[IMG] Don’t think you’re going to find one of these behind your...

Don’t think you’re going to find one of these behind your couch. Picture: Justin Tallis / AFPSource:AFP
HANG ON. EXPLAIN BLOCKCHAIN.
Blockchain is basically a decentralised computer system which can govern how information is sent across the internet, and is essential to cryptocurrencies. By decentralised, we mean there is no single computer, but rather information is verified across millions of different computers across the globe.
While in the real world, I can just physically give you something and you now own it and I don’t, it’s not quite that simple digitally. Think about when you send someone a photo over email, you’re not really sending that photo itself, but creating a copy of it and sending that copy to someone. You both now have the photo. This wouldn’t work in a currency world, because no real value is being sent.
So this is where the blockchain fits in, it allows people to send value (not just money) over the internet, by coming to an agreement on who owns it across millions of different computers. Think of it like Paypal, who could be the middleman in governing that yes you did send $100 to James, and now you have $100 less and James has $100 more. But with blockchain, there is no central company or organisation that looks over this that could potentially tamper with it.
If you were to try and tamper with data on the blockchain, you’d need to do that somehow on all of the millions of computers in which the data needs to be verified across, making it an essentially unhackable way of sending goods.
This lays the backbone for Bitcoin and other digital currencies, as it allows them to have an intrinsic value, as you can create a finite number. The blockchain will set up the agreement between its massive network that you sent those 2 Bitcoins to James, and that they are now his and you no longer have any ownership of them.
The blockchain itself has huge value not just for sending Bitcoin, but could be used to send anything of value — think the deed to real estate, the ownership of your car or even to verify information in databases to help thwart hacks.
While it currently is only really being talked about with Bitcoin, you’ll be hearing a lot more about blockchain as it starts to become more important in all our digital lives.