by Yuval Halevi

I will try to explain Blockchain in the simplest way I can.

Assuming you are five years old.

If you already know what blockchain is, you can still stick with us!

What is Blockchain – Explain Like I’m Five


There is a big difference between understanding what blockchain is and explaining how it works in a concise way.

Overcoming this gap will help you to deliver a clear & easy to understand message to your potential clients/visitors/investors.

Note: This article is part of the complete Blockchain Marketing guide.

What Blockchain is?

Let us assume that there are two people in the world.

Ben and Mike.

Ben borrows some money from Mike and Mike writes it on a piece of paper signed by Ben.

After a few days, Ben denies the existence of such a document. Ben claims that Mike has forged that piece of paper.

Mike would now find it difficult to prove that Ben actually owes him money.


In this example, Ben and Mike are two nodes.

Now let’s assume the same scenario, but among a society (real-world use-case YEAAA)

So there is ’X’ pair of people transacting with each other.

And the only proof that each pair has, is that piece of paper.

Kate comes up with a solution.

Kate suggests maintaining a common notebook of the transaction for the entire society.

She designates the town hall to be the place where every exchange takes place.

In the common notebook, every pair writes the transaction and then the notebook is kept safely.

People rejoice and accept Kate as their leader.

That notebook can be called a database.

But one day, somebody spills wine on the notebook (You didn’t expect this ha?!).

This makes the notebook illegible (And drunk).

Taking advantage of this situation, Ben again denies taking money from Mike.
(Ben makes me wanna eat KFC)

This is the problem databases face and it’s called a Single Point of Failure‘.

Irritated by this problem, Kate comes up with another solution (Sometimes I wish I had Kate in our company).

She suggests maintaining multiple notebooks.

Kate chooses some trustworthy people from society and gives them a notebook each.

Now every time a transaction or exchange takes place between two people, Kate instructs some of those trustworthy people to mention the transaction in their notebooks.

So the data is repeated in the notebooks.

Now, even if one notebook is destroyed, the chances are that all the data regarding transactions are still present in the combination of other notebooks.

This is a distributed database, and multiple notebooks are the multiple nodes.

But the next day, another problem arises.

Kate has a friend named Nick who owes a lot of money to some people in this society.

He asks Kate for help, and she agrees to help him.

She instructs all the people with the notebooks to remove the entries where Nick received money.

Now Nick doesn’t owe any money based on the notebooks.

This is the problem with distributed databases – they are centralized.

That means one single entity owns all the nodes/resources and can make changes as they deem fit.

When the people from this society come to know of it, they remove Kate from the leadership (I don’t want Kate to work in our company anymore).

They decide to keep a notebook each.

Every time a transaction is made between any two people, all the people from the town come together and mention it in their respective notebooks.

So if there are ‘X’ people in the society no one person controls the overall representation of the transactions.

This is decentralization.

They also decide to never remove or delete an already mentioned transaction from the notebook.

This is immutability.

Now when another group of people from the society, let’s call them ‘L’, try to change a record in their notebooks, all the other people also need to make the same change(as mentioned in the first point above, all the people write all the transactions in their notebooks).

Before writing the transaction proposed by the group ‘L’, all the other people notice that the transaction is not correct.

So they come to realize that L is trying to make a fraudulent transaction. Hence they deny that transaction and don’t mention it in their notebooks.

They also decide to banish group C from further participating in the group.

This is how Consensus is formed and voting is done to decide the validity of a transaction in Blockchain.

A very enthusiastic kid suggested that the transactions form a chain, so they decided to call the collective set of fully replicated, decentralized, immutable notebooks as Blockchain.

In short:

The Blockchain is a decentralized, peer to peer, immutable storage network which is censor free and regulator free because of the absence of one single controlling entity.

Every transaction that is written is voted upon by a majority of nodes and changing something which was written before in the chain is computationally very difficult.

This Explanation was originally written by the talented Abhishek Singh in Quora and been modified.