Suppose we are back to childhood and we are sitting in the school playground. We took the trading card of Pokemon and decided that we should trade two cards of roughly equal value.
There is nothing particularly tricky about this kind of transaction, we all agree that the transaction is fair, I give you my card, you give me your card, very good and very simple.
As a responsible 10-year-old child, we don't have to ask the teacher to supervise the transaction. We don't have to use the teacher to ensure the correctness of the card transaction. Obviously, we all know who actually owns each trading card because these cards are in On the countertop. I can see them and you can see them too. We all agree that the transaction is successful.
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This is very straightforward. Everyone can get what they want, no one will burst. However, let us imagine now if we trade Pokemon cards in digital form.
Suppose I have the most valuable card in the game, only one, and I want to transfer it to you. So how can you be sure that I didn't copy one on my computer before I transferred it to you? And this kind of copying will make it less valuable.
What if I made a thousand copies and sold them as the only one? You can't be sure that I didn't do this.
This is not a good thing for you and the Pokemon Trading Card community, because once the supply is over, the rare card will become worthless.
It turns out that this question has a name: double flower problem. (Blue Fox Note: This is double consumption) It only appears in this situation: When exchanging digital goods, how do you know if anyone has sent the same asset to two people at the same time?
So how do you solve this problem? How do I make you believe that the Pokemon cards I have given you in digital form are not duplicated?
Ok, we can use a ledger (transaction history) to record our transactions. This needs to be controlled by Nintendo Game Company so they can monitor and track the transactions of each Pokemon card to ensure that no one is copying the card.
However, this method has a problem. Now, a third party is involved in our transaction. If you are willing to involve the middlemen, then we will always need to complete their transactions through them.
No longer you and me in the school playground, we still need to trust third parties. We need to believe that they will not tamper with the ledger.
So, how can you be sure that the rare cards I want to give you are not secretly copied to his brother by Nintendo employees?
Again, the same result. We are not 100% sure that no one can tamper with the ledger.
However, there is a brainstorming idea: What happens if the ledger is not kept in a computer at Nintendo headquarters, but a copy of the ledger is handed over to all Pokemon traders?
If each Pokemon trader has its own copy, they will be notified when the transaction occurs, and each transaction can be verified independently.
On this shared ledger, it will specify exactly how many cards each card has, so if I secretly copy the card and save it on my account, then my ledger and other people's classification The account cannot match, so I will not be able to trade.
In this way, we have created an open, decentralized, irreversible, tamper-proof digital network that can be used to trade valuable assets.
This is a simplified version of the blockchain technology work. We'll follow in detail how it works, but it's easy to see that this technology gives Bitcoin its uniqueness and its fascinating properties. If you understand the above, then I want to give you an encouragement, because you know more about Bitcoin and blockchain than 95% of people through Pokemon cards. (Blue Fox Note: The actual operation and details of bitcoin and blockchain are much more complicated. Here are more simple metaphors for beginners to understand. If you want to know more about blockchain and bitcoin, Can read more articles on Blue Fox notes)
Risk Warning: All articles in Blue Fox Notes can not be used as investment suggestions or recommendations. Investment is risky. Investment should consider individual risk tolerance. It is recommended to conduct in-depth inspections of the project and carefully make your own investment decisions.