Level:

Basic/Beginner

Target Audience:

Everyone who wants to start with Blockchain (Absolute beginner)

Prerequisite:

Good understanding of English

Why learn Blockchain?

A learner must know the reason behind learning a particular thing as it provides genuine motivation to the learner during the entire learning journey. So following this tradition, first, let’s understand ‘why to learn Blockchain’.

Blockchain is a disruptive technology as it has changed the traditional way wherever it has been implemented. To understand it in layman’s terms, let’s take an example of a horse carriage (tanga) and a car.

In ancient times, people used to travel long distances on land using a horse-driven carriage (tanga). But with time, new vehicles have been invented and now we use cars for traveling long distances on land. It has been very convenient and secure for us to travel by car as compared to traveling by horse carriage (tanga). Thus, the car has been proven to be a disruptive innovation as long as transportation on land is concerned.

Similarly, Blockchain also promises innovation in the area of commerce and finance just like the impact of the web in the field of communication. Blockchain is considered to be a new internet with the factor of trust. So we can say that, Blockchain = Internet + Trust.

History of Blockchain:

The idea of blockchain came from the research paper of Stuart Haber and W. Scott Stornetta on ‘How to digitally timestamp a document?’. After the financial crisis of 2008 in the USA, the government and banks lost the trust of the people on them. Then, in 2009, Satoshi Nakamoto invented bitcoin. Bitcoin had that factor of trust. Moreover, Bitcoin uses Blockchain technology. So after the invention of bitcoin in 2009, Blockchain technology has become more popular.

What is Blockchain?

Formally, Blockchain can be defined as,

  1. A decentralized computation and information-sharing platform that enables multiple authoritative domains, that do not trust each other, to corporate, coordinate, and collaborate in a rational decision-making system/process.

  2. A blockchain is an open, distributed ledger that can record transactions between two parties efficiently, and in a verifiable and permanent way.

Elements of Blockchain:

1. Distributed Ledger Technology

All the participant computers in the network (referred to as ‘multiple authoritative domains’ in definition- 1) have access to the distributed ledger and its immutable records. Due to distributed ledger, transactions are recorded only once which removes the efforts of making duplicate entries which are typical in traditional business systems.

2. Immutable Records:

No participant in the ledger can temper the transaction once it has been recorded in the shared ledger. If there is an error in the recorded transaction, a new transaction must be created for correction and both transactions are visible in the ledger.

3. Smart Contract:

To speed up the transactions, a smart contract is stored on the blockchain and executed automatically. A smart
contract is a set of rules which should be satisfied for the execution of the transaction.

Advantages of Blockchain:

Blockchain has a number of advantages over traditional transaction management systems, the most important one being that its digital and its live on internet. Meaning everything you ever do is getting recorded and updated at the same time for all the parties involved and hence it gives real time data. At the core of this innovation are blockchain developers, whose work makes these advancements a reality. Here we list other four main advantages of Blockchain:

1. Trust

In Blockchain, your data is shared only with the members of your network. Moreover, the data is immutable and temper-proof. Thus, the records become trustworthy. Moreover, blockchain uses various protocols for the security of records therefore Blockchain is also known as a new internet with trust.

2. Efficiency:

As mentioned above, the distributed ledger is one of the principal elements of Blockchain, it saves a lot of time for the reconciliation of records. Moreover, Blockchain also uses Smart Contract which is stored in the Blockchain and executed automatically when all the protocols are followed. Thus smart contract also makes Blockchain more efficient than the traditional system.

3. Decentralization of records:

Blockchain stores the records in the chain of blocks and shares them with the members of that particular network. This way, each member of the network has the same copy of the records. This makes the records more secure if any one member of the network attempts to change the records, he/ shell will need the consent of all other members in the network.

4. Removal of Intermediaries:

Blockchain provides the function of storing and maintaining transactions with security protocols and the factor of trust, so it removes the requirement of third-party intermediaries such as ledger managers, trustees, banks, or custodians.