Technology

Blockchain bricks and crypto cathedrals

BY   |  FRIDAY, 6 MAY 2022    3:21PM

There is a saying in improv: 'Bring a brick, not a cathedral'.

While improv and the world of cryptocurrency are not readily comparable, the saying is a good reminder that you do not need to 'know it all' to participate in the crypto conversation.

Talk of blockchain and crypto is not new-but the voices are becoming more mainstream and credible. What was once thought of as a dangerous, scam-ridden fad is now being taken on by banks and governments around the world. And, while it may not yet be clear just how blockchain technology will become part of our day-to-day lives, its application and the infrastructure being built to facilitate it will become ubiquitous in the coming years.

While the message seems to be 'get on board'-the problem is that it is complex, and the terminology is inconsistent. This paper provides a breakdown of some of the key terms and concepts-'the bricks'­-to help you piece together a framework­-'the cathedral'-to engage in the conversation.

What is blockchain?

A blockchain is a distributed digital ledger. And what is a ledger? In its most basic form, it is a system of recording information. A blockchain is essentially a digital system that records information, such as data and transaction records, which is added to and verified by the computers participating in that blockchain's network, and which cannot be changed.

There is no one central source and the blockchain transaction history can be accessed and seen by each participating computer. Each time new data is added to the ledger, that is, each time a new 'block' is added to the chain, it is time-stamped and digitally signed, making it transparent and verifiable. This can be thought of as a massive spreadsheet into which many people can input data-as long as they have the access key-in accordance with pre-agreed rules, and with every input requiring acceptance. Once an input is agreed to, it cannot be altered, although new inputs that add to the existing spreadsheet can, of course, be made. So, participants do not need to go through a 'trusted' central source such as a bank-a blockchain does not 'trust', it verifies.