you’re like me, you’ve probably spent the last decade hearing about blockchain technology and all the ways it’ll change the world. And at some point, you’ve probably wondered, “Hey… what the heck even is a blockchain?”
So, like Gandalf giving Bilbo a few Tolkien-themed cryptocoins and sending him on an adventure (pretty sure that’s how the story goes), The Verge told me to try to learn about and demystify the tech that underlies everything from cryptocurrencies to NFTs. Possibly because my editors want to drive me to the point where I build an actual red string board.
I’ve read 1,000 analogies trying to explain the blockchain. Could you give me another one?
You can think of a blockchain like an obsessive club filled with members who love to keep track of things. The club has a ton of complicated rules to make sure that every member writes down the exact same set of records about what happens each day (whether it’s bird sightings, or beer tastings, or flower sales) and that once data is recorded and accepted, it becomes exponentially more difficult to change as more and more records are added on top of it. Then, usually, outsiders can come by and check out all their records and go, “Oh, wow, a cardinal flew by at 10AM in front of Mike’s house. Cool.”
And, of course, there’s an unwritten rule that says you can never stop talking about being in the club.
So what’s the point?
At their core, blockchains let you agree about data with strangers on the internet.
Public blockchains provide a place to put information that anyone can add to, that no one can change, and that isn’t controlled by any single person or entity. (Generally, at least; we’ll deal with the caveats and exceptions later.) Instead of one company or person keeping track of everything, that responsibility is spread out to everyone on the network.
These properties are often described with very technical-sounding language like “distributed ledger,” “peer-to-peer,” and “cryptographically hashed,” but these are the basic properties that those words describe.
We’ll get into the technical side of how all that is done a bit later on, but there are probably a few basics we should cover first.
Blocks are what store data on the blockchain — and it’s up to whoever’s making the blockchain to determine what kind of data they store. I could, if I wanted to, create a blockchain where each block stored the entire text of The Great Gatsby. Would it be efficient? No. Would it be dumb? Yes. Have I done it? Also yes.
For normal cryptocurrencies, though, blocks contain the records of valid transactions that have taken place on the network. I sent you a MitchellCoin? Put it in a block. You sent me 10 MitchellCoins in return? That’s so kind of you! That’s in the block, too. For cryptocurrencies, you can imagine blocks as boxes of receipts.
Let’s say I just made a new blockchain: the first block would be there, shiny and new, but lonely. Then, the second block would come along and say, “the block before me is the first block.” The next block would say “the block before me is the second block,” and so on, creating a chain (of blocks).