Quote:
Originally Posted by stan the man
Will someone explain the blockchain? . Good start for first meeting
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The block chain is simply a public ledger.
Wallet1 sends coins or tokens to wallet2 and so-on. It uses encryption keys to prevent theft and the keys are so large, no amount of computing power will ever be able to crack it. Quantum computing may some day do it, but standard computing power as we know it right now can never crack the encryption.
They way the block chain is secure is that transactions, i.e. blocks, are validated by nodes. These are computing centers, typically with some pretty hefty computing power. There are different ways that nodes become "big" enough to be considered legitimate. Right now all the various block chains are moving from "proof of work", i.e. raw computing power to a "proof of stake" model, i.e. you hold a lot of coin. Proof of work uses A LOT of electricity and that's not very green. There is also "proof of history" which uses very accurate clocks. There are some other lesser ways that are also used.
As to how it works...
For example, I want to send you 1 Bitcoin. Your lucky day. I submit a transaction from my wallet to your wallet. This gets sent out to the block chain and once enough nodes confirm it, your wallet now shows 1 bitcoin and my wallet shows a sad frowny face and one fewer bitcoins.(who am I kidding, I don't own any whole bitcoins, just a pile of Satoshis)
If you download the entire ledger, and you can, you can see every wallet address and transaction for every bitcoin ever created, moved, or split, all the way back to the first one. There are a bunch of different blockchains, Bitcoin and Ethereum are just two of the biggest.
The public ledger is how cheating is stopped. If someone comes along and tries to re-write history and say "I have 100000 bitcoins", the nodes will examine the ledger, tell them that they are full of @#$% and cancel the transaction.
It really is that simple on a very high level. There's lots of encryption and number crunching that makes it all work, but it's all driven back to the same thing. Person A sends coins to person B...process it!