What is Blockchain?
Blockchain Explained Using Beer
When you would like a beer (or soft drink or indeed anything you need to keep cool) out of the refrigerator, is it necessary for you to understand how the damn thing works?
Nope. You open it door, grab it and enjoy. If you’re home, you likely take it from your own fridge (most commonly described as a popular household appliance consisting of a thermally insulated compartment and a heat pump – usually mechanical, electronic or chemical- that transfers heat from the inside of the fridge to its external environment so that the inside of the fridge is cooled to a temperature below the ambient temperature of the room).
Are you aware of these mechanics when you go for the beer? Probably only vaguely.
Is it necessary for you to know to enjoy your drink. Not at all.
It is the same with Blockchain. Unless you’re a technical specialist (if you are, I have a list of source sites for you to visit in the next section) you don’t need to know the detail of what Blockchain does to take advantage of its capabilities. You only need to know that it works.
How does it work? Very well.
Here is a basic real-world analogy to explain how Blockchain will work.
Let’s say we live in a world where your employer could send your salary via a secure email directly to you at home and not to your bank (similar to years ago when you were handed a piece of paper, a cheque, on payday, saying how much you were owed,).
Since he sends it via an email transaction, you now have the information residing on your computer itself (probably also a cloud server for security).
Now let’s say you owed your brother-in-law $50 (or any other currency) in which you are paid by sending him an email. If you both have the right software on your home computers, you can send him the £50 directly WITHOUT using the bank as a middle-man.
The transaction happens swiftly (as fast as an email), smoothly, and without you paying the bank any transaction fee or monthly fee to handle your money. You’ve paid your debt safely, swiftly and securely, and your brother-in-law has his money, which he can use to pay his own bills in the same way.
You’ve just completed a transaction using Blockchain.
One way to look at Blockchain transactions and communications would be to consider them to be super-duper, triple-secure, double-secret safe email, with the right software enabling the proper safety, security and correctness of the transactions.
Once you grasp this, its efficacy of use and the value of carrying out a transaction using this model, you can extrapolate the future value and potency of using the internet for nearly everything, and cutting out a lot of the ‘middle-men’ in the entire ‘internet’ universe.
Do you need to know how it works? Not any more than you need to know that emails are transferred over TCP/IP interfaces (the technical basis of the internet), or the amount of work that it took to come up with creating the current day internet to begin with, or how a fridge keeps the things in your kitchen cool.
As long as you have the right software at either end of the transaction (not a small task, but we’ll go into that later) you’re good to go. (We discuss the importance of Blockchain in another section).