The missing concept to understand blockchain

The missing concept to understand blockchain

I had a breakthrough in my understanding of blockchain when I heard someone explain that conceptually it is NOT a network of computers. A blockchain IS a computer. Imagine that instead of millions of machines like yours connecting to each other, a blockchain is a super calculator of which your laptop is 0.01% of the CPU and storage.

All resources are put together to form a sort of operating system to which users can ask things, like executing transactions or “smart” contracts. And that “super computer” happens to be the most secure machine possible (at least as long as current encryption systems hold) at the expense of several drawbacks, the most important being the relatively slow pace of execution and limited bandwidth for parallel demands.

It’s the most secure form of computing because data is replicated on each and every participant’s machine, so EVERYBODY stores a copy of ALL transactions ever. New transactions are added inside “blocks” at the end of this ubiquitous ledger. All blocks come together into a “chain of blocks”. If someone wants to manipulate the truth they would have to concurrently hack as many computers as there are participants to the system (or at least 51% of them) in less than a few minutes. The more participants, the more security.

The difference between Bitcoin and Ethereum? Both are super computers, both are powered by the blockchain. But bitcoin runs an operating system that only accepts financial commands (take money here, put it there) while Ethereum accepts more complicated commands (financial, but also logical so that one can program triggers and events resulting from those triggers).

Blockchain is a complicated subject. It is a truly revolutionary idea, and that’s a first point worth noting. It’s an idea more than a technology. Second, it’s good at certain things, bad at others, so it will complement existing tech rather than replace it. Third, whatever financial bubble is being built on top of it right now (bitcoin at $3000, Initial Coin Offerings) should not blind us into thinking that it is irrelevant, because it is not. Tons of very interesting use-cases can be built, starting with a lot of government infrastructure around ownership, official information and identity.