As good human beings, we all use licenced versions of our computer softwares (right?), but some bad guys could have downloaded some files/documents from Torrent. How does this Torrent work? In Torrent world, there is not a single center where files are stored and the file pieces are kept on different computers in the network. In other words; while you downloading a file through Torrent, you don’t download it from a single server/computer. Also after you downloaded a file, you can serve to other “downloaders” to help them in order to have same file which you already have. This is called “peer-to-peer communication”.
Blockchain also works with a similar logic like Torrent because Blockchain is a common registry book with the simplest expression. Let me explain Blockchain’s concept with an example. Let’s assume that John, Mike and Marry have a credit-to-pay situation. John gives 50 USD to Mike and Mike also gives 30 USD to Marry. All these transactions between these 3 people are written in a shared accounting book which they all can access to and also, all money transfers (transactions) have to be approved by these 3 people. They call it “distributed ledger”. Blockchain works with this principle.
So why blockchain has became a hot topic in today’s? Nowadays, users do not have any control over the system and have to rely on a person/organization in all transactions that require mediation. However, blockchain technology incorporates many innovations, as this process is transparent and focused on trusting the community instead of an individual or a single corporation.
Well, how did we get to this stage? According to Moore Theory (Moore is one of the founders of Intel), due to the fact that our technological speed is so high; while costs are halved every 18 months, new developments are doubled. You probably remember some transitions such as from 1.44 MB floppy disks to 1 TB USB memory; from 56K modem connection to the fiber internet. These scale-up changes made possible the realization of distributed systems like Blockchain. Before that, this kind of big data could not be copied on all devices in the network or it would take years.
Okay but how is the relationship established between transactions to keep them safe and reliable? As the name implies, Blockchain keeps transactions as block chains and sends the records to endpoints. Connects the blocks to each other and writes a summary of the previous block to the next block. If you found difficult to understand the credit-to-pay example in above, here is another example. Let’s say, we have a shipping business. We write on ship number 2 “There’s a 200 tonne load at number 1” and “There’s a 120 tonne load at number 2” on ship number 3. Thus, each block verifies the previous block. If a tonne amount cannot be verified (validation) by 51% of ships (community), the defective block is removed from the system.
So how is validation done? This process is called reconciliation or verification. The cryptocurrencies (like Bitcoin, Etherum etc.) -they have built on Blockchain technology- call this process as “mining”. The machine that works to verify transactions (via solving crypto) is rewarded depending on its performance.
In a nutshell; Blockchain is very promising technology especially for the works which include a middle man. It makes possible to trust a “pluralist and uncentralized system” instead of an individual or a single corporation. Blockchain is currently in its infancy but we can expect to see Blockchain based technologies in many processes such as copyrights and patent procedures, notary operations, cargo transportation, ID/passport controls in near future.
January 12, 2019