Trying again to break down that the technical basics of “blockchain” are devastatingly simple, because people trying to convince you that blockchain is really complex technology are trying to sell you something, so I’ve broken it down into a lot of little “chat line” pieces, and tried to make sure that every technical term is explained as it is used (or isn’t entirely relevant) with the intended audience being folks with no technical background. (I think anyone with a technical background should find this explanation sufficient: “A blockchain like Bitcoin is a rebase-only git commit process of a transaction ledger where each new commit hash must start with enough zeroes. The committer with the right commit hash is awarded more tokens to use in transactions in later commits.”)

I tried to reduce the number of places where someone can “Well, actually” me with a technical quibble and have kept the biggest ones to parenthetical asides that should be truly optional to the description as a whole. I’d like to especially note here that: while it is very easy to make such “Well, actually” interjections in just about any technical description of anything, nuance does not imply complexity. Especially in this case it implies variation. Not every use of “blockchain” is Bitcoin, and there are certainly plenty of variations both like and unlike Bitcoin today, but Bitcoin is and likely will remain “king of blockchains” (and a use of electricity, all by itself, continuing to be larger than the electricity produced by entire “second world countries”) so it remains the strongest example to use of the basics of how a blockchain operates, technically speaking.

I hope it helps. “Proving” that blockchains are devastatingly simple isn’t going to change hardly any minds on their stance towards blockchains and cryptocurrencies. I just hope I’ve helped do my part to break down some of the salesmanship that drives cryptocurrency hype cycles (“it is so complex you just cannot understand it, so trust me”). But I’m a cynic here and think it is far too late, the majority of the damage is done, and that hype cycles or not, for better and for worse, “blockchain” is here to stay, and mostly in my opinion for the worst.

Block: you’ve got a bunch of documents to store that rely on/link to data from previous documents

One of the easiest ways to “link” such documents is to record in “child” documents a secure ID of the “parent” document

A common form of “secure ID” is to use the output of a “cryptographic hash function”, called a hash

A hash is a relatively tiny number that reflects the contents of a larger document

What makes a hash “secure” is when you can’t predict the hash of a document, but the same document will always produce the same hash, you can’t predict the contents of the document from just the hash, and similar documents produce unpredictably different hashes

(That’s the difference between any old “hash function” and a “cryptographic hash function”, what the word “cryptographic” means here: that it meets those security needs of unpredictability)

When using a cryptographic hash function in this way to link documents, this data structure has been called a “Merkle tree” since the 1970s

It’s natural shape is a tree: more than one document can point to the same parent, there’s nothing in the nature of this way of storing data that prevents that from happening

In the case of most cryptocurrencies what is stored in the documents (inside of “blocks”) is the transaction ledger: Transfer X amount from Address 1 to Address 2, Love Address 1

Transactions depend on previous data (need to point to parent documents; reason it forms a Merkle tree): at some point previously in the transaction ledger enough transactions sent X or more to Address 1 (and Address 1 has not already transferred that much out) so that it has X to send to Address 2 (and is a valid transaction)

Chain: creating artificial scarcity by “pruning” the (Merkle) tree

Merkle trees may have an infinite number of possible branches

Blockchains use a “consensus algorithm” to choose which branch is the preferred branch, and which other branches to ignore

(Forks are still in the same conceptual Merkle tree: the difference between the Bitcoin, Bitcoin Cash, Bitcoin Gold, etc branches is much more marketing than technical)

(Artificial scarcity: there’s still an infinite possible number of branches or “forks” allowed by the nature of the underlying data structure, but marketing is great at selling “preferred options”)

“Consensus algorithms” among other things declare “which document must come next”

The most common “consensus algorithm” (and arguably the only known one that seems to work in the long term so far) is Bitcoin’s “Proof of Work”

“Proof of Work”: the next document (block) proves you have done a lot of “hard work” in order for it to count in this branch

(In computing terms “proof of [hard] work” really is just “prove you spent enough electricity”)

In Bitcoin’s case the “work” to prove is completely stupid: the “secure ID” for the block needs to start with enough Zeroes

This is hard: because the secure ID is a secure hash (from a “cryptographic hash function”) and the output hash is supposed to be entirely unpredictable from the input data

The only currently known way to do this is to add a bunch of random garbage next to the document (which is what truly makes it a “block”: document of transactions, plus random assortment of garbage) and see if you get enough Zeroes starting the hash (ID)

Not enough Zeroes? Add different random garbage and try again (this is all the “work” in “proof of work”, randomly generating literal garbage)

First one with enough Zeroes “wins”

(Everyone calls this “mining” and not “pruning” because the by-product of a “win” is new coins to spend; to incentivize computers to sit and spin creating random garbage in search of finding all these “useless zeroes” it’s a very dumb lottery)

(You can’t spend coins without “mining”: “mining” is what adds [and reconciles] your transactions to documents in the Merkle tree branch/blocks in the “blockchain”)

There’s a name in security speak for this sort of hunt for a specific looking hash (ID): a preimage attack

(Technically this is a partial preimage attack because Bitcoin doesn’t care what the rest of the ID is after all the zeroes it wants at a given time; but from a security perspective any partial attack is still an attack)

That’s where Bitcoin’s “Proof of Work” especially transcends from not just “stupid” but downright “evil” because it is a rapid, heavy attack on a cryptographic hash function used in a lot of other places as a building block of internet security

If someone found a shortcut that wasn’t just the brute force “build random garbage” (why I prefaced with “the only currently known way”), they found ways to predict the outputs of the cryptographic hash function forever weakening their usefulness as secure IDs

(This has happened before. We’ve lost cryptographic hash functions when we’ve found out that they were susceptible to preimage attacks. But in those cases we had decades of warning and known better algorithms waiting in the wings. If Bitcoin miners truly “win” the preimage attack we might not have any warning at all and a lot of internet security would be immediately at risk. It’s also arguable if we have known better algorithms waiting for such an eventuality today.)