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March 15, 2020

What is blockchain?

A puzzle of a sunset with three pieces missing.

The concept behind blockchain is simple. Forget everything you’ve heard about Bitcoin and let’s explore a fun analogy about puzzles.

Blockchain is an incredibly exciting technology that’s bursting at the seams with world-altering possibility. While it seems like everyone with even a basic knowledge of computer programming is talking about blockchain these days, it can be difficult for layperson to find a good explanation for how it works.

Thankfully, the concept is simple. Forget everything you’ve ever heard about Bitcoin and let’s start from the beginning–in order to properly explain how blockchain works, we rely on the puzzle analogy.

The puzzle analogy

First, let’s picture a puzzle that you buy from the store. Now, imagine that all your friends buy a copy of the same puzzle, then all their friends buy a copy of the puzzle and so on. As you’re digging through the pieces, you notice that one piece looks a bit strange – perhaps it got mixed into the box and doesn’t belong there. Since all your friends have the same puzzle, you can check your pieces against theirs to make sure everything checks out. Is one of your friends out of town? That’s fine, because you have other friends who also have the same puzzle, and you can check with them instead.

In real life, this sort of activity would be incredibly time-consuming. But when the puzzle pieces are blocks of data, a network of computers can perform this activity in fractions of a second. The pieces can also be assembled virtually instantaneously.

With blockchain, you have thousands – or even millions – of “puzzles” that are all being checked against one another. If some prankster attempts to muck up the system by tossing in a piece that doesn’t belong, the network will catch it in an instant.

Additionally, just like the edges of a puzzle piece, every block contains data about the blocks that are connected to it. When you try to change the profile of a puzzle piece, it no longer locks together with the piece next to it. Similarly, if you attempt to change data in a block, it no longer lines up with the blocks next to it and the network recognizes this as an error.

As you can see, blockchain data becomes very difficult to manipulate, since no one person has access to every single copy of the record, and any change to the established record triggers a reaction that resonates through the whole chain.

This analogy isn’t perfect, of course, since blockchain records are constantly being added to. Every new transaction becomes a part of the chain. For our original puzzle analogy to be more accurate, we’d have to imagine a puzzle where new pieces can be added without gumming the whole thing up.

Perhaps we need a better analogy.

The puzzle game analogy

Let’s start with the previous example where all your friends buy the same puzzle. Now we can build on that to create a hypothetical game that better represents how blockchain actually works.

In this game, one person takes a piece out of the box – say a corner piece – and places it on the table. That person snaps a photo of the piece and sends the picture to the whole group, so everyone else can dig through the box and find the same piece. Eventually, a person finds the next piece and puts it into place, then snaps a photo and sends it to the group. Then, everyone with the puzzle digs through the box to find the correct piece so they can put it into place. This might make a fun game for a group of friends, but in person, it’s probably not feasible. How long would it take to assemble a 100-piece puzzle this way? How about a 1,000-piece puzzle? Thankfully, blockchain technology speeds this along so an exercise like this could be performed in an instant.

In the puzzle game, you can see how once a piece gets added to the puzzle, it becomes very difficult to alter the record. Not only do you have photographic evidence of which piece was used, you also have previous photographs showing where that piece was used. In fact, using the sequence of photographs you’ve created, you can figure out with some degree of accuracy when every piece was added. In order to change the record, you need to independently convince every single one of your friends that their memory isn’t accurate, then change their copy of every single photo. You’d also have to do this for all your friends simultaneously, and all their friends and so on, because you’d run into a problem as soon as two people checked their photos against each other and realized that they didn’t match.

Blockchain’s endless possibilities

If you’ve managed to follow along with both analogies, you’re probably starting to realize just how much potential there is for blockchain to improve the world in which we live. Anything that requires transparent, accurate, secure record-keeping can be streamlined with blockchain. Bitcoin is an example of blockchain being used to streamline digital money transfers, but the possibilities don’t end with cryptocurrency. With blockchain, supply chains become more transparent, identification records become more accessible to the people who need them most, and people who browse the internet are empowered to take back their own browsing data. These are just a few of the ways blockchain is being used to create a better world, but we’re quite certain that the best is still in front of us.

BanQu creates blockchain solutions for some of the modern world's biggest challenges, such as supply chain transparency and identity platforms for impoverished populations. We believe that with blockchain's bright future, world poverty can become a thing of the past.