What Is Blockchain? Plain English & Non-Technical!

What is blockchain? This stuff can seem really complex and difficult to understand. But here, we're going to get a very simple, plain-english understanding of exactly what blockchain is, some of the incredible things it can do, and why it's such a huge game-changer that's set to turn the world upside down!

Show Notes

Here are links and resources mentioned in today's video. Enjoy!


Okay so, here's how I try to explain what blockchain technology is. And just so you know, this is totally non-technical and we'll use an example that pretty much anyone can follow.

Let’s say you’re playing a game of Monopoly with a group of friends. Now imagine that for each player’s turn, everyone records and verifies on paper every transaction that occurs with all the other players.

Make sense? That’s essentially what blockchain is. So what blockchain technology does is, it keeps a record of all transactions that occur...and these transactions don't have to be monetary in nature -- it could be anything.

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But in our Monopoly game analogy, notice that there's something else going on too: Who's the referee? Who's upholding and enforcing the rules? Well, everyone is, aren't they?

Because all the players are recording everything that happens, it's in the best interests of all players to adhere to the rules.

No imagine instead of a set of Monopoly game rules, it's a set of rules (called a protocol) that are programmed...and instead of a group of friends, we have interconnected computers that are spread out across the world.

So blockchain networks are massive peer-to-peer computer networks with tens of thousands, even millions, of participants. Every computer that’s a part of the blockchain network logs and verifies all transactions that occur with all other participants.

This makes platforms that are built on blockchain networks trustless. Here, there’s no governing authority. There’s no centralized control. Instead, everyone has to follow a strict set of rules and verify and agree on everything that occurs.

The implications here are mind-boggling. Any application that runs on a blockchain runs in a completely trustless, decentralized system. The trust comes from all participants recording and verifying everything that every other participant does. Any behavior that can’t be verified by all participants is rejected.

In other words, everyone must adhere to the rules in order to participate. And the rules are upheld by everyone, too. That's what blockchain technology is...at least on a basic level.

So a blockchain is the base layer -- a global network of individual computers (called nodes) that run and uphold a protocol. And a protocol is simply a programmed set of rules that must be followed.

The only time a protocol can be changed is if all the nodes that run the network are in agreement. Remember too that when a transaction is made using a blockchain-based technology like bitcoin, it’s broadcast across the network and verified by the network nodes, making the network trustless.

Really though, my answer to the question, "how does blockchain work?" is, who cares?! I mean, you can go and watch some fairly technical videos if you're interested...but what's most important is that you and I only need to know that it DOES work.

I don't know about you, but I'm really not all that interested in knowing how my car works before I go and use it...or the technical details that explain how my smartphone works...or I mean, I don't need to have a full and in-depth understanding of how electricity works before I use my microwave or charge my laptop.

Who cares?! All we care about is that it works for what we need. But again, if you really want to, you can jump into the technical weeds to fully understand exactly how blockchain technology works. That said, the above Monopoly game example gives you the gist.

Bitcoin’s blockchain protocol, for example, has certain rules to handle financial transactions and other characteristics related to sound money. A transaction on a blockchain network can be anything too, not just financial. A transaction might be an agreement, or it could be a claim of ownership to something, or really, anything else.

Almost as a proof of concept, blockchain was first used to solve one of the most difficult problem humans have faced throughout history. And that is, the storing, transporting, and exchanging of value that’s created through human economic activity.
Namely, money.

Here, I'm talking about bitcoin. Bitcoin was the first digital payment system to make use of blockchain technology. Further, bitcoin was the first time personal and private ownership could be assigned to a fully digital asset.

So digital sound money was the first application of blockchain technology. Said another way, blockchain is the underlying technology that makes the bitcoin network possible.

Now truthfully, I don't think it's too important to know and understand exactly how blockchain technology works -- I mean you can dig into this stuff if you want...but what's more important is knowing that it DOES work and how you can use it.

My reasoning is this: I don't really understand how my car works or how the electricity in my house works or how PayPal works...but I know that they DO work when I need them, and I know how to use them.

That's all we really, truly care about. But like I say, you can dig further down the rabbit hole if you DO want to learn and understand how blockchain technology works.

All we really need to know is that blockchain networks are global networks that uphold a protocol (a set of rules) that store data like cryptocurrency transactions, smart contracts, NFT ownership, and so on.

In fact, our children, grandchildren, and great-grand children will think the same thing about blockchain technology as we think of electricity. Blockchain is infrastructure. It’s a peer-to-peer network -- pipes and wiring -- that can be used in ways that we can’t even imagine yet.

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Geoff Blake, Ten Ton Online

Hey there, I’m Geoff! Business, marketing, and the web can seem like a tangled, confusing mess, right? Well if you wanna get clear, straight info on all this stuff (no gimmicks or hypey nonsense)...then you're definitely in the right spot! Start here (free!)