Blockchain technology that makes you own the information that matters to me for the first time in history. But to understand how it works and how you can start using it, you need to understand what a blockchain is.
Blockchain is a catch-all term for a specific type of ledger where transactions are linked to one another in order of their chronological appearance. So the first transaction was the earliest chronologically, then the second and the third and so on. And usually it refers to a type of distributed ledger where on your checkbook or on your computer there's like one copy. So it's easy to keep the record of the truth. But
A blockchain makes it possible for a network of participants to keep one collective record that is stronger than an isolated record because the first transaction is not only recorded on this ledger, it is recorded and broadcast to every person's machine who uses the network. Then when another transaction is added at one machine, it broadcasts to all the other machines to see if it makes sense in accordance with the previous transaction, and if so, they all record it.
Over time what happens is you create a record that is very resistant to tampering because the network, which can grow, becomes harder for any one person, machine, entity, or government to change because in order to change this record, I'd have to change a majority of all these records.
It's like a bank account. If I want to do a day in the ocean and try to rob bank, all I gotta do is break into one vault. But could you imagine trying to break into not just one vault, but 10,000 bank faults that can all talk to each other, and they don't physically exist. And after you get inside, if you can somehow change the information that doesn't physically exist, you gotta break out again without getting noticed. So like, this is such a more secure way to like talk about money or health records or any kind of data than any solutions that we have now that we rely on central intermediaries.
We don't need to use this network only to track financial information. We can use it to build any kind of thing we might wish to decentralize, like a different kind of social media. And there are some opportunities, but also some challenges that come with using blockchain to do this kind of thing. The first challenge is agreeing on a consensus mechanism that makes sense. As you might imagine, for all these computers to talk to each other and do the kind of things to verify the network energy and time intensive. It can be very slow and that might not be ideal for something like saving a like on social media in a blockchain ledger to prove that it exists. It's probably not an ideal solution for creating tokens in a video game to represent a skin or a weapon or an achievement that you need to get right now in order to keep playing.
But what I hope to impress upon you is that nothing, absolutely nothing that has existed before this moment has made it possible for a network of participants to keep a central record over the internet and verify information about digital things, to trust each other even though we don't know each other, and to ensure that even if somebody wants to manipulate the system that it's very, very difficult, or at least that they are penalized and we can recover if they do so.
But there are many hybrid solutions that will exist, for example, where people will use off-chain, we say, things to process transactions and then send a transaction on-chain to update the record in batches with information that might be important to preserve. If somebody manages to hack a blockchain or a group of blockchain users decides they want to take the network in a different direction, any of them can propose a change at any time and the network can be forked, we say, literally like a fork in the road where some people keep going with the ledger as it was. And some people put it in a new direction either by changing the code, changing the consensus mechanism or something else about the network. This has happened many times in the history of blockchain.
Notable examples include Litecoin, a popular cryptocurrency, was a fork of Bitcoin. Or in 2016, after the hack of an organization called The Dow, the Ethereum community chose to fork. People who wanted to reset the ledger to make it as if the hack never happened became the Ethereum community we know today. While the folks who were resistant to that and wanted to preserve the record as it was became what is known today as Ethereum Classic. A lot of people also want to know what's going to happen to cryptocurrency if the internet goes down. And it may surprise you to know that cryptocurrency is actually likely more resilient to an internet outage than your traditional bank money system.
The reason why is that as a network grows and becomes increasingly decentralized like Bitcoin or Ethereum, whose networks have thousands of nodes all around the world, it becomes increasingly unlikely that all of them would go down at any one time. If all the nodes on the Bitcoin network, all 65,000 nodes around the world went offline, that would mean that there was a global internet outage and frankly, you would have bigger being able to send Bitcoin like you would be in trouble. And remember what we learned about blockchain networks is that the computers, they can all talk to each other.
So if some of them go online, the network will continue to function. It might be a little slower because there aren't as many nodes processing transactions and they might be farther apart from each other. But once these computers, these nodes come back online, the protocols are always looking for the longest record in terms of the most trustworthy record of truth.
They're going to default to trusting the nodes that have been online. They will receive the broadcasts about the transactions that have occurred while they were offline and the network will just resume functioning like that. Like even if we have an apocalyptic event and the network doesn't come online for years, if there is one of these records that's intact, then you can restore the whole thing and the best part about blockchain networks like this that are decentralized and open is that it doesn't matter if you're black or white or young or old. Absolutely nobody can keep you from owning the information that is on this ledger or transacting with the network if you have an internet connection and the will to do so.