Introduction to the Concept of Blockchain
The first concept of a decentralized and blockchain-like system was added by David Chaum. He mentioned the technical infrastructure of this network in his 1982 research paper. Stuart Haber and W. Scott Stornetta also detailed a chain of blocks in 1991.
Origin of Blockchain Technology
The prototype of blockchain was first introduced in 1991 by cryptographer Stuart Haber, mathematician Dave Bayer, and physicist W. Scoot Stornetta. The researchers were working on a digital time-stamped document that was not editable or backdated.
This system also incorporated encryption method to generate a chain of blockchain that contained time-stamped documents.
In 1992, Merkle Tree was added to this design. In this manner, the network was able to collect more than one data into one block. This technology did not find a practical use case at the time and its patent expired in 2004. Four years later Bitcoin was introduced.
What is Reusable Proof of Work?
Computer Scientist and cryptographer Hal Finney introduced a system called RPoW or Reuseable Proof of Work. HashCash is a type of proof-of-work system that is used to limit spam and denial-of-service attacks. It was created by Adam Back in 1997. The system also produced RSA-signed coin that was transferred from one holder to another.
However, RPoW solved the problem of double spending by assigning a single ownership of a given token to a registered user.
The ownership record was saved on a trusted server in a digital manner and it was sent to different users around the globe to verify correctness and integrity in real time. RPoW is often marked as the early prototype and the baseline for creation of cryptocurrencies.
Bitcoin creator Satoshi Nakamoto published a white paper in 2008 for introducing Bitcoin blockchain as a decentralized and peer-to-peer fintech network. The paper was published in the cryptography mailing list by Satoshi Nakamoto.
Bitcoin blockchain was also based on the Hashcash proof-of-work algorithm. However, instead of RPoW it solved the double spending issuer with decentralized peer-to-peer network. In this manner, Bitcoin was able to track and verify transactions.
Furthermore, Bitcoin invited miners to earn BTC tokens as reward by using proof-of-work mechanism and get the information on the blockchain verified by the nodes on the network. The first Bitcoin block was mined by Satoshi in 2009.
The first Bitcoin was sent to Hal Finney, who received 10 BTC when Satoshi conducted the first Bitcoin transactions on 12 January in the same year.
Vitalik Buterin a programmer and co-founder of Bitcoin Magazine published the concept of a new blockchain network based on Bitcoin in 2013. He added scripting language to the Bitcoin network to add the feature of decentralized applications.
However, the proposal did not receive many votes in the community. Therefore, he started to develop the new blockchain called Ethereum with a new feature in the form of smart contracts.
Smart contracts are automation protocols that are deployed and executed on the Ethereum network. They trigger transactions automatically when specified conditions are completed.
Smart contracts are written in a specific programming language and they are added to the bytecode which is a type of decentralized Turing-complete virtual machine that has been renamed as Ethereum virtual machine or EVM. These protocols can read and execute programs.
Additionally, developers are able to create and publish applications on the Ethereum blockchain. These applications usually known as decentralized applications and they have hundreds of decentralized applications on Ethereum network.
Some of these decentralized applications are social media networks, gambling dens, and financial exchanges, etc. Ethereum blockchain issued a native currency called ETH. It is used to transfer value between different users on the blockchain and pay transaction fees.
Blockchains are adding new features, functions, and upgrades with the passage of time. At the same time, the technology is utilized in many sectors such as medical, real estate, finance, gaming, fashion, and other business activities.