Almost everyone has heard of Blockchains. But what are Blockchains, what do they do and how do we use them. Blockchains are a vague concept for most of us. This article is going to try to give an explanation on what Blockchains are and on there applications.
A Blockchain consists of a header (or key) and a content. Further in this article I’m going to go deeper on these terms.
When we think of applications for Blockchains, we think of bitcoins. Bitcoin is a well-known online currency, but this is just the tip of the iceberg. Money is just one of the many applications! The difference is that Blockchains are the general concept that is being used to move those bitcoins from one individual to another. So bitcoin is just an application on the general concept called Blockchain. But money is just one of the many applications of Blockchains.
I’m going to show the thoughts behind the development of Blockchains. To make it easier to understand I’m going to apply it on online money. Let me first explain, if person A wants to transfer money to person B. They both want to do that by a third party, who they can trust. There you will lose a bit of money and it will take over three days. But you want to do this immediately and you don’t want to lose money.
The first solution was to use the concept of open ledger.
Suppose you have a network of three people who want to move money from one another. You can now think of money that is transferred, like A starts with 20 and moves 5 to C and C moves 3 to B. You can now link this transactions into a chain A=20, A àC 5, CàB 3.
The good thing about this method is that everybody can check if a transaction is valid, due to the fact that everybody has the whole “logbook”. You can’t move 50 from C to B when C only has 5. As you can see this is an open transaction where every step has a header, that has information about the previous transactions and has a content.
This uses a lot of data, because everybody who is involved, has the whole logbook. To use less data, they started with Distributed Ledger.
Now we don’t want that everyone can see everything. They solved this by distributed Ledger, this means that everybody who is in the network has different pieces of the ledger. This has to be synchronized so it is correct and it will stay correct when you change things.
But how do you get things synchronized?
Here I want to introduce the concept called: mimers. Those are notes that every involved party has. When someone wants to do a transaction, the parties are going to check if the transaction is valid.
But there is one catch. Every party wants to validate things as first because this party will get a financial reward: “ a bitcoin”.
But validate isn’t enough, you also have to get a key to couple the new transaction to the previous that he has in his ledger. This is really hard, because it is done by trial and error. This is a method where they just guess random what the key can be. So there needs to be time and power invested in these search. When one party has founded the key, he tells the others that the transaction is valid and he gives the key, so every party ledger is synchronized. And now they do the same thing all over again.
This is an example of a Blockchain, the orange part is the content and you have two keys. One that is the “name” of the block and one that refers to the previous Blockchain. If you chance a little thing in one block this block’s code will be wrong and the connection will be broken. Everybody can check those data, so you have a “social” control that checks if someone is wrong, who has the mistake in his chain.
There you go EVERT MAAS, I hope this was useful. For everyone, make sure that if you want an article about a subject of your choice, that you comment on the Facebook post. Good luck!