Blockchain Guide for (not so) Dumb Blondes
"What? Like it's hard?" - Elle Woods
If you’re like me, you want to get the info quickly and precisely. Reading a 45-page white paper with words that require dictionary support is not my idea of effective learning. Let’s break it down:
What is blockchain? According to the IBM Blockchain for Dummies guide (found here), “Blockchain is a shared, distributed ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible — a house, a car, cash, land — or intangible like intellectual property, such as patents, copyrights, or branding. Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.”
Yeah okay, did you also have to read that 3 times to try to get that through your brain? Same. So let’s put this in OUR language.
What is a ledger?
A ledger is basically a list — or a book of record keepings. Typically, it is a list of transactions. Think about your bank statement:
One line tells you about your (a little too expensive) purchase at Nordstrom last week (what? The shoes were on sale and too cute to pass up!) The next line is your direct deposit from work. After that, your bank statement reminds you of when you swiped your credit card for that delish Chipotle burrito bowl yesterday.
Get the point?
Okay I understand a ledger, but what is a decentralized and distributed ledger?
A decentralized and distributed ledger is really nothing more than a shared ledger.
Continuing on with the bank statement analogy, you have the transaction line where you bought those drop dead gorgeous heels… But that’s all it tells you. Why? Because your bank statement is a CENTRALIZED ledger — i.e., owned by your bank and only having information pertaining to you. What happened to the money after you gave it to Nordstrom? Did that money go towards fixing that God-awful lighting in the bathroom? Did the employee pocket it? WHO KNOWS?! Even worse, there are random fees on your bank statement! Why is this one entity controlling this ledger?
With a DEcentralized and distributed ledger, there is no central administrator or centralized data storage of the ledger because it’s shared across multiple sites, companies, persons, etc. Therefore, no one entity is in control. Think about it: If your bank shuts down for some reason, what happens to all those transactions? Well if the bank wasn’t the only “person” to control the recording of your shoe purchase, there wouldn’t be a problem.
Decentralized, distributed ledger, okay I’m starting to follow along… Do I download this blockchain or something? Where IS it?
This is where things get a little tricky. For the purpose of your basic understanding of what the blockchain is, we will keep it short and sweet. It’s not an app, it’s not a program, it’s not a physical piece of hardware… it’s just… there. Think about the internet. What exactly is the internet? How would you try to explain the internet to someone who has never even heard of it? The blockchain is in the same ballpark. You feel me?
Are blockchain and bitcoin the same thing?
Have you had a guy hit on you yet saying something like “I bought bitcoin a few years ago. I’m going to be rich.”
No? Well, not the point, but you probably will.
Anyway, blockchain and Bitcoin are NOT the same thing. Bitcoin is a cryptocurrency and blockchain is the technology SUPPORTING the cryptocurrency. We can talk about that later, though.
If I’m not buying and selling cryptocurrencies like Bitcoin, why should I care about blockchain?
OMG I am so glad you asked. HELLO?! Blockchain is literally going to change the WORLD. Yeah that’s right — you like fashion? Food? Wine? Diamonds? Literally anything???? THEN YOU GOTTA GET ON THE BLOCKCHAIN TRAIN, SWEETIE! Check back for posts all over my site that can teach you a bit about the different areas blockchain can be used, but for now, let’s break it down with our earlier shoe example.
Let’s say the shoes you bought were none other than a gorgeous pair of bloody bottoms — oh yes, a FAB pair of Christian Louboutin pumps. A pair of Louboutins go for around $725. How PISSED would you be if you found out you got scammed and bought FAKE Louboutins?! Probably Regina George finding out she was eating Kälteen bars mad.
While we’d love to assume we could trust the brands we purchase from, the amount of fraud going on in the world is shocking. Wouldn’t it be awesome if you could see exactly how your shoes were made? Or the path they traveled from the first stitch to the shoe rack in your closet? Ding! Now you can.
By putting a shoe on the blockchain, you can see every single step of the way. You can see where the bottom of the shoe was dyed, who personally attached the heel to the sole, which company physically placed the heels in the perfect packaging, which truck the boxes were transported in, and everything in between. There are NO secrets. Everything is 100% transparent and unchangeable — from the very first seam all the way to your closet.
And how exactly is everything 100% transparent and unchangeable?
I am so glad you asked. Someone explained this with a diary metaphor to me once and I thought it was genius. Read up:
Let’s say you’re starting a brand new diary and today is the very first entry. Maybe it says something like:
“Lucky by Britney Spears is giving me all the feels.”
Now let’s attach a number to every letter in the alphabet. A–Z = 1–26. So, A would be 1, B would be 2, C would be 3…Y would be 25, Z would be 26, etc.
Now, let’s take the phrase we wrote in our diary, attach the proper numbers to the letters, and add it up.
L (12) + U (21) + C (3) + K (11) + Y (25), etc.
If you added up all the numbers in our diary phrase, it would equal 490.
So, diary entry (block) #1 = 489.
Tomorrow, you write in your diary again:
“Zac Efron is hot.”
This time, you’re going to start with the last number you left off at — in our case, 489.
489 + Z (26) + A (1) + C (3) + E (5) + F (6) + R (18), etc.
Now, diary entry (block) #2 is going to be the 489 from our diary entry #1 PLUS everything from diary entry #2.
So, diary entry (block) #2 = 648.
Third day rolls around and you write:
“I miss NSYNC.”
Once again, start with the prior diary entry (block) of 649 and keep adding.
648 + I (9) + M (13) + I (9) + S (19) + S (19), etc.
Therefore, diary entry (block) #3 = 792.
Get what we’re doing here?
Now let’s say your totally annoying little brother decides to mess with you and change up your diary. On day 2, he changes, “hot” to “fat” (ugh, as if!). Now that diary entry reads:
“Zac Efron is fat.”
If you added up that diary entry (block) the numbers would total to 633, NOT 648. Well if diary entry number 2 is 632, but diary entry number 3 still starts off with 648, the numbers won’t match.
All right, all right, it’s a trivial example but do you see my point? Imagine if a bank used a numbering system like this for every single transaction ever made? If someone tried to change up some numbers or do any money laundering, the fraud would be so easy to pick out — wherever the numbers don’t line up!
This is why it is utterly impossible to make changes after it is recorded on the blockchain.
HA! Joke’s on you little bro, I would never write that Zac Efron is fat.
But how does this all apply to me?
Whether or not you’re in the tech world, blockchain is applicable to more fields than you may think. Think about our shoe example from earlier, if you’re looking to have a career in fashion or merchandising, you better know how this works! Or what if you’re in supply chain/distribution and you’re transporting the shoe? Blockchain is going to touch you too!
In the upcoming weeks, you’ll be able to read more articles on specific areas of interest that you might be considering and how exactly blockchain can/will affect it. I can promise that you will NOT regret having some basic knowledge on this topic. Imagine knowing about the Internet… before the Internet.
Congratulations! Just from reading and understanding this guide, you are THAT much smarter. You’re doing great, sweetie.
Disclaimer: This is an extremely BASIC guide. If you are more knowledgable on the subject... wow, so proud. This article is not claiming to make you the next blockchain savant - just a truly broken down, basic guide to understanding the completely brilliant concept that is blockchain.