We have recently been asked to write a simple blog to explain blockchain for the farming community by a lead industry body in Australian agriculture, so if you are an experienced user this may be a bit basic for you but if you are new please read on to see if it is relevant for you too and we thought you might like to see a bit of how blockchain applies to solutions.
Ok, so let's take a think about this, first what is blockchain? Essentially it is a software just like bitcoin is, which is the name for a coin that is actually a mathematical code and its name is like the basics of computer technology which is made up of bits. 1’s and 0’s to be more precise, like on and off.
A ‘block’ is a collection of data. Imagine it like a stack of accounts we will call ledgers, with all the money you budgeted and then spent all written on lists. Then imagine you had a stack of these lists collated into a file that is sent in multiple copies across the internet not showing what is in the file but rather that it IS this file, with a unique code attached to it to identify it referred to as a 'hash tag - #'. (Therefore 'hash power' is how quickly the information can be moved in the internet - but more on that in later blogs on what these computer hardware things that drive this called ‘mines’ actually are and what they do.)
Everyone in this global community is verifying this ‘file’ is what it is, across the network so no one can cheat or replace it. These grouped files form a 'block' and join other blocks of data moving across the net forming a chain of blocks. This system is open and transparent for all the public to track and see. Hence the term blockchain. Ok so what if a person has one of these 'coins' ( they are not actually anything like a coin but you get the drift) and wants to send one to you. You have to open an account like you would at a bank, only this is not run by a bank so only you control it. If you do it on the internet it is not as secure as what is called a 'cold wallet' which is a piece of equipment like a usb stick that stores the codes off the internet... but then you have to protect it and not lose it, so really all that is up to you and your level of risk. Ok so maybe you just open an account on the internet with an exchange, kind of like the global stock exchanged and yes they have to usually have a financial license to operate one. Then, you have to jump through all these hoops to prove you are not a criminal - called KYC (Know Your Customer) and AML (Anti Money Laundering). A few of them will take your hard earned cash from your bank account (called 'fiat' money). Once you have done all that and they clear you, you simply spend the cash on a coin or a tiny percentage of a coin like bitcoin or ethereum and you are in!
Just note that in countries that tax crypto which many still do not, the tax is paid every time you exchange one coin or part there of for another one and you pay what is called Capital Gains Tax CGT (or loss - maybe you can claim it back!) and the exchanges are fast becoming legally bound to reveal your details over a certain amount of money in your account if you have it listed on a public exchange - lets face it the governments of the world are always going to want a cut of any money you make no matter how you do it!
No one person is ever able to monopolise or corrupt the information which is why it is truly decentralised. This makes it, theoretically, the most secure and transparent system ever – or it will be when we catch up with how many people are now using it! So if something gets attacked or 'hacked' as it is referred to, it is open on the Blockchain for all to see, if you care to look. Many hackers (term for guys who know this stuff but more widely known globally for the creeps who like to see if they can break in and steal stuff - not the majority by the way! Mostly hackers are bright, young, possibly socially quiet and awkward, often idealistic young computer people who like to compete to break each other's code but in fact many are just into it for the competitive game and would rather be gallant and protect you from people not pure to the nature of coding and the world of crypto-everything! So there are many who already watch the code (UEH – united ethical hackers also called white hackers) to keep it ethical because they believe passionately in a decentralised, open and non-government run systems so the whole world is part of this ...connection. for those of you interested i where the coders all hang out take a look at github.com and in India I understand it a similar space is bitbucket.com
Some types of blocks of data can hold different types of data in them so more and more businesses are finding user cases and application for the safe transfer of massive amounts of data that need its identity preserved and secure. This is causing the system to go slow which is why it is so variable but many people are working to fix this issue. But the security is why blockchain is becoming so desired. Of course, there are those saying its just added stuff to make money but with, but like all things new, infrastructure often seems unnecessary on a small scale. It’s when you are moving huge amounts of valuable data you need to ensure is protected that these things become more obvious.
As these blocks and files have no name to them they remain anonymous to anyone but the owner of the codes.
Let us know in the feedback if we made that clearer? The next blog is about some applications for blockchain.