A recent post by Chris Dixon from A16Z explains the Blockchain in simple terms - as computers that make commitments - and the implications of that simple fact.
Blockchains are computers that can make commitments. Traditional computers are ultimately controlled by people, either directly in the case of personal computers or indirectly through organizations. Blockchains invert this power relationship, putting the code in charge. A game theoretic mechanism — a so-called consensus mechanism — makes blockchains resilient to modifications to their underlying physical components, effectively making them resilient to human intervention.
With blockchains, a few things become possible:
- Computer networks have unchangeable data (the chain itself) built into the network itself, not just in an individual computer.
- A computer network itself can behave with a set of rules (not just the individual computers), and therefore be programmed. (e.g. Ethererum)
- Computer networks can have inherent financial instruments (tokens) that can grow in value with the growth of the network itself. (e.g Bitcoin)
Extrapolating these three can probably help us explore the different possibilities of how Blockchains will change how we use computers.