We've been talking about the Blockchain in pretty abstract terms as a technology that can allow people to store data in a way that's trusted without requiring a third party intermediary. It's useful at a high level, at least to talk a little bit about how it works, just to give you a flavor of what's actually happening in the Blockchain, where it's providing value. So the Blockchain can be viewed as a ledger or a spreadsheet. And if we think about storing data in this kind of a format, and we want it to be trusted, we want to be able to look at the data and trust it completely, we need to know essentially two things and only two things. One is that the transaction, the piece of information, the information that's put into the database was verified by, if there's a transaction between two people, for example, the transaction is verified by each of the two parties, the information as it was originally put in the database is legitimate. And then number two, that it we've never gone back and changed, falsified, updated or deleted that piece of information. If we know these two things, we can be sure that the information we're seeing in the Blockchain is correct. So number one, that the original information was valid and verified. And number two, that nobody went back and changed that information. So this is what the Blockchain achieved. The first one actually, the verification we've been doing for a long time with the Blockchain. The second one is what the Blockchain achieves, making it so that we can be sure that no one has gone back and falsified, updated or deleted data. So Blockchain again is ledgers, spreadsheets, a little bit different though than a single spreadsheet. It's essentially identical copies of spreadsheets or ledgers that are stored all across the network. And these are called nodes, so all across participating nodes of these networks. And information is recorded in a sequential chain of blocks, and this is where it gets the name, Blockchain, from. And each of these blocks holds changes in the world that have happened since the last block. And so the current state of the world is kind of computed by looking at the entire sequence of blocks, not just the last block. And so the whole sequence of blocks together, it kind of explains the state of the world. So it's got this system where it uses a bunch of spreadsheets all around the network and records information in a sequence of blocks, all of which together express the state of the world. So there's two design points to know to understand how the Blockchain is providing value. One is that any transactions, any information that is put in the Blockchain is verified using a form of encryption. So let's say we're using the Blockchain to keep information about skills, about some skill that I obtained online, so the transaction might be between me and the provider of that skill-based education. So that transaction itself is verified using a form of encryption, both counter parties meeting myself and the platform might say, this person has the skills. This transaction is then confirmed by the network and stored in a chain of blocks. So that's designed Point One. But all these transactions are verified when they're first put in. And then design Point Two is that the Blockchain itself is designed in a way that is exceedingly difficult to try to fake data or cheat the system by going back and changing data. So unlike a database where it's fairly easy to change data, the design of the Blockchain is such that's actually very expensive, prohibitively expensive in most cases, to go back and try to falsify or fake or change data in the past. And so the second design point is really what provides that verification that the data is authentic and it stays authentic all the way through. So because of this, the Blockchain is a data storage technology finally that prevents any of this faking or rewriting of entries. And so if the information is verified in the first place, it's never been changed, therefore we know that it must be true, and we don't again need a third party to say, hey, this is a valid piece of information. We know that because of the design of the system, the information that is being presented to us within reason at least must be true. It turns out again that this solves a number of problems. So information in a Blockchain can inherently be trusted, so it doesn't therefore require a third party to hold the data. And as we talked about last time, this is going to potentially provide a number of changes to different industries in terms of what the role of trust brokers are and what value they provide at various different points in the in the workflow.
