BLOCKCHAIN BASICS

BLOCKCHAIN BASICS PART 1
Hi friends .I am a newbie here so if you find some issue in his please let me know in the comment.This article have 6 parts after going through all the parts I hope you will be able to understand blockchain at very practical level.
I will post each part of this article one by one.
1 . WHAT IS BLOCKCHAIN AND WHY IT IS IMPORTANT
So let us start with the first part of the article. What is blockchain and why it is important today?To explain this I will use a real life example let us assume your friend has requested 1000 bucks to his PayPal account. So when you send him the requested amount what happens no any materialistic thing transferred from your side to him it is just an information like email has been transferred. This information is maintained in a digital record which we call ledger. So now the information or data contains ownership, identity, and value. These things are stored in the ledger.
Now for these record books or ledger to be maintained there is a central authority. The accountant would not give you the access to these record books. If he did, you would add millions to it and sit back and enjoy your millions. Then off course their would be some one who could take that away from you in a similar way.
Thus we have institutions. PayPal ledger lives in a PayPal computer. A bank ledger lives in a bank computer.
The ledger is maintained, updated, and secured centrally and we trust these instructions with their jobs.
Now assume a magic ledger which is not maintained, updated, and secured centrally and yet does all jobs banks did all these while.
This magic ledger what we call it as blockchain.
Now think about the potential and importance of blockchain
With these PayPal and banks on which we trust there is an issue. When you are sending a payment you are not the person changing the ledger but you are only requesting the central authority like PayPal or bank to change the the ledger. This central authority have full power to either grant or reject your request.
The central authority has complete power to reject or freeze your account, change terms and conditions, block payments.
Now with blockchains there is no any middle man. The central authority who had power to freeze your account , change terms, block payments is gone. You can send and receive money from anyone and from anywhere. This can bring financial freedom to a lot of people. For good or for worse.
Another example :suppose you have an apple and you want to give it to your friend. You put the apple in your friend's hand. You both know what happened you don't need any third party to be the witness of this event.
Now this Apple is owned by your friend and if he want he can give it to anyone a passers-by, his teacher, his wife or some one else. This is how an in-person transaction would take place.
Now suppose a situation that you have a digital Apple.
You give this digital Apple to your friend.
Now the interesting part of this is how your friend would know that the digital Apple which he just received is only his not yours.
How does your friend know that you haven't sent it to another friend of yours or you kept a copy to yourself or you uploaded it online to be downloaded by thousands of people.
So this a problem with digital Apple which was not in the case with the physical Apple.
This problem is called "double spending problem" .
Let us try to solve this problem maybe by tracking the Apple with a ledger. Ledger is like an accounting book in which transaction is stored and keep tracked.
So now in the digital world this ledger is needed someone to keep a track of it.We can keep someone -say Mr K(K for keeper)to keep track the records. Awesome! We solved the problem.
But there is an issue with it as well — what if Mr T adds 10 digital apples
to his name. He can always do that since he is in charge of the digital
ledger.
Secondly, having a Mr K to keep track of the digital ledger is like having a
third party watching the transactions take place.
But we would like to replicate the environment where you could give an
apple to your friend without the need of any third party being an
witness to the transaction.
How can you hand over the digital apple to your friend in the usual way
you handed over a normal apple.
What if we give this ledger to everyone. Like instead of Mr K being in
sole charge of the ledger, we can allow the ledger to live in everybody's
computers.
All the transactions that have ever happened, from day 1 till today will be
stored in everybody's computers.
It would also be difficult to cheat. You can't give a digital apple to your
friend if you do not have one. Because if you did, it would not sync up
with everybody in the system.
It would be a tough system to beat the number of computers are big in
number.
Also it is not controlled by one person. So you can't add more digital
apples to your account.
For the first time in the digital world, this is the same thing. All thanks to
blockchain.
Now because blockchain is open, anyone with an Internet connection can
connect to it. There is no restriction on who can and who can't. A 7 year
old kid can. A terrorist can. Anyone can make a transaction of any
amount.
Anyone can own and transact on the blockchain. It can be a human being
or a thing. It can be a car, a fridge or a piece of software.
In the real banking world, an Air Conditioner cannot open an account
with the HDFC Bank. But in the blockchain world,
it can hold a bitcoin address or any other cryptocurrency address.
That is how important the blockchain is.
A blockchain is a chronologically maintained, ever growing chain of
blocks. It is a public ledger. As a transaction gets complete, it gets added
to the chain.
A block is nothing but a record. Each of these blocks or records are
interlinked. Every block carry a time stamp and a link to its previous
block or record.
However the most important feature for a blockchain that makes it so
indispensable to the future of computing and transactions is its
decentralized nature. It provides a technology through which
transactions of value can be done in a secure manner without the need
and involvement of a third party.
Normally if you have to transfer money to someone, you would need the
bank to do it for you. The bank's network is connected to a centralized
network which is insecure and prone to hacking. Blockchain's
decentralized network provides this security.
Blockchain implements cryptography to secure the network The
network is normally a chain of computers that must all approve the
exchange before it can be verified and recorded.
Cryptography ensures that the users will be able to edit only the parts of
the blockchain that they own. This would mean that the user would need
to have keys to decrypt a certain block which they intend to edit.
By now you must have understood what a blockchain is and why it is
important.
In the next part of this article I will explain the various components that make up
the blockchain ecosystem.
Thanks to read and please share.