Blockchain explained with emojis

Most guides are really bad. They’re too simple, too complex, or just plain boring.

So we made a much better one. It explains lots of details, like end-to-end encryption, hash functions, and more —

— and it’s all done with emojis.

This image is probably confusing on its own, but it will make more sense as we dive deeper.

This guide is heavily based on our CEO’s Guide to Blockchain, so if you want to read the three extra sections not included in this post, click the link below

CEO’s Guide to Blockchain (with 51 illustrations)

It’s completely free — no contact form required.

Oh, and if you’re already building a crypto project, check out these crypto website design trends and examples, too.

In one sentence . . .

Blockchain is a big, untamperable list of trades spread across lots of computers.

If you’re just trading cryptocurrencies or NFTs, that’s about all you need to know. But if you’re leading any project related to blockchain, it helps to know how the whole thing works.

We’ll keep everything high-level and easy to understand, then list some resources with more information.

Emoji Guide to Blockchain Part 1: Trades

Since Blockchain is a list of trades, we need something to exchange. It could be money, data, or really anything that could be digitized.

In our example, an artist makes her own cat trading cards.

An artist creating a cat.

She and her friends trade and collect the cats all the time. But when the pandemic hit, trading got a little trickier.

How can she keep these cat trades going?

Emoji Guide to Blockchain Part 2: Ledger of Trades

To keep trading going, the artist makes a shared spreadsheet. Every time someone wants to trade a cat, it goes on the sheet.

A ledger of cat trades. Each list item contains an illustration of people exchanging cats.

Once everyone meets up in person again, she’ll go through the spreadsheet and figure out who gets which cat.

The artist is looking at a sheet and giving people cats based on what the sheet says.

Thus, a trade written on the spreadsheet is as good as an in-person trade.

But this system isn’t perfect. It runs into a few issues.

CEO’s Guide to Blockchain Part 3: Centralization Problems

The current cat trading spreadsheet is a centralized database (in the simplest terms, a database is basically just a box of digital spreadsheets). It’s centralized because the entire cat economy goes through a single central point.

Four people connect to a central database.

A centralized database can be nice (especially in an unrealistic example like this one). If someone makes a new trade, you only have to write it down in one place.

A new trade is written down in the database.

But a centralized system isn’t always very secure. If the database explodes in a freak accident, the entire cat economy goes away.

The database breaks, so the network collapses. No one can trade without the center.

Backups aren’t enough to fix everything, either. That’s because centralized databases create a single point of control.

If the artist decided to lie that Dion owes her a cat, nobody could prove her wrong.

The artist says that Dion owes her a cat. She’s the only one connected to the database, so no one else can check.

To make the cat trades more transparent, the artist needs to decentralize.

CEO’s Guide to Blockchain Part 4: Basic Decentralization

To put the power in the hands of the traders, the artist decides to use a decentralized system. Instead of making all trades go through a single spreadsheet, everyone has their own copy.

Everyone is connected to their own list.

Whenever a trade takes place, the traders announce it in a group chat. Everyone checks the signature and adds it to their own copy of the list.

Everyone records a transaction between Al and Barry.

This system is completely disaster-proof. If Dion’s computer breaks down, everyone else has a copy of the data, and trades keep going.

Everyone updates their list with a new transaction. Dion’s list explodes, but since everyone else has a copy, the trading continues.

Best of all, the artist can’t lie about what’s on the sheet. Everyone has their own copy, so everyone knows how much everyone else owes.

The artist lies about her sheet, but everyone has their own copy and corrects her.

However, there’s one very big problem. There’s no guarantee that every list looks the same.

If enough people forget to list a transaction, it didn’t happen. So if Al, Barry, and Carina dislike Dion, they can decide to ignore that he received a cat from Ellen.

An equal number of people ignore and record a transaction.

Then, because it’s not on the lists, it didn’t happen.

To solve this problem, we need to create a self-referencing system. That way, if a transaction gets left out, the list isn’t valid.

But how do we do that?

CEO’s Guide to Blockchain Part 5: Basic Blockchain

Let’s start by putting each trade (realistically, it would be multiple trades) into a box.

A transaction is put inside a box.

This box is called a block. Each block is also identified by something called a hash. It’s basically a big string of seemingly random data.

The block is “labeled” with a long string of characters (BFE57EF8A3…)

If anything inside the block changes even a tiny bit, the hash changes completely.

A hacker makes himself the recipient of the cat, but the hash changes.

When we add a second block, it has a unique hash, too.

THIS block’s hash begins with A1F.

The second block needs to somehow show that it’s second on the list. That’s why the second block also contains the hash of the block right before it.

The second block (A1F) includes the hash of the block in front of it (BFE).

Every time a new block gets added to the chain, it must contain the hash of the block right in front of it.

EVERY block stores its own hash and the hash of the block in front of it, which makes a long chain of transactions.

That way, if Carina forgets a block, she can’t add any more blocks to her list.

Carina forgets block 9B6. The next block contains its own hash (72D) and the previous hash (9B6). But there isn’t a block with 9B6 on the chain, so it doesn’t connect until Carina adds 9B6 back.

This type of list is called a blockchain because it’s, well, a chain of blocks.

Because each block references the one before it, the whole blockchain is very hard to edit. If a hacker wants to change a transaction earlier on the list, the hash changes and no longer matches the following block.

The hacker edits the data inside block 9B6. Because the data changes, so does the hash, and it no longer matches the next block.

The only way to hack a block is to hack every single block that follows it and every block to follow.

But what if Al and Barry have one blockchain, but Carina and Dion have another? How does Ellen know which one is right?

Two people have one list, but two people have another conflicting list. Which is right?

There are a number of ways to achieve consensus. These methods are called consensus algorithms since they achieve consensus.

Wait . . .that’s it?

Of course, it isn’t.

There’s a lot more information about stuff like consensus algorithms, encryption, and more in The CEO’s Guide to Blockchain (with 51 illustrations)

In fact, the main article has three more sections not included in this post, including one about Proof of Work and Proof of Stake

Yes, it’s free, and no, you don’t have to enter your email.

Let us know what you think about this post at blog@fyresite.com. We hope this guide sets you off on your deep dive into blockchain technology!

Originally published at https://www.fyresite.com on July 6, 2021.