How to explain Blockchain in 60 seconds

I was recently told that I explained Blockchain well - here's my attempt to do it in a minute.

Every day we do things that we need to record, verify, and store for future access. Blockchain provides a new, and in many ways better way to do this.

First, note what Blockchain is not. It is not the same as Bitcoin, but it is one of the technologies built into Bitcoin and many other services.

What Blockchain is, is essentially the combination of two technologies:

1. A series (chain) of records (blocks). 
2. A mechanism and network to record, verify, store, and access the record.

A Blackchain starts with a 'Genesis' record. New records are added, forming a chain. Blockchains use a smart type of encryption that takes into account the previous record, so it actually becomes more trustworthy with more records. Each user has a key which is used to verify and track actions by that user (similar to the way we use usernames and passwords), and the Blockchain is updated on multiple copies in different locations all at the same time. You may hear Blockchain referred to as a 'distributed ledger'.

Why all the hype?

Today we often use databases to record information. There are normally controlled by one organisation, i.e. a bank or government department. This gives them power. It can also be hard and slow to share the data.

The reason people are now talking about Blockchain is that the old way of storing transactions has real problems and block chain improve many of them

A Blockchain would allow you to record the same info, and for it to be stored and accessible from many places and controlled by no single organisation. Any user could record an action – you don’t need a central authority. It would still be secure and access would be controlled.

The reason people are now talking about Blockchain is that the old way of storing transactions has real problems and block chain improve many of them. Sending money is harder than it should be, selling a car takes more paperwork than it should, important medical records are not available when they are needed, and, believe it or not, occasionally someone who doesn’t own a house is able to sell it and run off with the money.

Use Cases

Blockchains are being used today :

• In Bitcoin and other virtual currencies (cryptocurrencies) for borderless peer to peer transactions.
• To allocate donations to refugees that works across multiple borders and organisations
• To execute rental agreements without a property agent
• As a secure way to record usage of an application or service
• By logistics company UPS to track packages all over the world

Blockchain makes most sense when you want to record a series of actions ... i.e. the changing of ownership of an asset, movement of a package, access of a system, or maintenance on a machine

A Blockchain makes most sense when you want to record a series of actions in multiple places, and make it editable without a intermediate third party, by multiple people who don’t trust each other. i.e. the changing ownership of an asset, movement of a package, access of a system, or maintenance on a machine. Dr Jinghao Ke explains it well and lays out where you should use Blockchains in a 3 minute article here.

Are there any issues?

Yes. The biggest one is that it is over hyped. It can also be comparatively slow, bloated, and is too transparent for some use cases - however many improvements are coming. Blockchain is a new and different approach to recording and storing information and doesn’t yet have the breadth of functionality and maturely of existing approaches.

Summary

Blockchain is not suited to every transaction situation, and is not perfect, but for many uses, it is better. It supports distributed, transparent, peer to peer transactions especially well. In the next few years it may become the standard way we record many of the things we do.

It supports distributed, transparent, peer to peer transactions especially well

Einstein is quoted as saying “If you can't explain it to a six year old, you don't understand it yourself” – I’m off to try this on my daughter.

What do you think? I'd love to hear your thoughts. Comment below...

Stephen Pech is a people, sales, and strategic leader; and writes about leadership, technology, and strategy. His blog is at https://ondemandblogging.wordpress.com/, his linkedin profile can be viewed at www.garudax.id/in/stephenpech/, and you can email him at mail@stephenpech.com