What is the Blockchain ... and why should I care?
What is the Blockchain?
To understand how the blockchain works, we need to think about how normal, traditional, brick and mortor banks work. Banks are organisations that keep track of how much money you have. They do this by keeping a ledger of all the transactions that you have made. When you deposit money into your bank account, the bank adds a transaction to your account. When you withdraw money from your bank account, the bank adds a transaction to your account. The bank keeps track of all of these transactions, and at any point in time, they can tell you how much money you have in your account.
Now, this is how things have worked for a very long time, and generally speaking work fairly easily.
Groups of people from the internet have decided to try something different. Imagine if instead of one group or organisation having this ledger and keeping track of transactions, everyone has a copy that is automatically updated over the internet. Now, this isn't to say that every time someone on the internet buys something everyone has to manually pull out a piece of paper and update that person's balance, but funementally the idea is the same, although it just happens automatically. This means that no-one can lie about how much "money" they have at any time, and everyone can see how much "money" everyone else has at any time.
This idea is "the blockchain".
Why is it useful
Because everyone can see who has what "money" at any one time, you may be wondering why this is better than a traditional bank. Well, there are a few reasons.
No central authority
The blockchain isn't controlled by any one person or organisation, and as such it can't "go bust" or be shut down. This means that it is always available, and can't be manipulated by any one person or organisation.
No fees
Because there is no central authority, there is no-one to charge you fees for using the blockchain. This means that you can send money to anyone else on the blockchain for free.
No borders
Because the blockchain is a global network, you can send money to anyone else on the blockchain, no matter where they are in the world. This means that you can send money to your friend in Australia, or your family in the US, or your cousin in Japan, all for free.
No limits
Because the blockchain is a global network, you can send as much money as you want to anyone else on the blockchain.
Anonymity
Because the blockchain is a global network, you can send money to anyone else on the blockchain without them knowing who you are. This means that you can send money to your friend in Australia, or your family in the US, or your cousin in Japan, all without them knowing who you are.
It wouldn't be right to acknowledge that a lot of the motivation behind the blockchain is therefore to enable people to do things that they wouldn't be able to do otherwise. This includes things like buying drugs, or weapons, or other illegal things. However, it also includes things like sending money to people who may be in trouble; for example people in abusive relationships who aren't allowed access to traditional banking and need funds to escape the situation.