If you can’t explain it simply, you don’t understand it well enough.

Let us assume that there are two people Alice and Bob. Alice borrows some money from Bob and Bob writes it on a piece of paper signed by Alice. After some days Alice denies the existence of such document and claims that Bob has forged that piece of paper. Bob would now find it difficult to prove that Alice actually owes him Money.

In this example Alice and Bob are two nodes.

Now assume the same scenario, but among a society. So there are ’k’ pair of people transacting with each other. And the only proof that each pair has, is that piece of paper. Looking at this scenario, one person, Kate comes up with a solution. She suggests maintaining a common notebook of transaction for entire society. She designates town hall to be the place where every exchange takes place. In the common notebook, every pair writes the transaction and then the notebook is kept safely. People rejoice and accept Kate as their leader.

That notebook can be called a database.

But one day, somebody spills wine on the notebook. This makes the notebook illegible. Taking the advantage of this situation, Alice again denies taking money from Bob.

This is the problem databases face - single point of failure.

Irritated by this problem, Kate comes up with another solution. She suggests maintaining multiple notebooks. She chooses some trustworthy people from the society and gives them a notebook each. Now every time a transaction or exchange takes place between two people, Kate instructs some of those trustworthy people to mention the transaction in their notebooks. So the data is repeated in the notebooks. Now, even if one notebook is destroyed, chances are that all the data regarding transactions are still present in the combination of other notebooks.

This is a distributed database and multiple notebooks are the multiple nodes.

But next day, another problem arises. Kate has a friend named Bert who owes a lot of money to some people in the society. He asks Kate for help and she agrees to help him. She instructs all the people with the notebooks to remove the entries where Bert received money. Now Bert doesn’t owe any money based on the notebooks.

This is the problem with distributed databases - they are centralized. That means one single entity owns all the nodes/resources and can make changes as they deem fit.

When the people from the society come to know of it, they remove Kate from the leadership.

• They decide to keep a notebook each. Every time a transaction is made between any two people , all the people from the town come together and mention it in their respective notebooks. So if there are n people in the society, then there are n notebooks and no one person controls the overall representation of the transactions. This is decentralization.
• They also decide to never remove or delete an already mentioned transaction from the notebook. This is immutability.
• Now when another group of people from the society, let’s call them C, try to change a record in their notebooks, all the other people also need to make the same change(as mentioned in the first point above, all the people write all the transactions in their notebooks). Before writing the transaction proposed by group C, all the other people notice that the transaction is not correct. So they come to realize that C is trying to make a fraudulent transaction. Hence they deny that transaction and not mention it in their notebooks. They also decide to banish the group C from further participating in the group. This is how Consensus is formed and voting is done to decide the validity of a transaction in Blockchain.
• A very enthusiastic kid suggested that the transactions form a chain, so they decided to call the collective set of fully replicated, decentralized, immutable notebooks as Blockchain.

So, well. This is the easiest example I can think of to explain Blockchain. Blockchain is a decentralized, peer to peer, immutable storage network which is censor free and regulator free because of the absence of one single controlling entity. Every transaction that is written is voted upon by a majority of nodes and changing something which was written before in the chain is computationally very difficult.

#Jayanthi