New ledger or book keeping technology.

• I think blockchain technology can be best explained as a new way of keeping track of the movement of goods, services and assets, whereby the same actions that initiate the movement , record the movement. The system is constructed on a computer program, so the record is never wrong and the only potential for error lies with the humans inputting the order for movement. I think this is best illustrated or explained by an example.
• Example: Joe wishes to buy a dozen roses for his wife Anne. He goes to the Florist, picks up a bunch of roses, which he believes to be one dozen, and pays what he believes to be 12 dollars. In order to buy them, he takes his phone out of his pocket, types $12.00 in the box for payment, then shows the QR code of his digital wallet to the QR reader of the Florist and the $12.00 moves from his wallet to the Florists wallet. This creates a record of the transaction. It is permanent and cannot be altered. Once Joe scans his QR code the transaction is permanently recorded on the ledger or book keeping system for all dollars in circulation. The transaction between Joe and the Florist is recorded by the same steps which carry out the transaction. That is the beauty of the system called blockchain, it insures it is accurate each time. Now suppose Joe paid 120 dollars by mistake, instead of 12 dollars. If Joe typed 120 in the box, instead of 12 that would be permanently recorded. Both Joe and the Florist could see the error and the Florist can refund Joe the difference by initiating another transaction returning the extra dollars to Joe. The Florist could label it Refund and this would be permanently recorded on the ledger.
• This is the first aspect of the blockchain, the record is created by the transaction so it is always accurate.
• The second aspect of the blockchain record system is security. The only way to enter fraudulent transactions is to steal or guess someone’s password. But because the passwords are 23 places and any combination of 10 numbers and 26 letters it would take the most powerful computer in existence 100 years to guess your password. The mathematical science which came up with this security is called cryptography.
• This is the second aspect of blockchain security, cryptographic protection.
• The third aspect of blockchain ledger security is transparency.
• In a blockchain ledger system every transaction is recorded on a public ledger, which means everyone who wishes to learn how to read the ledger can see all the transactions because each one has a number.
• Now while the ledger records thousands and even millions of transactions a day, which may make it seem like finding your transaction on the ledger impossible, each transaction is numbered and your wallet specifically contains a section for only your transactions by design. So anytime you and the Floristhavea question about your transaction regarding the roses you can look it up by the transaction number. In fact, anyone with the transaction number can look it up. So if you and the Florist somehow disagree any third party can lookup the transaction number and settle the dispute. This is the power of the blockchain ledger.

Last words

• I hope you see why this new technology is so exciting to those who use it, and why many use it to transfer things of value.
• I think if you have an understanding of modern book keeping which occurs after the transaction, and provides an opportunity for error by accident or intent, you understand the value of the blockchain for accuracy and resistance to alteration.
• Once you understand this fully I think you start to feel the energy and excitement about the technology.

My Blockchain Core Concept Explainer Series:

1. What is a Blockchain
2. What is Blockchain transparency-
3. What is Blockchain immutability