What is Blockchain?

Blockchain is more than just the latest tech buzz word or theoretical solution.  Blockchain technology is alive and well with unlimited potential once people start to really grasp the capabilities.  Many brilliant tech minds believe that it will change the world.  I’m far from a brilliant tech mind, however I have the same beliefs.

Explaining what this technology is not easy.  It’s a very complex topic with many nuances that are not easy to grasp at first.  You came here because you want to understand blockchain and that’s exactly what you are going to get.  Keep reading or listen to the blockchain episode on the Cup of Crypto podcast

The most common explanation is…  a Blockchain distributed ledger or Blockchain is an immutable, transparent, distributed ledger.  That’s about as helpful as saying the internet is a global communication network that uses standard protocols.  Technically both are true, however that doesn’t really explain much of anything.  Let’s leave the technical definition and really start to understand what blockchain really is.

Without the internet you wouldn’t have netflix and reddit and without blockchain you wouldn’t have bitcoin, litecoin, ethereum, and more than a thousand other coins.

The coins are cool and hot right now, but it’s just the beginning for blockchain.  They are not tied together.  Blockchain doesn’t need cryptocurrencies to exist.

We just happen to hear about the two together all of the time because it all started with bitcoin.

Nobody cares about Blockchain

Learning new concepts is sometimes easiest when you relate it to something you already know.  I just referenced the technical definition of the internet.  Why is it that nobody describes the internet like that?  The real reason is that nobody cares.

Consumers enjoy facebook, youtube, websites, amazon, and the things the internet enables them to do.

Businesses enjoy making money off of the internet.

If both consumers and businesses could get the same results with something better than the internet they would.  People care about the end results not the thing that provides them.

How is this related to Blockchain you might ask?

Blockchain is very similar to the internet.  It’s a platform, software, a technology, something that enables us to do things we couldn’t do before.  Just like the internet did and continues to do.  Unfortunately nobody really cares about Blockchain either.  They care about what it will do for them.  It’s the stuff built on top of Blockchain that will change the world.  Blockchain is just the thing underneath it that nobody really cares about.

Blockchain Defined

Now it should be clear that Blockchain is the foundation of building new stuff.

Why is it called Blockchain?

Block = Stored data or information

Chain = The Blocks of data linked together

Now let’s go back to the technical definition and break it down in the context of blockchain.

Transparent + Immutable + Distributed Ledger = Trust

  • Transparent = Clear, Visible, ability to see
  • Immutable = Cannot be changed
  • Distributed = series of nodes, computers, organizations, individuals
  • Ledger = recorded transactions

Now let’s put it together and see if it makes a bit more sense.

Blockchain is a ledger (recorded transactions) stored in (Blocks)  that is distributed (copies of exact same ledger in many places.)  The information in the ledger is immutable (cannot be changed), transparent (visible to everyone), and each of the blocks are chained together.

This is the bitcoin blockchain if you want to take a peek at what the ledger looks like.  Ethereum, Litecoin, all have their own blockchains and can be seen here litecoin blockchain explorer or ethereum blockchain explorer

That’s the short and sweet version of what blockchain is.  How is it immutable, how are the blocks chained together, how do you interact with the blockchain?  Now we are getting into how it works and not what it is.

How Blockchain Works?


Miners are people or companies that run software to validate blocks on the blockchain.  Once a block is validated it becomes recorded in the ledger and linked to the previous block.  The linking of blocks to the previous permanently records this information making it immutable.

Two examples of validating transactions

  • Proof of work – Solving problems (computing power).  This is what bitcoin uses
  • Proof of stake – more coins more voting power to validate transactions


In order to interact with a blockchain you need to have a client.  Comparing it to the internet your internet client is most commonly your browser or netflix app, or something similar.  Blockchain also has many clients.  It really depends on the blockchain you interact with.  For a currency like bitcoin an example of a client would be a mobile wallet.  A blockchain that deals with moving goods from point A to point B would most likely be a mobile or desktop app.


The distributed nature of blockchain means that it is spread across several geographic locations and once the network is large enough it becomes very resilient.  Once a block is validated it gets replicated (copied) to each of the nodes.

Have a look at the following active nodes.

It’s very easy to setup a node for your favorite blockchain.  Here is a guide to help setup a litecoin node

What Blockchain is and is not

  • There is no such thing as one blockchain.  There are thousands of implementations of blockchains some private and some public that serve many purposes.
  • Bitcoin is not Blockchain and Blockchain is not Bitcoin.  Blockchain can exist without Bitcoin, but bitcoin cannot exist without blockchain.
  • Many cryptocurrencies are based on blockchain, however there are many blockchain alternatives.  There are some blockchain free concepts and another option such as RaiBlocks that uses a slightly different approach with a concept called block lattice.
  • Applications can be built on the blockchain too creating truly distributed applications without the need for a middleman.


Blockchain potential

Most of us couldn’t have imagined what the internet would do to our everyday lives and now we can’t live without it.  Tech continues to advance and it’s becoming embedded in everything.  This trend is speeding up rather than slowing down.

New cryptocurrencies will continue flooding the market while the existing ones mature.  Some coins will die and others will gain massive adoption and dethrone their competition.

I’m very excited in the potential financial gains for the currencies, however I think there are much bigger opportunities and lower hanging fruits in the application side

The potential that blockchain opens up is the transparency of information and remove the need to the information middlemen.  Today most of our information is kept in the databases of companies that we do business with.  They own the data and the power because of it.  Blockchain can and will disrupt that and the potential is unlimited.

Don’t believe me, just look at all the big boys jumping on the bandwagon with several initiatives including BlockChain as a service from Microsoft and blockchain open source initiatives from IBM.

Done reading and more confused than ever?  Don’t worry, it’s a complex subject and takes time to fully understand it.

Soak up everything you can about blockchain and cryptocurrencies.  They are not going anywhere and having knowledge never hurt anyone.

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