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What is Blockchain?

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Cryptocurrencies are almost always built on top of a distributed public ledger called the Blockchain. This ledger is a core part of crypto’s architecture. It is designed to maintain that the network stays decentralized, that is not controlled by any one central party.

Before getting into what the Blockchain is, it would be beneficial to start with how we got here in the first place. The Blockchain is – at a most basic level – a simple and powerful solution to a famous problem in Computer Science.

The Byzantine General Problem (BGP)

Imagine it’s the year 500 and you’re a General serving in the army of the Byzantine Empire. You command a division of the army and there are more Generals like you, each commanding their own division.

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But alas, the city’s residents are putting up a good fight and refusing to surrender.

As a group, you have to decide what to do: do you attack the city or retreat? [Generals vote on whether or not to attack.] The most important thing is that attack will only work if all the Generals participate in it at the same time; if only half of the Generals lead an attack, it will not be successful.

Since communication can only be done via messenger, a messenger can also lie about the message received or send conflicting messages:

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All Generals Attack = City Defeated

Some Generals Attack = Generals Defeated

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Traitor general ruins consensus

Traitor general ruins consensus

The illustrations above show a small number of Generals and therefore a small number of messages (or communication channels) between them. With a small number of these links, we can already see a lot of potential problems. Imagine what happens as the number of Generals and messengers (the parties in the system) increase.

What do you do? How do you guarantee that you and your loyal General friends reach a majority agreement and that any traitor General can’t cause a problem?

This scenario, first proposed in a 1982 academic paper titled, “The Byzantine Generals Problem,” has been a long-standing issue in distributed systems, a field of computer science.

The creator of Bitcoin, a person, or persons, going by the pseudonym Satoshi Nakamoto, was the first to propose an elegant solution to this famous problem, through what they called a Blockchain.

Building Consensus

The Blockchain is simply a public database that has a record of every transaction in a system in chronological order. If the Generals were using such a method, it could look like something like a list of lines with such statements as:

  • General A told General B attack at 5pm