I am sure you have heard of Bitcoin, and if you have, you must have heard of the word “blockchain”. Blockchain is a technology that could change the way banks operate online.
Let’s imagine that you and your group of friends play a game where you trade Wizard cards. You and John are in the school canteen and you give John your Blue Wizard card. Now, John has a Blue Wizard card while you no longer have a Blue Wizard card. When you give someone an object in person, that’s basically it.
Now let’s look at a different scenario. You and John are chatting online when he decides to give you his Blue Wizard card. You are all excited because you desperately need the card to help you play your card game.
John scans his card and emails you a JPEG file with an image of the Blue Wizard card that you can print out. Here’s where it gets tricky. Technically, John still has the Blue Wizard card. After a few rounds, he regrets giving it to you so he decides to play it himself. In fact, he denies ever sending it to you. The question is, who owns the card? You or John?
This is the problem blockchain is trying to solve.
But let’s not get ahead of ourselves. First of all: what is blockchain?
Blockchain is a decentralised, shared ledger (account book) that keeps track of transactions in a way that is secure, permanent, and verifiable. That’s a whole lot of big words, so let’s break it down by returning to our Wizard cards.
At this point, it’s your word against John’s. Another friend, Susie (who is sort of the leader of your group) suggests that your group record all the card trades in a notebook that she will keep. Now, you love Susie but everybody knows she is a bit of a scatterbrain. What if she loses the book? What if she drops it in a puddle? The records would be gone and another argument would break out.
Instead, the group decides that Ah Hong and Raj will also keep notebooks where they copy Susie’s records. Susie organises weekly play dates where the whole group looks through the notebooks together.
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