# Blockchain-An Attempt at an Explanation By [Get Off My Metaverse Lawn! An Aspiring Curmudgeon Explores web3](https://paragraph.com/@gomml) · 2022-06-15 --- ### It is really simple, so they say. Blockchain is a shared digital ledger system that is secured through cryptography and a consensus mechanism such as proof of work or proof of stake. Blockchain records are immutable and allow for the tracking of digital assets like NFTs and cryptocurrencies. Right… I see… Simple. That makes perfect sense. Where do I sign up? Will someone please take my money? ### Not So Fast At first glance this whole thing sounds like nonsense. Maybe it is. Maybe it isn’t. More importantly, who cares and why should you care? The reason it is important is because blockchain technology is being implemented across a wide variety of industries, and it is showing promise as a way to more efficiently transact business. Also, blockchain is the core technology behind web3. If you want to understand web3 concepts, even a little, you need to have an idea of what blockchain is. Some of the more trendy things like NFTs and cryptocurrencies may prove to be a fad, but blockchain in general has a good chance of hanging around. ### What Blockchain Is Not Blockchain is not the same thing as Bitcoin. These two things are often confused. Blockchain is not a type of cryptocurrency. Instead, blockchain is a new type of computer system that allows for all these new web3 things, such as Bitcoin and NFTs, to function. Also, there are many blockchains. Often people will refer to “the” blockchain, as if to imply there is only one universal blockchain out there, but this is not the case (although some serious Bitcoiners might argue differently). Different applications will be associated with a particular blockchain. For example, Bitcoin has its own blockchain. Mirror, which is the publishing platform you are reading on right now, uses the Ethereum blockchain. Many business applications make use of an IBM blockchain. ### What Blockchain Is At the most basic level, blockchain is a record keeping system. It is often referred to as a ledger, but because that word is a bit archaic, I find it unhelpful. This is a new way of doing an old thing - recording and tracking information. One real world system that is very analogous to what blockchain accomplishes is the record system of property deeds at your local county courthouse. This system keeps track of a particular type of information which is the ownership history of pieces of property. You can see not only who owns a piece of property, but also you can see all the previous owners. These property deeds are housed in your county courthouse as paper documents, or perhaps as digital files in your county’s computer database. A blockchain system can do a similar thing. It maintains current records of information as well as the history of how that information has changed over time. What Makes Blockchain So Special? --------------------------------- Again, blockchain is a new way of doing something that people have been doing forever, recording and tracking information of some sort. This information could be ownership records, supply chain information such as shipping or delivery times, voting records, or medical records. These are just some of the use cases for blockchain. Typically these things would need to be recorded using paper records or a computer database. Blockchain systems can record this same information but in ways that provide certain advantages. ### Copies, Copies, and More Copies One of the key aspects to a blockchain system is that all parties involved keep a copy of the information that is recorded. These shared copies are stored on computers that are connected to one another by the internet. Each of these computers that keeps a copy of the records is called a **_node_**. Anytime there is an adjustment to the records, all copies are updated to reflect the new information. This multitude of copies stored in various locations creates a decentralized network structure. There is no centralized authority in control of the information. There is no single, master copy of the recorded information. Each copy is just as valid as the next. ### All in Favor, “Aye”. All opposed, “Nay”. Another key element to a blockchain system is consensus. This is the idea that before a new record is added to all the copies, the nodes must agree that this new record is valid. There are a variety of consensus mechanisms out there, the details of which are beyond the scope of this project, but an effective example is a simple majority vote. So long as 51% or more of the nodes agree that the new information is valid, it is added to the blockchain. This prevents any single node or even a small group of nodes from controlling the information. ### Security, Immutability, and Why It Is Called Blockchain Before we discuss security, we need to define some terms. The first is _cryptography_. A decent working definition of cryptography is using math to secure information. It is as if you put a lock on something and to open the lock you have to solve an incredibly hard equation. You use cryptography all the time. Anytime you make a purchase online, your card information is secured by using cryptography. We also want to be sure we are familiar with the term _immutable_. This is often used in a theological context, but here it shows up in a computer science context. It refers to the characteristic of being unchangeable. A piece of information recorded in a blockchain is referred to as a “Block”. Thanks to cryptography, each new block is linked to the one before it and these links cannot be broken or rearranged. The blocks are locked together by cryptography. The connection of the blocks into a chain-like structure is the reason the system is referred to as “blockchain”. Because the links cannot be broken or adjusted, there is no way to go back and change the information in a previous block. This gives rise to blockchain’s characteristic of immutability. Previous records cannot be changed, only new records can be added. This inherent inability of past records to be changed adds a very strong layer of security to the system. Once a record is added to the blockchain, no one can go back and make an adjustment to benefit themselves or hurt someone else. ### Mining and Maintaining a Blockchain Remember that blockchain is made up of a network of computers connected to one another by the internet and they all keep a copy of the recorded information. Anytime this information is updated, every copy on every computer is updated. This is done almost instantaneously over the internet. Many people have heard of “mining”, most often in the context of Bitcoin. These are the computers on the network that add new records of information to the blockchain. The catch is that not just anyone can up and decide to be a miner and add information to the blockchain. This isn’t Wikipedia. Mining requires the purchase of specialized computers that run the appropriate mining software. Miners also have to supply the power to run these computers. When I say computer, I’m not talking about a really nice Mac Book Pro. Instead, mining “rigs”, as they are called, look more like a box with a fan and wires coming out of it. They are designed do one thing only, mine. Serious operations can fill a warehouse with stacks and stacks of these special computers. These computers are not cheap and they tend to be very power hungry. The resources needed to mine play an important part in protecting the consensus mechanism of the blockchain. There is the possibility that a single entity could control 51% of the network by owning and controlling 51% or more of the computers maintaining the network. This would give them the majority vote in the consensus mechanism and allow them to control what information is added to the blockchain. Due to the high cost of mining resources, it is highly unlikely that a single person or small group of people could purchase and maintain enough computers to control that much of the network. As the size of the network grows, the amount of computer and power resources equal to 51% of the network continues to grow and extend beyond the reach of a single entity. Miners have to earn the right to add new information by finding the solution to a particular equation. This is done using the guess and check method, a favorite of math students everywhere. This equation is generated by the computer code that runs the particular blockchain system. That is what the mining computers are doing, picking a random number and plugging it in to see if it is right (okay so it is a little more complicated than that, but that is the gist of it). There is a certain level of randomness to who guesses the correct answer first, which makes it difficult for any one miner to dominate the system. Once a miner has the correct answer, they can create a new block with new information. Their answer is checked and verified by other miners and the new block is sent out for verification through the consensus mechanism. Miners are rewarded for their work, often with cryptocurrency, which is why it is referred to as “mining”. ### Public vs Private Not all blockchains are the same. Some, like the Bitcoin blockchain and the Ethereum blockchain are public blockchains. This means anyone can run a node or be a miner and anyone can view the information that is on the blockchain. Other blockchains, especially in a business application, are private. The information on the private blockchains would only be available to the involved parties. ### Trust Issues One of the problems a blockchain system sets out to solve is the problem of trust. How do you know if the information you are looking at is trustworthy? (I’m not talking about the kind of information you get from a news report being trustworthy. See Rule #2: [https://mirror.xyz/gomml.eth/hjqtszgz5PcwoqafFeKMt-PU5JbVRP9bbo3iygvs4YU](https://mirror.xyz/gomml.eth/hjqtszgz5PcwoqafFeKMt-PU5JbVRP9bbo3iygvs4YU) ) Instead, what I mean is, how can you be sure that recorded information is valid and hasn’t been tampered with? Although it isn’t perfect, blockchain attempts to solve this problem with copies, consensus, and cryptography. (See what I did there?) The multitude of copies prevents anyone from sneaking in adjustments without someone noticing. The consensus mechanism prevents a single bad actor from committing fraud within the records. Cryptography ensures that once a record is added, it can’t be changed. With these three things in place, blockchain is attempting to be a more secure and trustworthy record keeping system. ### Shared Version of the Truth I want to be careful here before I start talking about truth. In the Web 2.0 world that we live in, everyone is primed up to talk about fake news, misinformation, and disinformation anytime you bring up the issue of truth. For the sake of this discussion I will classify this type of truth as _factual truth_. This is not the issue of truth blockchain is addressing. Also, anytime you begin to talk about “shared truth” it can be easy to wander off into some version of moral relativism where truth is defined by whatever the group, community, or culture agrees is truth. That is not at all what I’m am about to suggest when I discuss shared truth. I personally hold that there are moral absolutes that exist outside of and, possibly, contrary to the current cultural consensus. For the sake of this discussion I will classify this type of truth as _moral truth_. This is also not the type of truth claim being addressed by blockchain. Okay, so where am I going with this? I want to discuss a third classification of truth that I will call _technical truth._ I will define this type of truth as a claim of truth that pertains to a recorded event within a computer system. This is the type of truth claim being addressed by blockchain. Technical truth may point to the other types of truth, but it is a distinction that needs to be made to prevent too high of expectations of what blockchain can accomplish. When two parties are working together, a framework of shared truth helps to greatly reduce friction in the relationship. This is true in the context of all three types of truth discussed above. When there is no shared version of the truth, it creates a great deal of friction in the relationship between the two parties. This friction can make it difficult for two sides to work together effectively. Let’s think about this in the context of _technical truth_. If two parties, in a business setting lets say, are operating with different sets of technical truth (i.e. different information) there will be friction and inefficiencies in the relationship. An example is shipping information. If a customer and supplier are operating with different versions of a product’s shipping status, it is easy to imagine friction and inefficiencies happening in that business relationship. Friction and inefficiency also show up when one party doesn’t trust the information coming from the other party. One solution to this is what is “third party verification”. A third party that is trusted by the original two parties is called in to verify the information and facilitate trust in the relationship. Third parties can be helpful, but because another entity is involved, this set up brings it’s own type of friction and inefficiencies. Blockchain systems aim to reduce the friction in a transaction by providing a consistent shared version of the truth and by removing the need for trusted third party verification. Because everyone involved has a copy of the shared information, everyone is working from the same base information. Through the consensus mechanism and cryptography, the network verifies the trustworthiness of the information automatically and removes the need for a third party. ### The Solution to a Problem You Didn’t Know You Had Most people aren’t walking around thinking about this, but centralized storage and control of information have some disadvantages. In the event that the centralized authority in control turns out to be a bad actor, there isn’t much anyone can do. They are in control. Blockchain aims to remove this issue by spreading control of the information throughout the network in a decentralized manner. Furthermore, when third parties must be used to facilitate trust and verify information they are put in a position of control over the information in question. If you are deemed untrustworthy, then you are untrustworthy. Again, blockchain attempts to remove this issue by providing a shared view of the truth that is trustworthy regardless of what a third party says. As we push forward into web3, especially the cryptocurrency world, much of the motivation comes from a desire to do away with centralized authority and allow any two parties to transact in a way that is trustworthy and doesn’t require third party verification or approval. ### Summary A blockchain system is a network of computers connected by the internet that maintain records of information. The aim is for these records to be transparent and trustworthy for all parties involved. This is accomplished in predominantly three ways. The first is through the existence of a multitude of copies of the information. Each computer on the network keeps a copy of the information. The second is the network consensus mechanism. This allows the computers on the network to verify the validity of any new records. The third is cryptographic security. This provides immutability to past records. Blockchain is useful because it provides a shared version of the truth. This can decease friction between two parties working together and allow more efficient business solutions than presently exist. The decentralized nature of blockchain systems also has important implications when it comes to censorship issues. This is particularly the case regarding public blockchains and cryptocurrency. Because there is no central authority controlling the system and no third party necessary for interactions, it is very difficult for any individual to be censored and prevented from using the blockchain. --- *Originally published on [Get Off My Metaverse Lawn! An Aspiring Curmudgeon Explores web3](https://paragraph.com/@gomml/blockchain-an-attempt-at-an-explanation)*