Blockchain Technology Made Simple


Let’s say you come up with an idea to form a book club. The purpose of this club would be to provide a variety of books for children to read every month for a small fee. You ask around for volunteers and many of your friends join. Different roles are assigned to different volunteers. As a founder of this club, you realise that it is important to maintain proper records of all transactions. You maintain a register
wherein every time a member carries out a transaction, they must make a note of it in the register. However, you start to notice that someone is tampering with previous records. You think hard about what you can do to prevent that from happening. What would be an ideal way to maintain records, which are accessible to all the members of the club and yet so secure that no one can ever change anything in them without the other members knowing about it right away? Blockchain technology just might be your solution.

Blockchain technology is a public ledger system where transactions are recorded and linked together using complex mathematical codes. If you were to use a simple form of the blockchain technology, it would mean that every record of a transaction gets assigned a unique mathematically generated code. In order to ensure more security, each mathematically generated code is linked to the previous record. As more transactions get recorded, a new code is generated for each transaction and is linked to the previous code, thus creating a chain. How is this more secure? The rules of blockchain technology dictate that if information in a record is changed, then the unique mathematical code assigned must also change. Since the codes are all linked, changing one code would mean altering every single code. Changing all the codes can be extremely cumbersome and time-consuming. It may not be worth all the effort after all. In the big, wide world, where groups are much larger than your book club, where the number of members run in thousands or more and transactions happen between total strangers online, there is a need for a sound way of verifying if any given transaction actually took place. Powerful computers play the role of validating transactions. At any given point of time, any transaction is declared valid only after it is validated
by all the computers in the system. Computers use complex mathematical models or algorithms to validate transactions. Once any given transaction is validated, it is added to the public ledger/ record and a unique mathematical code is generated, which is linked to the previous record’s code. This results in a large chain of codes. This chain is called blockchain. Since the system is extremely stringent, it is impossible to hack into it and change records.

Leslie Lamport, Robert Shostak and Marshall Pease, three computer scientists, in their research paper dated 1982, described a problem well known in the computer science field as the Byzantine Problem, for which they worked out a solution. Byzantine was an East Roman Empire. The research paper describes a problem where the Byzantine army had encircled a city and had to formulate a plan to attack it. Needless to say, the army had several generals in charge. A decision had to be made about attacking or retreating. Some generals thought they must attack while others thought retreat was a better option. For the sake of hypothesis, assume there were a total of nine generals and four voted for attack, while four others voted for retreat. One was a treacherous general who voted in both categories,
thus distorting the unanimously taken decision. Having voted for retreat as well, a part of the army may decide to retreat, thus putting the section of the army that is all set to attack at great risk. Further possibilities of confusion arise as the army is spread across a large geographical area. Messengers may get killed on the way to the generals or messages could get tampered with on the way. Attempting to solve this kind of problem and devising a system where it is impossible for any member to make drastic changes without the knowledge of the others eventually paved way to the blockchain technology as we know it today.

The most popular application of blockchain technology is the Bitcoin (discussed in a previous article that appeared in the issue dated March 8 to 14, 2018) Apart from Bitcoin, blockchain technology is beginning to find a lot of use across sectors such as healthcare, financial services, insurance, real estate, government and tourism.