Blockchain In 7 Minutes | What Is Blockchain | Blockchain Explained|How Blockchain Works|Simplilearn

Summary

The script explains the concept of blockchain technology, using an example of four friends splitting a dinner bill. It highlights issues with traditional bank transactions, then introduces cryptocurrencies and blockchain as a solution. It explains how blocks record transaction details in an encrypted, tamper-proof chain. It also covers blockchain concepts like distributed ledgers, mining, and public/private keys. The script describes how blockchain brings transparency to supply chains, using Walmart as a real-world example to track and improve product quality.

Takeaways

• 😀 Blockchain provides a way to complete transactions without banks/third parties
• 👥 Blockchain transactions are recorded in an immutable public ledger shared among users
• 🔑 Public and private keys enable secure transactions on the blockchain
• ⛏️ Transactions are validated and added to the blockchain through a process called mining
• 🔗 Blocks in the blockchain are linked together, containing transaction details and account balances
• 😄 Blockchain brings transparency and accountability to supply chains like Walmart's
• 🌟 The bitcoin network uses blockchain technology to enable a cryptocurrency system
• 🔐 Blockchain data is protected through encryption algorithms
• ❌ Invalid blockchain transactions will not go through due to the shared ledger system
• 🤝 Blockchain enables peer-to-peer transactions without central authority

Q & A

What is blockchain technology and how does it work?

Blockchain is a distributed ledger technology that allows recording transactions and tracking assets in a secure, transparent, and decentralized manner. It works by grouping transactions into blocks, linking them together to form an immutable chain using cryptographic principles.

What problems can arise with traditional bank transactions?

Bank transactions can fail due to technical issues at the bank, hacked accounts, exceeding daily transfer limits, or extra fees and charges. This leads to delays and lack of transparency.

How do cryptocurrencies solve the problems with traditional transactions?

Cryptocurrencies use blockchain technology so they are decentralized and don't need a central authority. They use encryption for security. The public ledger provides transparency while cryptography prevents alteration of records.

What is mining in the blockchain context?

Mining refers to the process where participants validate blockchain transactions and group them into blocks. Miners need to solve a complex math problem to add a block. The first one to solve the problem adds the block and receives a bitcoin reward.

What are the two keys used in a Bitcoin transaction?

The two keys are: 1) Public key that is publicly known like an email address 2) Private key that only the owner knows, used to digitally sign transactions to prove authenticity

How was Walmart able to improve their supply chain using blockchain?

Walmart used blockchain to permanently record the state of goods at each point in the supply chain. This transparency helped identify problem areas when issues arose instead of refunding customers.

What are the advantages of blockchain technology?

Key advantages are decentralization, transparency, immutability, enhanced security, reduced costs, faster transactions, automation through smart contracts.

What is proof of work in blockchain context?

Proof of work refers to the complex mathematical problem that miners need to solve to validate a block of transactions and add it to the blockchain.

What are some real-world applications of blockchain beyond cryptocurrencies?

Some applications are supply chain management, healthcare records, property records, digital IDs, voting system, royalty distribution system for creative works.

What are some popular cryptocurrencies other than Bitcoin?

Some other popular cryptocurrencies are Ethereum, Litecoin, Ripple's XRP, Bitcoin Cash, Binance Coin, Tether, Cardano, Polkadot.

Outlines

00:00

😊 Introduction to Blockchain

The first paragraph introduces the concept of blockchain as an alternative payment system that solves issues like failed transactions, additional charges, and security breaches faced in traditional bank transactions. It explains how cryptocurrencies like Bitcoin use blockchain technology to enable direct peer-to-peer transactions without requiring a central authority.

05:02

💡 How Blockchain Works

The second paragraph provides an in-depth explanation of how blockchain works using a transaction example between friends. It covers concepts like distributed ledger, mining, proof of work, public/private keys, hashing algorithms etc. involved in adding transaction blocks to the blockchain securely.

Keywords

💡Blockchain

Blockchain is a distributed ledger technology that allows secure digital transactions without the need for a central authority. In the video, blockchain is presented as a solution to issues like failed bank transactions, additional fees, etc. It works through a decentralized network where transaction records are stored in linked blocks, protected by encryption.

💡Cryptocurrency

Cryptocurrencies like Bitcoin and Ethereum are digital or virtual currencies that use blockchain technology to enable direct transactions between parties securely and anonymously, without banks or other intermediaries. The video cites the immunity to counterfeiting and decentralized nature of cryptocurrencies as key advantages enabled by blockchain.

💡Bitcoin

Bitcoin is the most popular cryptocurrency that runs on blockchain technology. In the video example, friends Phil, Ted and Sam use bitcoin to send money to Jack without issues faced in traditional bank transfers.

💡Ledger

The blockchain ledger refers to the chain of transaction records or blocks that are linked to each other. It acts as a public, distributed record of all transactions on a blockchain network. The video explains how the ledger validates transactions by tracking bitcoin balances across accounts.

💡Mining

Mining refers to the process where participants in a blockchain network validate transactions and add verified blocks to the existing chain. As the video describes, miners have to solve complex math problems through 'proof of work' to qualify to add blocks. They are rewarded with bitcoins for mining.

💡Hashing Algorithm

A hashing algorithm converts transaction details into encrypted code using private keys in blockchain network. As illustrated in video, hashing algorithms like SHA-256 are used in bitcoin system to digitally sign and encrypt transaction data for security.

💡Public Key

The public key in blockchain is comparable to a public email address - it allows other users on the network to identify and interact with an account. As shown in the bitcoin transfer example, public keys enable identification of sender and receiver wallets for transactions.

💡Private Key

The private key is a secret, unique identifier associated with each user, like a password. It is used along with encryption algorithms to digitally sign transactions or messages in blockchain networks to prove authenticity, as demonstrated in the bitcoin transfer illustration.

💡Supply Chain

The video cites supply chain as a key area where blockchain delivers value through enhanced transparency and traceability. Taking Walmart's example, blockchain helps track quality issues to source by creating immutable records of product conditions across supply chain stages.

💡Smart Contracts

While not explicitly mentioned, concept of smart contracts is highly relevant to blockchain technology. Smart contracts are programmatic transaction protocols that execute automatically when conditions are met, eliminating need for intermediaries. Common blockchain applications.

Highlights

Cryptocurrencies use blockchain technology and are immune to counterfeiting, don't require a central authority, and have encryption protection.

Blockchain is a collection of records linked together that is resistant to alteration and protected by cryptography.

Each blockchain user has a public key that acts like an email address and a private key that acts like a password.

Transactions details are encrypted using algorithms and the sender's private key to digitally sign the transaction.

Different cryptocurrencies use different hashing algorithms like SHA-256 for Bitcoin and Ethash for Ethereum.

Miners validate transactions and add blocks to the blockchain by solving complex math problems, and are rewarded with cryptocurrency.

Adding a block to the blockchain through the process of solving math problems is called mining.

The concept that ensures blockchain data cannot be altered is the public distributed ledger.

Walmart used blockchain to identify problems in their supply chain by tracking quality at each step.

With blockchain, Walmart could pinpoint where damaged products occurred in the supply chain.

Blockchain has many real-world applications beyond cryptocurrency.

Blockchain allows permanently recording transactions in an immutable ledger.

Failed bank transactions led to the creation of blockchain and cryptocurrencies.

Bitcoin is the most widely used cryptocurrency built on blockchain technology.

The blockchain ledger is shared publicly among all users of the network.

Transcripts

ever wonder if there's an easier way to

complete transactions without having to

deal with online wallets banks and

third-party applications well it's

possible thanks to blockchain here's

everything you need to know about

blockchain imagine four friends jack ted

sam and phil meet up for dinner after

they're done jack pays the bill and all

of them decide to split the expense

amongst each other now on the next day

when phil sends his share to jack via

online money transfer the transaction

goes through without a hitch then ted

and sam send their respective shares to

jack but their transactions don't go

through the failed transaction cites

some issues at the bank that's when jack

comes to know about the many ways a bank

transaction could fail it could be due

to technical issues at the bank one of

their accounts were hacked daily

transfer limits being exceeded and

sometimes additional charges like

transfer charges associated with

transferring money to solve these

problems the concept of cryptocurrency

came into existence cryptocurrencies are

a form of digital or virtual currency

that run on a technology known as

blockchain thanks to blockchain

cryptocurrencies are immune to

counterfeiting don't require a central

authority and are protected by strong

and complex encryption algorithms and in

a market of more than thousands of

cryptocurrencies like litecoin ethereum

z cash and so on one reign supreme

bitcoin now let's go back to our

previous example and have phil ted and

sam send jack two bitcoins each as their

contribution to the previous night's

dinner let's assume phil ted and sam

have three bitcoins in reserve while

jack has five first phil sends two

bitcoins to jack a record is created in

the form of a block the transaction

details between them is permanently

inscribed in this block this record also

holds the number of bitcoins each of the

friends own so after phil's transaction

jack has seven bitcoins while phil has

one following this sam and ted send two

bitcoins to jack a new block is created

for each of these transactions these

blocks hold the transaction details as

well as how many bitcoins sam ted and

jack have in reserve these blocks are

linked to each other as each of them

takes reference from the previous one

for the number of bitcoins each brand

owns this chain of records or blocks is

called a ledger and this ledger is

shared among all the friends which acts

as a public distributed ledger this

forms the basis of blockchain so what

happens when phil has only one bitcoin

left and he tries to send two more

bitcoins to jack the transaction will

not go through this is because all his

friends have copies of the ledger and

it's clear that phil has only one

bitcoin left his friends will flag this

transaction as invalid a hacker will not

be able to alter the data in the

blockchain because each user has a copy

of the ledger the data within the blocks

are encrypted by complex algorithms all

of this is made possible with the help

of blockchain technology blockchain can

be described as a collection of records

linked with each other strongly

resistant to alteration and protected

using cryptography now let's have a

closer look at the bitcoin transaction

between jack and phil and find out how

it works every user in the bitcoin

network has two keys a public key and a

private key the public key is an address

that everyone in the network knows of

like an email address of a user the

private key is a unique address that

only the user has knowledge of something

like a password first phil passes the

number of bitcoins he wants to send to

jack along with his and jack's unique

wallet address through a hashing

algorithm all of this is part of the

transaction details these details are

encrypted using encryption algorithms

and using phil's unique private key this

is done to digitally sign the

transaction and to indicate that the

transactions came from fill this output

is now transmitted across the world

using jack's public key with this the

message or transaction can be decrypted

only by jack's private key which only

jack has knowledge of different

cryptocurrencies use different hashing

algorithms while bitcoin uses the

sha-256 algorithm ethereum which is also

a famous cryptocurrency uses one known

as ethash

this transaction and several other

similar ones are taking place all around

the world these transactions are

validated and then added block by block

the people who validate these blocks are

called miners

for a block to be validated and added to

a blockchain miners need to solve a

complex mathematical problem the miner

who solves this first adds the block to

the blockchain and is rewarded with 12.5

bitcoins the process of solving the

complex mathematical problem is called

proof of work and the process of adding

a block to the blockchain is called

mining

with this phil and jack's wallets are

updated just like every person in the

network who has completed a transaction

now that you know about blockchain and

its important concepts time for a small

quiz what is the concept of blockchain

that ensures data cannot be altered by

any of the users within the network a

public distributed ledger b

proof of work

c

proof of stake d

hash encryption let us know what you

think is the right answer in the

comments below three lucky winners will

get amazon gift vouchers details are

mentioned in the description below let's

have a look at how walmart uses

blockchain to provide its customers with

better service walmart was facing

problems in delivering quality products

to its customers they were facing a high

return rate and large amounts of refunds

due to their products bad quality they

were unable to determine the point of

failure in the supply chain which

started from farm to storage to

transportation to processing all the way

to the customer then walmart adopted

blockchain technology with blockchain

the quality of the goods at each step

was permanently inscribed within a block

for example when a customer flags a

product as damaged it can be correctly

identified where the product got damaged

in the entire supply chain thus helping

walmart to identify the problem areas

and fixing them and this is just one of

several ways blockchain is used in real

life applications can you think of any

others let us know in the comments down

below that's all for now thank you for

watching and stay tuned for more