Blockchain in companies for beginners

Oke, blockchain, bitcoin, crytocurrencies, distributed miners, transaction broadcast, mathmatical trap door, elliptic curve digital signature algorithm? Can someone make a manual just like Lego on how to build this? Blockchain can be quite confusing when it is introduced to explore the options within your company. Explaining the need and investment of blockchain to a executive board can be a steep hill to climb (somewhat impossible maybe). My advice, keep it simple, get on YouTube. 

Wooden toy building blocks, in bright colours over white background, stacked in a tower

 

The most simpelest version of blockchain can be a stacked pile of block just straight up. Without the first (base) block, all the other blocks can’t exist in the stack (aka: chain). Every block knows about the previous block because it’s dependent of that block. So the information on each block would be:

  • reference of the previous block
  • timestamp (when the block was created)
  • proof of work (security code that only neighboring block know) or proof of stake
  • summary of transaction data (has it’s own chain)

Taking the next step is just like the movie ‘the matrix’, “there is no stacked pile of blocks”. You can’t see the blockchain but it’s there. It is distributed over many computers all over the world, so called miners.

The ownership principles in blockchain

Wow, back to basics, to explain the details of ownership, imagine you give a present to a friend. You know it happened, your friend knows it, you don’t need anyone else to help you transfer the present to your friend. The present left your possesion and you can’t control it anymore. Your friend now has a present and if he doesn’t like it, he can give it to another friend (give better presents next time). This is ownership and can apply to almost everything.

Now, let’s make your present digital. You can make millions of copies of it and give them digitally to everyone. This gives an ownership and exchange problem. Your present isn’t unique anymore. This problem is called the double-spending problem. Some very smart guys solved this problem by keeping a record of all the transactions (or copies) made by the owner. Sending this record (ledger) to all users and keeping it updated everywhere made sure that you can’t change the form of the original present. This record is what we above mentioned as the transaction of data and thus the explaining the ownership of an item (currency, data etc.) in a blockchain.

These are the principles of blockchain, and I hope to have given you a start to read more on blockchain! It will change the way we do our taxes in 10 years.

For beginners (2 minutes)

YouTube voorvertoningsafbeelding

Bonus for IT devs (not 2 minutes)

I’ll go into detail with this for some next posts, but this is for dummies!

YouTube voorvertoningsafbeelding