What is a blockchain | simple explanation


What is Blockchain?

Many people think that the blockchain is just a technology on which digital currencies in general and Bitcoin in particular operate. Although the initial goal of creating this technology was so, its benefits can be very numerous and much greater.


Blockchain technology or in Arabic (block chain) can be defined as a technology that works in the form of an electronic record system that can be programmed to record or track anything of value from transactions and financial transfers to medical records or even land titles.


 

The question that comes to our mind now is: What makes blockchain technology distinct from other methods and systems we already have that are also able to track data.


To clarify this, we will explain how the blockchain works in the field for which it was created, which is financial transactions, or rather Bitcoin, in order to simplify the explanation to the maximum extent.


How does blockchain work?

We begin to explain the problem that the Blockchain is working on in the field of financial transactions, which is sending money.

If we assume, for example, that person A who lives in Germany wants to send money to person B who lives in Japan in the traditional way, he will need an intermediary (the bank) to do the transaction. The transmission will be as follows:


Person A determines the amount he intends to send, for example $10. Then comes the role of the intermediary, i.e. the bank that identifies the addressee (Person B) and then sends the specified amount while taking the commission on the service provided.


This process usually takes three to four days. If we do this process using the blockchain, it will be as follows


1- Sending the amount from person (A) to person (B) without an intermediary (bank).

2- The transmission will be faster than the bank if it is not an instant transfer.

3- The transmission process will be done at a much lower cost.


Blockchain technology is based on three principles:


Open Ledger Principle

It is a series of exposed transmissions so that anyone on the network can see the source and amount of money there and thus determine whether any transmission actually took place on the network and whether it is legitimate or not.


If person A, for example, does not have a balance and tries to send $10 to person B, the transaction will be displayed on the open record, and everyone will see that person A does not have the amount and that the transaction is incorrect and therefore rejected and will not be added to the chain.


distributed ledger principle

As we have already mentioned, one of the goals of the Blockchain is to eliminate centralization and replace it with decentralization. How is that?

This is done by distributing a copy of the register to all the people who contribute to the network and thus we have eliminated centralization.


But we still have another problem that we have to solve, which is to make sure that all copies on the registry are synchronized and that all network participants own and see the same copy. Here we come to the third and most important principle.


Mining principle

We saw above that the record is exposed so that everyone can see and view it. We also saw that the registry is distributed to all network contributors to eliminate centralization.


Now we will look at how computers can understand and update the ledger on the network. We use a simple example to understand the process.


 

Suppose Person B wants to send $5 to Person C, he will have to post the (not yet activated) transmission on the network so that everyone can see it. Of course the transmission so far is on the network but it has not been added to the registry, in order to be added to the registry, miners have to step in and do the job.


Metallurgical:

Miners are a group of private computers on a network that own a copy of a ledger. Assume for example that Person C and Person D are metals.


The work they will do is to compete with each other (or between them in the case of a multi-metal) over who will be the first to get the transmission (not yet activated) that Person A has broadcasted, activates, and publishes on the Ledger. The first to do so gets a reward, in this case the reward is Bitcoin. How is that?

In order for the miner to succeed in taking the transmission and placing it on the ledger he must do two things:


1- Activating the transmission, which is not difficult because the record is exposed and everyone can see Person A on the network and does he really have the credit he wants to send.


2- Finding a private key that allows the miner to take the previous transmission (a transmission made by another person and activated by two miners and put it on the record) and link it to the current transmission. To get this key, the miner must use computer power because the search is random and very fast.


It means that the computer does the searching and guessing process over and over again until it finds the right key. The first miner to do so will get the reward. The miner then posts the solution on the network so that everyone, including miners, can see it and get it.


When miners see that the transmission has been activated and find its key and that there is no benefit in the competition, each miner takes the activated transmission and adds it to his (Ledger) copy and each of them begins to search for another unactivated transmission that was displayed on the network.

What is a blockchain | simple explanation

 


What is a blockchain | simple explanation


What is Blockchain?

Many people think that the blockchain is just a technology on which digital currencies in general and Bitcoin in particular operate. Although the initial goal of creating this technology was so, its benefits can be very numerous and much greater.


Blockchain technology or in Arabic (block chain) can be defined as a technology that works in the form of an electronic record system that can be programmed to record or track anything of value from transactions and financial transfers to medical records or even land titles.


 

The question that comes to our mind now is: What makes blockchain technology distinct from other methods and systems we already have that are also able to track data.


To clarify this, we will explain how the blockchain works in the field for which it was created, which is financial transactions, or rather Bitcoin, in order to simplify the explanation to the maximum extent.


How does blockchain work?

We begin to explain the problem that the Blockchain is working on in the field of financial transactions, which is sending money.

If we assume, for example, that person A who lives in Germany wants to send money to person B who lives in Japan in the traditional way, he will need an intermediary (the bank) to do the transaction. The transmission will be as follows:


Person A determines the amount he intends to send, for example $10. Then comes the role of the intermediary, i.e. the bank that identifies the addressee (Person B) and then sends the specified amount while taking the commission on the service provided.


This process usually takes three to four days. If we do this process using the blockchain, it will be as follows


1- Sending the amount from person (A) to person (B) without an intermediary (bank).

2- The transmission will be faster than the bank if it is not an instant transfer.

3- The transmission process will be done at a much lower cost.


Blockchain technology is based on three principles:


Open Ledger Principle

It is a series of exposed transmissions so that anyone on the network can see the source and amount of money there and thus determine whether any transmission actually took place on the network and whether it is legitimate or not.


If person A, for example, does not have a balance and tries to send $10 to person B, the transaction will be displayed on the open record, and everyone will see that person A does not have the amount and that the transaction is incorrect and therefore rejected and will not be added to the chain.


distributed ledger principle

As we have already mentioned, one of the goals of the Blockchain is to eliminate centralization and replace it with decentralization. How is that?

This is done by distributing a copy of the register to all the people who contribute to the network and thus we have eliminated centralization.


But we still have another problem that we have to solve, which is to make sure that all copies on the registry are synchronized and that all network participants own and see the same copy. Here we come to the third and most important principle.


Mining principle

We saw above that the record is exposed so that everyone can see and view it. We also saw that the registry is distributed to all network contributors to eliminate centralization.


Now we will look at how computers can understand and update the ledger on the network. We use a simple example to understand the process.


 

Suppose Person B wants to send $5 to Person C, he will have to post the (not yet activated) transmission on the network so that everyone can see it. Of course the transmission so far is on the network but it has not been added to the registry, in order to be added to the registry, miners have to step in and do the job.


Metallurgical:

Miners are a group of private computers on a network that own a copy of a ledger. Assume for example that Person C and Person D are metals.


The work they will do is to compete with each other (or between them in the case of a multi-metal) over who will be the first to get the transmission (not yet activated) that Person A has broadcasted, activates, and publishes on the Ledger. The first to do so gets a reward, in this case the reward is Bitcoin. How is that?

In order for the miner to succeed in taking the transmission and placing it on the ledger he must do two things:


1- Activating the transmission, which is not difficult because the record is exposed and everyone can see Person A on the network and does he really have the credit he wants to send.


2- Finding a private key that allows the miner to take the previous transmission (a transmission made by another person and activated by two miners and put it on the record) and link it to the current transmission. To get this key, the miner must use computer power because the search is random and very fast.


It means that the computer does the searching and guessing process over and over again until it finds the right key. The first miner to do so will get the reward. The miner then posts the solution on the network so that everyone, including miners, can see it and get it.


When miners see that the transmission has been activated and find its key and that there is no benefit in the competition, each miner takes the activated transmission and adds it to his (Ledger) copy and each of them begins to search for another unactivated transmission that was displayed on the network.