Atomic Object’s Jaime Lightfoot has a good primer explaining what “blockchain” is, while primarily focusing on Bitcoin and Ethereum to highlight comparison and contrasts features at time. What I really like about “primer” articles is not only their text, but all the other things they link off to, for much extended reading and understanding. And blockchain can be one of those things too time consuming to explain, so I keep articles like this close to forward to people when necessary.
Blockchains are nothing new: Bitcoin’s blockchain was implemented in 2009, and research papers on blockchains date back to the early ’90s.
While I had heard about Bitcoin and blockchains, I didn’t fully understand them, and the gaps in my knowledge came to light when my grandma asked me to explain Bitcoin to her. This post is intended to explain what blockchains are, how they work, why someone would want to use them, and what’s coming up next.
A New Take on Money
In your everyday life, if you want to buy something, you exchange money with a business or person for the thing you want to buy. Before computing was widespread, people used physical representations of money (dollars, coins, gold). Now, we also use digital records of money.
Whether you rely on physical or digital means, you are trusting some kind of outside group to create and regulate the physical representations of money (the Federal Reserve), keep accurate bookkeeping records (banks, state and national laws on bank records, etc.), and prevent theft, double-spending, and fraud (laws, law enforcement, counterfeit protection, etc.). I’m glossing over some things here, but the point is that everyone follows the rules that external entities have made–because if someone breaks those rules, those entities have the authority to step in and act.
Cryptocurrencies have the same ideas—creation, regulation, accurate bookkeeping, and prevention of theft—but there’s no outside group to monitor them. This makes Bitcoin and other cryptocurrencies “trustless.” In other words, there is no outside group or third party that must be trusted for transactions to occur.
And here’s a long, classroom-worthy 1.5 hour presentation by Alex Fisher on “trustless” communications and the blockchain with an emphasis on Ehtereum and its roadmap: