What Blockchain really is? – Harrish Selvarajah

What most people think when they hear the word Blockchain is that Block Chain is the technology behind Bitcoin.

Saying blockchain is the technology behind bitcoin is like saying, internet is the technology behind email. It is true but does even start to explain the purpose of the internet?

Blockchain being this new fancy technology it works based on the old technique to store record, The ledger, let me explain it to with the following use case.

Scenario Zero without BlockChain involvement
Person A in Sri Lanka wants to transfer money to person B in the U.S.A.

Step 1: Person A goes to the bank in Sri Lanka and deposits money to person B account. Here the bank in Sri Lanka has a ledger where the transaction is recorded.

Step 2: The money is transferred to the bank in the U.S.A to person B. Here the bank in the U.S.A records the transaction in its ledger.

Here the money transfer involves in two ledgers and may be even more, because of many ledger entry system it creates a friction which results in delay in the transfer and also the money reached will be less due to the commission by middle man.

Now rather than having more than one ledger entry, think of one huge ledger in the cloud and each block in the block chain will have a copy of the ledger which will record transactions, so now the scenario will be;

Step 1: Person A sends bitcoins to Person B via blockchain, the transaction is is verified by each block in block chain and then the transaction added making it just one ledger entry.

This transaction has no middle man, middle man will be completely eliminated when we bring the blockchain concept alive and how? this is because the trust in the system is not centralized its being decentralized resulting in no central authority needed.

Now, question arises so how is the blockchain managed and how is it authenticated? This will be explained in the upcoming section How Block Chain Works?