Many people confuse blockchain with cryptocurrency. If you hear the word “blockchain” and a big golden coin with a capital letter “B” pop up in your head, you should pay attention to my next sentence.
CRYPTOCURRENCY IS ONLY ONE APPLICATION USING BLOCKCHAIN TECHNOLOGY.
Before I tell you blockchain is a decentralized system, let me give you an idea of a centralized system.
Storage room, where you collect/centralize all your stuff into, is a centralized system. On the internet, this storage room is called a data center. (This is mainly because you can only send and receive digital data not your broken chairs via your computer.) This data center is a centralized system and It collects all your data (birthday, address, bank account, pictures, videos…) in one place (the center of the image).
Now I can tell you: blockchain is a decentralized system. First, it means your data is not in a centralized data center! Then where is your data? The answer is: EVERYWHERE.
So what motivated people developed the decentralized system and what is not good about a centralized system?
First, data centers are not in your house and you don’t have control over them. What if a data center decides to close their business. If the center point is gone, all the small dots around it are gone. You will end up losing all your data (imagine your bank account information is disappeared). Now we assume that you TRUST this data center to exist forever. (Remember the word TRUST). Just like thieves steal from storage rooms, in a centralized system, people can hack into the center dot and bring down the system. That means hacker only need to hack into one place to have access to all the information. Now we assume you TRUST this data center to be 100% safe. Data centers are operated by humans, who you probably don’t know personally. You will have to TRUST them to not look or leak your privacy or accidentally delete all your data.
For a decentralized system, it gets rid of the problem of the single point of failure. If a node got shut down, all the other nodes still have the full copy of the data, meaning no one will lose their data. A decentralized system is also far more expansive to hack, either by people outside of the system or within the system. This because it lacks the sensitive center point. If a hacker decided to hack a blockchain, the hacker will have to hack the majority of the nodes which is very impractical.
But here is a question, if my information is on a decentralized system, how can I TRUST other nodes not to steal it. The answer is you DO NOT NEED TO TRUST anyone on the blockchain.
Here is the reason. Imagine you are cooking a piece of raw meat. You use your special private recipe, that you and only you know, to cook it. When people smell or eat your dish, they know right away that you are the person who made it. It is the same principle on the blockchain, except the meat is your data. The recipe is called the private key, which you and only you know. The process of cooking is called encryption, which is a complex mathematical procedure. The smell or the taste of your dish is called the public key. So in blockchain language, your data is encrypted using your private key, and people can identify that piece of information belongs to your with your public key. As long as you keep your private key private, the complex mathematical function will make sure no one but you can decrypt the data without your private key. Due to the nature of the mathematical function, it uses, having the public key and encrypted cannot decrypt the data. Only the private key can decrypt the data.
Do you still remember all those TRUST I asked you to remember in a centralized system? A decentralized system can get rid of all these trust issues. This is also the reason blockchain is called a trustless system.
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