Blockchain For Dummies Pt. 1: What is Blockchain?

The term Blockchain, for a lot of us, was initially tied in with the first boom of Bitcoin.  

Bitcoin and Blockchain seemed to be used interchangeably. As Bitcoin reached its previous all-time highs back in 2017, it seemed like blockchain companies were popping up out of nowhere and reaching sky high valuations.  

Understanding what cryptocurrency is, helps us understand how they are backed by blockchain technology.  

As 2020 turned into 2021, a huge shift towards cryptocurrency returned as several tokens, including Bitcoin started to reach even greater all-time highs, and once again, the popularity of the term blockchain returned with it. 

In light of the many questions that we’ve gotten recently about blockchain, we’re here to put together a series that will help you achieve a better grip on what this elusive technology is all about. 

What Is Blockchain? 

Blockchain, at its core, is essentially a database.  

Though it serves a much more sophisticated function, let us begin by explaining exactly what a database is.

A database is a collection of information stored electronically on a computer system. When data is stored in a database, it’s usually structured in a table format (kind of like a spreadsheet). This allows for the information to be filtered and searched for, easily.

While a spreadsheet is an excellent way for an individual person to access info, its capabilities are limited. A database allows for an exponentially larger amount of info to be stored, which can be accessed, filtered and modified quickly and easily by many, many more users concurrently.

As databases grow in size, hundreds (and sometimes even thousands) of computers are needed to provide the computing capacity  required for their use.

So where does Blockchain come into this? 

For One, Storage. 

Blockchain, as you may have gathered from the name, collects information in a group of… well, blocks. These blocks hold sets of information and have specific storage capacities. Once the capacity of a block is filled, it chains itself to the previously maxed out block. This, when repeated, forms a chain of data, stored in blocks.

Hence the name, Blockchain. 

All blockchains are databases, but not all databases are blockchains. The sequential linking of the data blocks in lieu of tables are what differentiates the two. Plus, all the blocks are timestamped automatically. When used in a decentralized system, the blockchain naturally creates an irreversible, and subsequently indisputable, timeline of data. 

Here is the timeline of a blockchain transaction: 

1. A new transaction is entered. 
2. A network of peer-to-peer computers across the world receive the transaction. 
3. This network of computers solves a number of equations to validate the transaction before clustering it together into blocks. 
4. The blocks are chained together in sequence, creating a permanent, timestamped history of the transaction. 
5. The transaction is completed! 

We hope you enjoyed part 1 of this series.

Until the next one!

-Edge