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Manbir Singh Marwah
Manbir Singh Marwah

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But why do we need Blockchain, anyway? And why does it need us just as much?

Out of all the cult surrounding Bitcoin, many people think of blockchain as the technology that powers it. While it's true and that was its original purpose, blockchain is capable of a lot more, thanks to all the innovation happening. Also, we don't hear the term 'blockchains' quite often, but that's a term, because there are a whole bunch of them.

Blockchain is, in-fact, a shorthand for a whole suite of distributed digital ledger technologies that can be programmed to record and track any type of value; for example, from financial transactions and medical records, to property/land titles. You might be thinking that we already have processes to track and store data, then what's so special about blockchain?

Let's dive into the reasons why blockchain technology is here to revolutionize the way we store and interact with data, along with why blockchain needs us just as much we need it.


1. Storing and Tracking Data

While many people relate blockchain with cryptocurrencies, it has more to do with how we store and manage data. Blockchain stores information in batches, called 'blocks'. There are multiple of them, that are linked together in a chronological order that can not be modified, forming a continuous line having multiple chunks of data entities: metaphorically, a chain of blocks.

If we want to make a change in the information in a particular block in-between the chain, we can not do that simply by rewriting the data in that block. Instead, the change is stored in a new block after the most recently created block, depicting that 'x' changed 'y' at a particular date and time. To software engineers, this might sound familiar (reference: git revert).

Leaving even git aside, it might still feel familiar to you because blockchain is based on the centuries-old method of the general financial ledger, making it a non-destructive way to track data over time.

As an example, say there are two siblings, Anne and Harry, in a dispute over who owns a piece of land that has been there in the family for centuries. Now, since blockchain technology uses the ledger method, it would hold an entry in the ledger showing that Josh, one of Anne and Harry's ancestor owned the property first, say from 1990 to 1925, then transferred it to Bill - another ancestor (forming a new entry in the ledger), and so on, until it got transferred to Anne in 2015 by her father, making Anne the current owner. We'll be able to see that history of transfer of ownership for the piece of land in the ledger along with date and time. Unlike the old-age ledger method being on a notebook or a computer, all that data can never be tampered or deleted over blockchain because of its decentralized nature, which brings us to its second unique property...


2. Distributed and Decentralized

Blockchain is designed to be decentralized, meaning that it can not be controlled by any individual, organization or government institution. The data is distributed over a large network of computers. So if any entity wants to change the data, they'll need to change it on all the computers that hold that data—which is nowhere near feasible; thus making blockchain tamper-proof. All this creates trust in the network of blockchain users.

Before a block gets added to the chain, an algorithmic problem must be solved to validate an action over the network, for example, confirmation of a financial transaction. The computer (aka node) that solves the problem, shares the solution with all the other computers over the network. This is called Proof-of-Work (PoW). The network then works on verifying this PoW thereby reaching a consensus, and if it's correct, the block gets added to the chain. One of the major benefits of having a decentralized and distributed network is that, in case one of the nodes go down, there would still be multiple up and running, to validate the transactions and share data with rest of the nodes (represented in the GIF above).

The combination of these complex computational problems, along with verification by a large number of computers collectively ensures that we can trust every single block on the chain. Because the network does the trust building for us, it brings us the opportunity to interact with the data in real-time, also bringing us to the third major property of blockchain...

3. No Requirement for Intermediaries

Currently, when dealing in business, we don't show the other party our financial or business records. We instead, rely on a trusted intermediary such as a broker, bank or lawyer. We also trust them to keep our information confidential. For example, Uber connects a passenger with a driver and ensures that the ride is carried out efficiently. In the process, additional time and money is involved, and we also give out our personal information like contact, address, etc. to Uber—which has nothing to do with the data after a ride. They may or may not hold your sensitive data after the ride. Now, what if a passenger could get in touch with one of the nearby drivers directly?

Taking an example of voting in elections; how do we make sure that the count of votes going to a particular political party is genuine? How do we make sure that every citizen in a country gets an equal opportunity to vote just by being a part of it without requiring any additional document? How do we make sure that there's no human error in the counting of votes (in case of ballot casting)? By relying on algorithms that can be audited anytime, by anyone in the world. Blockchain works to solve such type of problems.


Now, going back to the example of Anne and Harry; in real world, a lawyer would have to sort out the dispute to verify that Anne is the rightful owner of the land by looking at the records, thus data getting exposed to the middleman. If Anne's ownership information was stored in the blockchain, she could independently retrieve the information about her property from there. Now since the data on blockchain is verified to be true (by multiple computers instead of a single human intermediary), Anne could simply show that data to Harry, thus saving a considerable amount of time and money that would've been invested while dealing with a lawyer.

This type of trusted, peer-to-peer interaction with data can revolutionize the way we access, verify and transact with each other by leveraging the power of algorithmic computations. Since blockchain is a type of technology and not a single network, it can be implemented in many different ways. While some blockchains can be completely public for anyone to view and access at any time, others can be closed to a select group of authorized users, such as an organization, group, agency or government institution like banks. There can be hybrid public-private blockchains too; where anyone can see the public data, but only authorized parties can see the sensitive data.

All the three properties above collectively contribute to allow groups of people who are anonymous and don't know each other to establish trust between each other. This develops a democratization in the data, which can significantly reduce fraud and mismanagement due to human errors.

Now that we know why we need blockchain, how does the inverse hold?


Blockchain needs us, users and early adopters just as much we need it; in the form of developers, miners, investors, validators, liquidity providers, educators and other form of contributors, because the power of a blockchain is in its community. The bigger the community of a blockchain network becomes, the more trust is established, not just because we'll have more computational power to validate transactions, but also because we're building an ecosystem in which the use cases are linked together between products that can co-exist to form a workflow, each providing a separate solution to a real-world problem that gets solved on-chain.

✍🏻 with ❤️ by [Manbir](

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