Explain Blockchain and bitcoins Like I'm Five

laviku profile image Lavinia Jan 11, 2018

Blockchain: Blockchain is a network of blocks (nodes) connected in a chained manner. Generally, blockchains are used to handle the data in a very secure way. The security is obtained by some cryptographic algorithms which are used in each block. For example, in a sequential row of nodes A B C and D. If A wants to send some data to node D which is 2 nodes away. The data will get encrypted and send to the Next node which is available nearer to node A. Here, in this case, it is node B. So the data get passed to node B, then Node B will look for the nearer node (Hear it is C). Then finally it will reach node D. Now you might have got a question like, what if the node B opens and reads the Data? This problem is handled with cryptographic key concepts (i.e) Only the person with the proper key can read the encrypted data. You can search for private and public key concepts if you want more details on that.

BitCoins: Bitcoins are nothing but a virtual money. It is similar to the currencies that you are using every day with some advantages and disadvantages.

Blockchain is a collection of records of things that happened.
It can be used for registering many things.
Bitcoin's blockchain, for example, is a collections of transactions that happened (eg: bob pays alice $10)
It has mechanisms to prevent data tampering, and this allows anyone to validate the records in the blockchain.