Last Updated 3/15/2023
Since being popularized by Bitcoin in 2008, blockchain has grown into an industry creating powerful infrastructure with a focus on decentralization. The appeal being increased resiliency, more transparency, and not having to rely on or trust any one party. Let's dig into what it actually is.

Blockchain System

The Protocol / Software
The code used to run the blockchain network and specifications for how the system should work. This includes how the blockchain is updated (consensus mechanism), the network is upgraded, and how any cryptocurrency comes into play. Depending on the blockchain, it's maintained by a developer community or company and is often open-source. See the software for Bitcoin and Ethereum
The Network
A group of nodes (computers) running the blockchain's software and connected over the internet. Each node stores a copy of the blockchain and collectively the network maintains and updates the blockchain per the protocol. Any user that wants to interact with the blockchain must do so through a node. Generally anyone can run a node given the right equipment and the more nodes the more resilient the network becomes
The Database (aka Blockchain)
Essentially a shared database (ledger) that can serve many different use cases. In Bitcoin it serves to track accounts and balances, but for Ethereum it serves a broader purpose as the backbone of the Ethereum Virtual Machine
The native asset of the blockchain system as defined by the protocol/software, but what it means/represents varies dramatically...
- the application/purpose (currencies like Bitcoin)
- ownership (like stock in a company)
- currency to use the blockchain system (Uber credits for the Uber app)
- all of the above

How it works

Proposed changes (or transactions) to the database from users are grouped together into "blocks"
A proposed block is broadcasted to the network
The network approves the block through its consensus mechanism which is part of the blockchain's software
The approved block is appended to the chain of all previous blocks, hence the name blockchain. This updates the database and all nodes store this updated version

Industry Terms

The amount of industry jargon is overwhelming, especially to someone new. Below are some of the key terms you hear with a comparison (not perfect) to the internet
Foundational Technology
Blockchain technology allows for a shared database of information without the need for trusting any one particular party to verify accuracy. It's foundational in the same way as the internet allows for communications of data between various parties
Early Application - Specific Use
Bitcoin was the first mainstream application of blockchain and is specifically focused on storing and transferring value. Similarly, email was one of the earliest applications of the internet, focused on communicating messages
World Wide Web
Early Application - Broader Use
Ethereum, another early application of blockchain, has a broader focus of being a platform for apps to be built and run on. Similarly, the world wide web, another early and key application of the internet, enabled websites and much of the internet services we use today
Internet Tech Industry
Resulting Industry
Web3 is the growing industry resulting from blockchain technology. Ideally it's a re-building of many of tech services we use today, but with a core focus of decentralization (using blockchain). It's comparable to the internet tech industry made of companies like Google, Facebook, PayPal, Amazon, and AirBnB that made internet technology the key component of how they re-imagined their markets
Currency / Shares
Economic Component
Generally, to use internet company services you pay in dollars (or other currency) and to own part of an internet company you buy the company's shares. Crypto takes those two roles for blockchain companies/services. Making it harder to explain is that it depends on the rules setup by each blockchain...

Why Blockchain / Web3?

Being a distributed network (of computers), blockchains don't have single-points of failure. Even if some computers go down (or are taken down), the blockchain still runs. This resiliency makes blockchains (and services run on) more resistant to tampering or censorship from individuals, companies, or governments
Reduces the need to trust middlemen, especially for ownership. For example, we currently have to trust banks that our money is there. With blockchain systems you have the ability to independently and directly verify your ownership
Many of the internet services we use today are black boxes. We don't know how are data is being used/protected (privacy) or the how algorithms are shaping the information we see. The open source nature of web3 looks to change that
Speed & Cost
IMO right now speed and cost are why nots. This will be addressed over time as the industry grows and the technology/platforms mature, it's currently like the internet in the 1990s...
Coming soon
Coming soon
Coming soon