Understanding The Blockchain In 400 Words Or Less

Understanding The Blockchain In 400 Words Or Less

While this will be a very cursory overview of the idea, and only explore the underlying principals and not the newest innovations and nuances, this article—yes, this tiny article—can teach you enough about the blockchain to understand how it is one of the most secure ways to manage money without relying upon a centralized group.

So here we go.

In simple, simple terms, the Blockchain is a chain of “blocks,” which are collections of transactions. Each of those transactions within a given block has a digital signature attached to them that, due to the nature of encryption, is literally impossible to forge externally without knowing a private code. There is not enough technology on the planet that can work out the number in any reasonable timespan, at least not at the time of writing.

And blocks are made up of these secure logs.

Now, the special thing about these blocks is that they are “chained,” they have a number that indicates their connection to the series. Each block references the previous block. To go back and change any block, you’d have to change every block after it—which is also a math problem that’s very hard to solve. But how about trying to introduce a new fraudulent one at the front of the chain? Well, that might work for a bit. But because “mining” is necessary to create a new block, (mining being computational work that’s hard to do), and competitiveness is rewarded with currency for the miners, your odds of being able to continuously guess the math first to create the next block is brutal. You might manage it for a short time—but someone will get ahead of you, the system will always pick the longest chain as true, and the whole effort will be invalidated.

And, considering just how many blocks are formed, and how many transactions are happening a second, it’s not a winning proposition to try to cheat.

So, that’s the blockchain. Or a simple form of it, at least. And now you know a little more of what’s happening when you make a transaction on the system.

By |2020-02-03T03:59:06-05:00February 3rd, 2020|DFN COLUMNIST|Comments Off on Understanding The Blockchain In 400 Words Or Less

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