Imagine person A having to conduct a transaction with person B. Supposing person C is also a party to this transaction but doesn't know A and B personally. C is now entering into a transaction that does not have a high level of trust. What if, A and B conspire to change the terms of the transaction after having interacted with C? C will never know what the terms of the original transaction. If not together, either A or B might change their side of the transaction and even then the sanctity of the transaction is lost.
Now imagine the same transaction taking place in a coded language in a public ground where a crowd has assembled. The coded language is not immediately comprehensible to anyone, but if needed, anyone can decode the transaction and verify the contents.
That, in essence, is blockchain.
To bring in a bit of technicality, this crowd is constant as well the original chain, main. Transactions that occur in the rules set by them are added to the same chain. Transactions that use a slightly modified set of rules are "forked" or branched out from the main chain. This image from Wikipedia's page on blockchain shows this pictorially as seen here.
![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fcce2482a-16a3-49b1-8d95-5672d521a956_320x850.png)
So what are cryptocurrencies, then? They are a new type of currency which uses the concept of blockchain to provide value. As explained previously, the legitimacy of a currency is provided by its status as a legal tender by a central authority. But this limits the use of the currency to the areas where this authority exerts influence. What cryptocurrencies do is replace this authority by the general public. The crowd in the ground, from the metaphor. Therefore, since everyone has "witnessed" the deal, it is legitimate quite simply because changing it cannot happen without telling the entire crowd. Which might effectively make it a new transaction.
To mix an old example with a new one, the farmer wanting to buy grain gives the farmer a cryptocurrency token instead of a promissory note. Where the bank would be the guarantor for the promissory note, the other token holders of cryptocurrency become the witnesses who ensure the farmer is paid.
This was opposed by many central banks. The reason given was that these transactions are anonymous and therefore can be used for criminal activities with no possibility of being traced. Going back to the crowded ground; A, B and C are transacting. However, D, E, F are nearby and heard everything. G, H and I couldn't, so D, E, F simply said: 3 people entered a transaction which was recorded in such and such manner. G, H and I then relay the info similarly ahead and thus A, B and C are anonymized. While this is true, some suspect that the real reason behind the opposition by the banks is because cryptocurrencies threaten their supremacy and powers.
But I digress.
So that's an oversimplification of blockchain. Please note the grain of salt here. Oversimplification by definition comes at the cost of accuracy. Also, cryptocurrency is one of the most popular applications of blockchain technology, not the only one. In other words, cryptocurrencies use blockchain; but not everything about blockchain is cryptocurrency.
As in the example, blockchains can actually be (and are being) used in smart contracts. Another application is in logistics to ensure that the material that was listed as dispatched is the same one that has been received and wasn't switched over on the way.
I wonder if it is not possible to use this in real democracies to truly involve the citizens in the law-making process. For example, a bill that is tabled in the parliament is usually discussed before being ratified as an act. Maybe there can be a way of allowing the citizens to vote directly on the bill. Blockchain would ensure that my ayes are not changed into nays or vice versa. Similarly, it might end all the rigmaroles involved in "babugiri." It would greatly change the way bureaucracies are operated and I'm certain reduce corruption significantly. Which is probably why politicians would oppose it like the central banks opposed cryptocurrencies.
Ideas by themselves are not valuable, as they rightly say.