A Question from my 12 year old Cousin — What Is BLOCKCHAIN TECHNOLOGY?
Have you ever been asked to explain a technological concept to a naïve kid or a clueless old person? Being a product of Gen-X, you should be able to do this easily. But it’s okay to get stuck and wonder how to explain it to them in layman terms.
Yesterday evening, I was on a call with my 12-year old cousin and I told her that I was switching between different technologies like Blockchain, App development, Machine Learning and Web Development, she asked me what blockchain is. She had heard about the rest from her cousins, but blockchain seemed new to her. The following is what I told her:
“Your teacher keeps a detail of the whole class’ marks. It’s written in her journal and a copy is saved on the laptop. If either of it corrupts, she loses all the important data. If I ask you to make a list of topics you have studied from grade 1, you’ll have to go back and check all the course resources to find the same. It’ll be a pain and you might even give up mid-way.
These are minute things in our lives. What if you were to keep details of the money you used? Would writing in a journal whose pages could be made into paper-planes by your brother be a good choice? Or a document on your laptop which could be hacked be feasible? We need a more secure and safe method to do this.
We implement blockchains in various ways in our lives.
Your dad collects bills of all his transactions in a month. At the end of the month, he makes a note in a ledger and counts his total expenditure and savings. That is his way of implementing a blockchain.
The first page in your mom’s chequebook where she marks where she has used the cheques for, is another paper blockchain.
When you were collecting money for your school picnic last month, you made a book with details of students, and the amount they paid. That book is also a blockchain.
The fee record in your school is another blockchain.
So how exactly do we define a blockchain? Blockchain is a system in which a record of all transactions made in a type of currency called cryptocurrency is maintained on not just one but many systems all around the globe. Does having the data spread over systems make it less secure? Not at all. Instead it makes the system much stronger and safer. Remember the story of the 5 sticks — they are always stronger together than separate. The same way, more the people using blockchain, more secure the network.
After all this you must be wondering why it got the name blockchain. It could have been simply called a digital ledger. The reason it is called a blockchain is its working. Every transaction is in the form of a block and these blocks are chained with each other. The copies of blocks are present all over but the data is anonymous, i.e. the names of people doing transactions isn’t available to others.
So what about cryptocurrency? How does it look like? Is it made of paper or plastic? The answer is none. It’s invisible and exists only on a computer. So blockchain deals with numbers being traded. Even Cryptocurrency has its various types. Bitcoin, Ethereum, Litecoin, Tether are some common ones. Bitcoin was the first of its kind.
Just how physical money is kept safe in wallets or bank accounts, cryptocurrency has a wallet to keep it safe too. A cryptocurrency wallet is your personal chequebook. It holds details of your transactions and can communicate with other wallets keeping the system secure. Every time a transaction is requested, it is sent to various nodes. On verification from all parties, the transaction is approved and the block is added to the existing chain. If your wallet is hacked, the data is still stored on other wallets and you can retrieve it when you want to. Ledger Nanon S, Coinbase, KeepKey and Exodus are some common cryptocurrency wallet names.
I am pretty comfortable with the paper money. So why would I switch to cryptocurrency? With the elimination of paper, comes a lot of advantages. The system is anonymous and fully transparent. Transactions are faster and there are no conditions to open accounts in banks. Now unlike normal currency which is governed by banks, there is no central authority looking over the cryptocurrencies.
Blockchain itself was invented by a person (or group of people) who we know by the name Satoshi Nakamoto in 2008. We don’t even know about them yet. Blockchain grew fast and got a lot of returns to people. Those who invested in 1000s, got returns in Lakhs. That’s the power of demand and supply. Blockchain is being used in various industries like media, healthcare, education, I.T, etc. Its decentralized approach and secure nature is what attracts most. People have slowly started accepting bitcoin as a currency.
Blockchain is here to stay and to revolutionize the way we function in our daily lives. The way we look at money is to change as well!”
Listening to all this, my cousin was really excited. She dived straight into researching more about the technology and I would suggest you to do the same. Blockchain is something really interesting and deserves being spread to people. Research, read, learn and invest.
Happy and Safe Blockchaining!
