BLOCKCHAIN 101
why do we need Blockchain?
Earlier, in 2008, a person named Satoshi Nakamoto coined the term "bitcoin" and it's working on blockchain ledgers.
Blockchain is a system in which a record of transactions made in bitcoin or another cryptocurrency are maintained across several computers that are linked in a peer-to-peer network.
Let's have an example!
#1 case
Let's say you're Alex and your friend is David. He is on a holiday with his girlfriend and ran out of money. So, he called you and told you he needed some money urgently. You told gimme a second. You told your manager to send David $1000 immediately (you're a rich guy) and the manager looked up your account to see if you had enough money and sent David his money and recorded it on his Financial diary.
(We are taking this simple example to avoid confusion)
And thus a block created which states the transaction history. So, whenever Alex sends the money, it gets recorded into the blocks. These blocks (transactions) connected into chains, called Blockchain!
Blockchain is:
Collection of records.
Encrypted with blockchain ledgers technology.
Immutable.
I'll show you how:
#2 case
You and your 3 Friends started a business. You make sure all friends contribute money. So, let's say
(all have a page, and $10 to donate each time)
Alex paid $10 to David. Jenifer paid $10 to George and so on..
There can be some misunderstanding and may Alex play games and write $100 instead of $10.
To avoid this! Blockchain has Proof of work as keys and signature.
Alex made a signature to it and let all know he paid so that all of them would write on their pages as well as david. So no fraud was made.
If the made purchase isn't valid it gets eliminated.
That's why blockchain ledgers are encrypted with complex algorithms. And once made cannot be modified or terminated. It saves the whole transaction from day 0 to end day.
it's decentralised means:
The access of transactions are made possible to everyone engaged in.
The whole transactions are stored in the form of blockchain ledgers and stored in computers anyone can have access to. Protected using cryptography.
Banks are centralised.
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