The Simplest Answer to "What is Blockchain"?

The most common question in blockchain is, "What is blockchain?" Dictionaries are getting pretty good at this:

Google: a digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly

Oxford Dictionaries: A system in which a record of transactions made in bitcoin or another cryptocurrency are maintained across several computers that are linked in a peer-to-peer network

Merriam-Webster: a digital database containing information (such as records of financial transactions) that can be simultaneously used and shared within a large decentralized, publicly accessible network

Wikipedia: a growing list of records, called blocks, which are linked using cryptography

Imagine being as thorough as possible and combining the four:

blockchain: a digital system, ledger, database, or growing list of records (aka blocks) containing information (such as financial transactions made in bitcoin or another cryptocurrency) that is maintained across several computers (linked using cryptography in a peer-to-peer network), is recorded chronologically, and can be simultaneously used and shared within a large decentralized, publicly accessible network

Now we notice that these definitions are trouble. They are satisfying but not dependable, even apart. Suppose you know nothing about cryptocurrency, cryptography, or computer science. Words like ledger, transaction, bitcoin, cryptocurrency, peer-to-peer, decentralized, and cryptography may give you pause. In a room of any size, there's a strong possibility that at least some of these words will be unfamiliar to at least some of the people. Problematic; the purpose of language is to communicate ideas and maximize the spread of knowledge while minimizing confusion. If you are asked to define something, the response should not include words you need to define. A good definition should be self-evident, simple, portable, and appropriate regardless of the audience. It should focus the listener on follow-up questions that expand on the ideas presented, not on the definitions of (new) words; a good definition doesn't distract, it immerses.

Alex Shevchenko, head of Exonum, has an excellent webinar about his platform, a framework for building private blockchains. In the introduction, he includes a slide on blockchain. He describes it simply, as a database which is distributed, tamper-resistant, and auditable. These three words are found almost everywhere blockchain is discussed, for the good reason that to qualify as a blockchain, these are the minimum requirements one must hit.  

So try this:

A blockchain is a database that is distributed, secure, and auditable.

If you start there, you can't go wrong. Whether it's a room of absolute beginners or industry insiders, they can all follow along. You can use it as a starting point with any audience:

• It's a crisp eight words: "a database that is distributed, secure, and auditable". You can even get it down to six: "a distributed, secure, and auditable database"
• It's simple: though it is necessary to mention "database", it excludes words specific to cryptocurrencies or cryptography. You can get into those in a different sentence
• It's flexible: you can land and expand. Land with the concepts of distribution, security, and auditability. Expand in whichever direction matters most to your audience (examples below)
• And it's memorable: distributed, secure, auditable = DSA. This is a useful and happy mnemonic because blockchains make use of secure digital signature algorithms (DSA) for transaction signing, so that the authenticity of transactions can later be verified

Notably, nearly any conversation about blockchain technology revolves around or returns to one or more of those three terms. For example, consider a "conversation index" of likely topics at conferences, presentations, and panels on the technology:

blockchain: architecture; benefits of; consensus algorithms; consortia; cryptocurrencies and; cryptography; decentralization; distributed ledgers and; governance; history; immutability; mining; permissioned (type); permissionless (type); pros and cons of; scalability; regulation; smart contracts; security of; tokens; transactions; transparency and; use cases; when to use...

Let's briefly discuss the three concepts of distributed, secure, and auditable to see how flexible and extensible they are.

First, distributed. Say you're discussing the difference between blockchains and other databases: "distributed" is a nice way to begin. There's nuance in this. A database can be distributed, but a blockchain has to be. Also, a database can be distributed yet not be a blockchain. Some distributed ledgers are not blockchains, and other distributed ledgers are. Hence the common, if confusing, lumping in of "distributed ledger technologies (DLTs)" with blockchains.

Next, security. Say you're discussing the security of blockchains. That's a very big topic. Cryptography here is relevant. How is the data in a blockchain made unmodifiable, immutable? How is it kept safe from external attacks? How is it made resilient against internal failures or sabotage? Which consensus algorithm is used when, and why? How are participants selected, authenticated, and authorized in the system? How are upgrades to blockchain software and security proposed and made? Why are digital signatures used on transactions? Which hashing algorithms are used, and why and when is hashing necessary? What programming languages are used for blockchain components or for smart contracts? When is decentralization a desired security feature, and what makes it a security feature? Rarely will a single conversation about blockchain extend in all of these directions. However, the word "security" is all you need to spoke out in any of them.

Last, auditability. Say you're discussing the value of using blockchains. What are the benefits? When would one use a blockchain instead of a different type of database? What motivated Bitcoin's creator(s) to use blockchain technology to solve a historical problem, and what problem was that? Why was the design choice made to include this, and not another database structure, to deter transaction fraud? For these and many other questions about history, value propositions, use cases, consensus mechanisms, transparency, and much else, auditability is your friend. You might begin by speaking to the purpose of audits generally: to ensure that certain rules are being followed or that things are proceeding in a fair way, as previously defined. You could discuss fraud, trust, and risk in society and in business in general terms, and why audits have come to be necessary in nearly everything done by groups of humans. With a technical crowd, you could discuss the architectural fraud detection and deterrence of public blockchains, the work of validator nodes vs miners, and more. With an enterprise blockchain developer crowd, you could speak to the role of auditor nodes within permissioned blockchains like Exonum or the implementation of Zero Knowledge Asset Transfer (ZKAT) in Hyperledger Fabric. Or with an academic group, you could speak to the use of hash functions + blockchains to store one-way hashes of documents so that you can later compare important documents and verify their authenticity, all without needing to store the actual documents. This, too, is a form of auditability that enhances trust. All auditability is intended to enhance it, so as to speed decision-making and diminish risk. In fact, it might be said that a world without the need for auditability would be a world without the need for blockchains. But that is not the world we live in.

So there you have it. Blockchains: distributed, secure, and auditable. Three little but very powerful words that are easy to understand and belie complexity and depth.

What is blockchain?

[This article is cross-posted from my blog, Blockchain Dreamers].