Now let's define blockchain using real world examples for better understanding.
Let's take the case of vaults in a bank.
The traditional approach is that you go to the bank with your vault key to access your possessions.
Only you have the access to your vault through your key and you cannot see what is inside the other
vaults.
Now imagine a situation where all the bank vaults are transparent.
You can see actual components of each vault, but still you only have access to your own vault.
Same is the case with public blockchains where you can see everything happening inside the network,
but you only have access to your account tokens and keys.
Some other real world examples could be your bank account statements which are duplicated across hundreds
of computers.
Everyone records every transaction you make.
Thus no one can tamper with your records.
Another example could be book analogy.
In a library, people come to the library to borrow a book.
If someone removes a page from the book, then the people lending the book after the culprit can identify
that the book has been tampered with and the page is missing from the book.
In this example, the book will act like a blockchain.
Every page inside the book is like a block, and the text on each page is like transactions.
Some other examples could be a Google document or a spreadsheet shared between multiple users.
Where your workbook is a blockchain, each worksheet is a block and linked with the next worksheet,
and the data in your worksheet are like your transactions.
Let's go back to the analogy of bank vaults.
Whenever you go for opening a bank vault, you get a key associated with the same.
You can use that key to open and deposit the contents inside your vault, inside the bank.
The vaults are filled with different rows of vaults, and each person has their specific vault where
they can store their contents or some useful information.
Moreover, in our analogy, we take these as transparent bank vaults where you can see the things being
stored in the vaults, but you can only have access to your content or information using your own keys.
This is the fundamental concept of cryptocurrencies, too.
Every person has a unique key associated with them, and using that key, they make the transaction
or receive the funds.
Moreover, the public blockchains like Bitcoin and Ethereum are open for all so anybody can see the
contents of all other transactions and addresses throughout the network and verify the information.
Although permissioned blockchains have emerged, still most of the public blockchains are viewable to
every participant in the system.
Now, let's see.
Why is blockchain known as Web 3.0?
The initial disruption started back in 1994 when the Internet came into being.
This was called as Web 1.0.
By the year 2000, tech giants like Google, Facebook, Amazon emerged and led to the second disruption
known as Web 2.0.
These disruptions still had a problem of centralized control.
Now, new technology, like blockchain, is trying to put the power back in the hands of the users.
Why is blockchain known as Web 3.0?
First of all, there is no central point of control in blockchain as compared to the traditional services.
If you are going to use email services, you are bound to trust Google and Microsoft to make sure that
your emails remains private.
If you are going to use storage services, you are putting your trust in Google and Dropbox to keep
your data safe.
We have seen how the confidentiality of data and hacks have been significant cause of concern for the
central organizations by using blockchain.
We are removing the trust from the central authorities and third parties and making sure that the data
is protected and made available through consensus of the participants.
Moreover, ownership of data helps in the reduction of texts and data frauds.
The second reason for disruption is the account of ownership.
Once the data is over blockchain, its immutable and anybody can verify and audit the data.
Blockchains can also store data with digital signatures, which provides the ownership of data.
If some other person tries to upload the same data in the future, then verifiers can see the history
of the data and state the ownership rights.
This can help to reduce land and patent disputes.
As blockchain is based upon secure and proven cryptographic algorithms, the chances of hacks and data
breaches are meager.
Moreover, protocols like consensus and permission based services almost make blockchain invincible.
These security parameters also form a reason for calling blockchain as web 3.0.
Most of the attacks over blockchain till now have been due to some implementation issues.
For example, one of the crypto exchange servers was hacked where the private keys of the users were
being stored at a central server.
Attackers were able to perform transfer of cryptocurrencies using those private keys.
Moreover, the ownership of data helps in the deduction of tax and data frauds.
The fourth reason is uninterrupted service.
Blockchain is available through peer to peer network, so anybody who is connecting to the blockchain
has a node running with them, and every node stores the complete data associated with blockchain.
For example, you have 100 nodes connected to a blockchain network.
Now let's take a sample that five of those nodes goes down, but you still have 95 nodes which will
provide the data and guarantee the availability of services.
These are the reasons why blockchain is called Web 3.0.
There are specific examples shown in the image on the left.
You can see in the web 2.0 we have the browser apps like Google Chrome Storage as Google Drive and Dropbox.
Video and audio calling functionalities provided by Skype.
Now they are being replaced by more advanced decentralized applications such as Brave for Browsers Storage
and Ipfs, for storage and expertise for video and audio calls.
Distributed applications like Steemit and Aksha now challenge even social networks like Facebook and
Twitter.
All the services mentioned here are currently running and trying to change the ecosystem in a way we
interact and share the data.
That was about some of the real world analogies for blockchain.
We also saw why blockchain is known as Web 3.0.
In the next lecture, we are going to have a brief overview and a peek inside the blockchain.