I want to buy a new car. I called one of my friends to suggest one that suits me and to be in charge of the buying process. So, I went to the agency and we picked a suitable car. Now, it is time to purchase.
I am gonna pay the car price. My friend Witnessed this transaction but it is not verifiable. So, I asked the agency’s agent to take a receipt of this transaction and a contract that I am the new owner of this car. All went fine, but it was between me and the agency and we needed a third party to verify this transaction. So, we went to a city’s registration office and we both signed that this transaction (Money transfer/buying a car) is done. Now it is verified.
Apparently, this is the basic story behind blockchain. In simple words, blockchain comes as a database to record this simple transaction. but what is the difference? isn’t already documented?
Blockchain is a network, connecting multiple entities involved (or not) in any transaction. not only to perform a transaction but also to verify it. Just as “My friend” and “Registration office”. They didn’t involve in payment at all, but they are here to verify.
We may now recognize one of the major differences in blockchain, which is DECENTRALIZATION. Here, there is no one entity to verify, actually, every member in the chain has to verify. The question here is: what if one in the chain didn’t verify or manipulate the data?
Here we will introduce another term, VOTING. Voting is used when the node in a chain has misleading information that different than the data on the rest of the chain. when every other node votes for the correct data, the misleading node has to update itself with the correct data.
To summarize this workflow, we can say that blockchain is immutable. Any valid record is irreversible and cannot be changed or altered. you can only APPEND.
Each transaction done in the chain is recorded as HASH (which will talk about in the next part), and those hashes are stored in the blocks. building the blockchain network.
Let’s talk a while about the elements and components we discovered in the last paragraphs. As you definitely noticed the bold words in the early paragraphs. They are all components of the blockchain network. Elements and components of blockchain, like:
- Distributed Ledger
- Smart Contract
- Nodes
- Blocks
- Hash
- Nonce
In the next part, we will start with defining the components and going through the benefits of using blockchain networks in multiple areas.
Former Nuclear Engineer | University Lecturer | Technology Advisor | Digital Transformation evangelist | FinTech | Blockchain | Podcaster | vExpert ⭐️⭐️⭐️⭐️ | VeeamVanguard ⭐️⭐️ | Nutanix SME | MBA | AWS ABW Grant’23
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