Unless you live completely off the grid, you’ve probably heard of Bitcoin and blockchain. It’s one of the most discussed topics in media today, attracting attention even from those who aren’t directly involved. Many non-technical friends have asked me about it, and I suspect plenty of others are curious too. So, it’s time to break it down in an easy-to-understand way.
Why Do We Need Something as Complex as Blockchain?
What exactly is blockchain, and why do we need such a complicated system? Instead of diving into technical jargon, let’s first look at the problem it solves.
Imagine your best friend, Xiao Zhou, is traveling around the world and suddenly runs out of money. He calls you for help, and you decide to transfer $1,000 to him. You call your bank manager, instructing them to transfer the amount to Xiao Zhou’s account. The manager checks your account, confirms you have sufficient funds, and updates the ledger.
Note: To keep things simple, we won’t delve into related computer principles here.
You then call Xiao Zhou: "I’ve sent the money. Please check your account!"
In traditional international money transfers, we rely on third-party intermediaries like banks. They manage the ledger, so you don’t have to physically send cash overseas. This seems convenient, but it introduces a new problem: can we trust these intermediaries? What if something goes wrong?
It’s entirely possible. Their ledger could be destroyed due to unforeseen circumstances. The manager might accidentally record $1,500 instead of $1,000. Or worse, they could engage in fraudulent activities. Once you entrust your assets to a third party, you’re at their mercy.
So, is there a way to remove intermediaries like banks and enable direct person-to-person transactions?
Yes! Blockchain, a distributed ledger system, solves this exact problem. It allows individuals to transfer funds directly without relying on third-party institutions. Amazing, right?
How Does Blockchain Work?
How does this magical blockchain operate? What are the underlying principles? Let’s explore a simplified version.
The most fascinating aspect of blockchain is its decentralized nature. It doesn’t rely on any central authority to maintain the ledger. Instead, participants’ computers collectively record transactions. As long as there are enough participants, the system continues to run autonomously.
How many participants are needed? At least three!
Imagine ten people who want to avoid third-party systems. Someone creates a replicable system based on a shared agreement. Everyone in the system maintains a public ledger, and all participants can view each other’s transaction records.
Here’s how it works:
Initially, everyone receives an empty folder, a blank bill, and a pen for recording transactions. The folder is used to store completed bills.
When a transaction occurs—for example, Participant 2 wants to send $10 to Participant 9—they announce it to everyone: "I’m transferring $10 to Participant 9. Please record this in your bills."
Everyone checks if Participant 2 has sufficient balance. If yes, they note the transaction in their bill.
Once everyone confirms, the transaction is considered complete.
As more transactions occur, the process repeats: broadcast, verify, and record. When a bill reaches its capacity (say, 10 transactions), it’s stored in the folder, and a new bill is used.
Before storing the bill, a special digital seal is attached to it. This seal has strong adhesive properties, linking the current bill to the next one. This makes it extremely difficult to alter past records without damaging the entire chain. This sealing process is a key aspect of blockchain.
Note: This process is often referred to as "mining" in the industry. For simplicity, we’ll call it "sealing." Since each bill contains a summary of the previous one, the bills are interlinked. Altering one bill would require changing all subsequent bills, which is computationally impractical.
In the past, we relied on third-party systems to guarantee transaction records. Now, with this decentralized distributed system, we can achieve security that is thousands of times more robust. Incredible!
How Are Transactions Sealed in Blockchain?
What’s the technology behind sealing data? Let’s examine the underlying mechanism.
Think of the sealing process as a translation device—a black box. You feed it input, and it produces output.
Note: This device is actually a hash function. Due to the complex mathematics and cryptography involved, we won’t delve into details here.
For example, if you input the number 4, it might output a string like 'dcbea'. How does it transform 4 into this string? The process involves complex computations, but the key takeaway is that it’s irreversible. It’s nearly impossible to derive the original input from the output alone. However, verifying the output is straightforward: input 4 again, and you’ll always get 'dcbea'.
Now, suppose we want an output that starts with '000', like '000ab' or '00098'. How can we find the corresponding input? Since reverse engineering is infeasible, the only way is trial and error.
After thousands of attempts, we might find a number like 72533 that produces the desired output.
Note: The "three zeroes" requirement is just an example. In reality, blockchain tasks are far more complex.
This illustrates the core特性: easy to verify, hard to reverse-engineer. So, how do we use this mechanism to seal data?
Suppose we have two inputs: a known data string (20893) and an unknown one. How can we produce an output starting with '000'?
In this case, the unknown input (e.g., 21191) acts as the seal for the known data (20893). Once the seal is attached, the data is considered sealed.
Note: This sealing number is called "proof of work" in blockchain, demonstrating the computational effort expended to find it.
To verify if the data has been tampered with, one simply inputs both the data and the seal into the device. If the output matches the expected string, the data is authentic; otherwise, it’s invalid.
Similarly, in blockchain, each bill (block) is sealed with a unique number. Participants expend computational power and electricity to find this number. Once found, the bill is sealed, making it tamper-proof. Everyone in the network can verify the records using the seal.
👉 Explore advanced blockchain concepts
Incentives and Security in Blockchain
Sealing bills requires significant computational resources and electricity. Why would anyone participate? What motivates them? Let’s analyze the incentive mechanism.
Recall when a bill is full (e.g., after 10 transactions). To seal it, someone must compute the sealing number. Since this is resource-intensive, participants lack motivation. To address this, the system introduces rewards: the first person to compute the sealing number receives a bonus—for example, 50 bitcoins.
Note: Bitcoin’s reward mechanism is designed to halve approximately every four years. It started at 50 bitcoins, halved to 25 in 2012, and is currently 12.5. As Bitcoin adoption grows, its value increases, compensating for the reduced reward amount.
This is the purpose of Bitcoin—the first transactional currency based on blockchain. Participants are rewarded with bitcoins, which gain value as more people use them. The scarcity and demand drive value, creating a self-sustaining economy.
Thus, rewards motivate participants to continue computing. After sealing a bill, they start a new one, repeating the process indefinitely. This is the essence of blockchain.
Note: Think of each block as a bill and the blockchain as the folder. In simple terms, blockchain is a distributed ledger maintained by participants.
But what if someone (e.g., Participant 7) disputes a sealing number? This can happen for several reasons:
- Participant 7 might have received incorrect transaction data.
- Participant 7 might have recorded data incorrectly.
- Participant 7 might have altered records for personal gain.
Regardless, Participant 7 has only one choice: abandon their version and adopt the majority’s ledger. Otherwise, others won’t trust their future records. The system operates on majority consensus—whatever the majority accepts becomes the truth.
This leads to another question: what are the vulnerabilities of this computational mechanism?
Imagine the folder already contains five sealed bills. If I alter a transaction in the second bill, the sealing number becomes invalid, and others will notice. To cover up, I must recompute the sealing number for the altered bill and all subsequent bills. Given the computational difficulty, this is nearly impossible.
Moreover, blockchain cleverly incorporates part of the previous bill’s output into the current sealing calculation. This links bills together, so altering one bill requires recomputing all subsequent seals—a Herculean task.
Additionally, no single participant’s computational power can surpass the combined power of the other nine. Even if someone tries to create an alternative chain, they can’t outpace the majority’s progress.
However, one vulnerability exists: if over 50% of participants collude to alter records, they could invalidate the original chain and start a new one. This is known as a "51% attack." While unlikely, it’s essential to understand this weakness.
Note: A 51% attack occurs when most participants conspire to deceive others, breaking the original协议.
Frequently Asked Questions
What is blockchain in simple terms?
Blockchain is a decentralized digital ledger that records transactions across multiple computers. This ensures transparency and security without needing a central authority.
How does blockchain ensure security?
Blockchain uses cryptographic sealing (proof of work) to link blocks together. Altering any block requires changing all subsequent blocks, which is computationally impractical.
What is Bitcoin’s role in blockchain?
Bitcoin is a cryptocurrency that incentivizes participants to maintain the blockchain. Miners receive bitcoins for verifying transactions and sealing blocks.
Can blockchain be used beyond cryptocurrencies?
Yes! Blockchain has applications in supply chain management, healthcare, voting systems, and more. Its decentralized nature enhances transparency and reduces fraud.
What is a 51% attack?
A 51% attack occurs when a single entity controls most of the network’s computational power. This could allow them to alter transactions, but it’s highly unlikely in large networks.
Is blockchain completely tamper-proof?
While extremely secure, blockchain isn’t entirely tamper-proof. However, the required computational effort makes unauthorized changes economically unfeasible.
Conclusion
Understanding blockchain doesn’t require advanced technical knowledge. By breaking it down into simple concepts—decentralization, cryptographic sealing, and incentive mechanisms—we can appreciate its revolutionary potential.
As Bitcoin’s creator, Satoshi Nakamoto, predicted in 2009, blockchain’s significance grows as more people believe in it. This self-fulfilling prophecy drives adoption, turning a decentralized自治经济 into reality.
Note: A self-fulfilling prophecy occurs when belief in an event causes it to happen. For example, rumors of a bank’s collapse lead to mass withdrawals, actually causing the collapse.
Blockchain’s impact extends far beyond cryptocurrencies, offering a new paradigm for trust and transparency in digital interactions.