Blockchain Explained Using Game of Thrones

As I was shooting the breeze at Bar Rochford on Thursday night, the conversation flowed towards the topic of my Honours thesis.

In a slightly intoxicated state, I attempted to describe what blockchain was and how it worked. This is hard enough to do sober, given that blockchain itself is incredibly difficult to understand, let alone describe to someone else.

Let’s imagine for a second that you’re Cersei Lannister looking to gold to fund the war effort against the Invader; Daenerys Targaryen. Unfortunately for you, gold has run dry and you have to ask your ally, the Tyrells for gold. For viewers, this scenario is of course, completely fanciful but bear with me.

Now unfortunately, the Tyrell’s don’t store their gold in Highgarden under their bedframes or buried in the ground, but like most reasonably wealthy families, keep the gold in the bank. They send a pigeon to the Iron Bank, that says something like:

The Iron Bank checks your account to see if you have the gold available, and because you’re the Tyrell family and you’re loaded with that sweet Highgarden money, you have more than enough to give. So they make a note in their ledger that says something along the lines of:

Now you tell your Lannister friends that the money has been transferred over and that the next time they withdraw from their Iron Bank ATM, they should have enough gold in their account.

In this scenario, the Tyrell family has trusted the Iron Bank to keep a record of the transaction and manage their gold. The gold did not physically move from the Tyrell family to the Lannister family (yet), they simply recorded a -500 transaction and a +500 transaction. Furthermore, this record isn’t one that the Lannister family or the Tyrell family maintains, its one the Iron Bank maintains. Again, the Iron Bank is trusted to maintain the financial records of both families.

This presents a huge issue for both families. They rely on the Iron Bank to manage and record their gold. They don’t trust each other enough so they must rely on the Iron Bank to provide the trust.

Now imagine if there was a way for both families, AND the other Great Families of Westeros to record their gold and pay debts without the need for the Iron Bank to act as a trusted intermediary between the families.

The solution to this is the blockchain.

Let’s move away from Cersei and the Tyrell family for now and think about the War of the 5 Kings.

Imagine if these 5 Kings decided that between themselves, they would not rely on the Iron Bank to manage their money, but rather, they would keep track of it themselves. In order for one King to transfer funds to another King, they would need details of their ‘gold storage’ right? The gold storage itself could be anonymous, they know the location of the storage but not the owner.

So say one of the Kings wants to give another gold, they have to ‘notify’ the other Kings that they’re sending gold from one account to another and to keep track of that transaction in their records. Now, this may not work in a war-time environment between 5 Lords in a medieval-fantasy tv show but bear with me.

At that point, each of the 5 Kings will note this transaction down. Gold from K1 to K2, without necessarily knowing who the parties are (this is to keep secret allegiances secret).

Now all 5 has a record of this transaction on a piece of paper.

Now transactions between each of the 5 Kings keeps occurring until that first piece of paper is full. At this point, they all have the same piece of paper with the same records. They now seal this paper with a secret code that all 5 of them agree upon, so it can never be altered and the record each of them contains is a true, immutable record of the transactions.

In practice, the blockchain sealing is called ‘mining’ and the algorithm used is incredibly complex. Similar to the Faceless Men, the ‘magic’ behind the secret code just works.

Now that the piece of paper with the records is sealed away securely, the 5 Kings are free to start another piece of paper for future transactions, and the process gets repeated.

Pretty easy right?

Thanks for nothing, Iron Bank.

Related posts:

I was happily working in Saudi Arabia when I felt a lump in my breast at the end of May 2017. Everyone said “Ah don’t worry about it” but I knew even then that it would be cancer. Don’t ask me how I…

Recently I have been reviewing RCAs filled by Engineers all over the company, to understand what are the common patterns that we need to improve on. One thing that stood out was how astonishingly…

In 2017 the Initial Coin Offering fundraising mechanism has allowed crypto-ventures to raise a staggering $2.18 Billion (as of Sept 2017). The amount per say is not surprising, but the mechanism of…