What is Blockchain?
Blockchain is the technology that supports the basis of cryptocurrencies. It serves the purpose of storing data and allows the users/nodes on the platform to come to an agreement or consensus without the need for mutual trust, but rather through the blockchain’s coding.
In 1991, the initial idea for blockchain was introduced by two scientists; Stuart Haber and W. Scott Stornetta. Their goal was to find means to apply timestamps in documents on the computer platform to eliminate the issues associated with time surveillance.
The two scientists stored digital information with timestamps in the form of “blocks”; each block would be interconnected with internal coding to ensure security. Later, in 1992, the Merkle tree was created, with the intent of storing numerous files within a single block. Nonetheless, the technology’s development was put to a halt and its patent expired in 2004, 4 years before the creation of Bitcoin.
Reusable Proof Of Work
In 2004, Hal Finney (Harold Thomas Finny II), a computer scientist and cryptographic activist, invented the Reusable Proof of Work system, a system that starts functioning when a Non-fungible token (NFT) is supplied and yields a token that can be traded peer-to-peer.
The RPoW system resolves the issue of double-spending, which was recognized as the main problem behind digital assets at the time. The system relied on trusted servers to securely store assets. The servers allowed users to verify the validity of the data, along with its completeness. All in all, it served as a vital basis for the cryptocurrencies we know today.
In late 2008, a whitepaper was distributed to the cryptography mailing list by the anonymous individual or group pertaining to the name Satoshi Nakamoto. The white paper introduced Bitcoin, a new electrical-finance network that relied on a decentralized electronic peer-to-peer system upon blockchain.
Its purpose was to verify transactions, as well as solve the issue of double-spending. Bitcoin utilized the Proof of Work algorithm, which derives from that which was found in Hashcash, which in return pertained similarities to Hal Finny’s RPoW system. However, Bitcoin employs the approach of “mining” to verify the validity of transactions through numerous computers, or nodes, in a network. Upon successful verification, miners would be rewarded with Bitcoins.
On the 3rd of January, 2009, the Bitcoin network was initiated after Satoshi Nakamoto mined the first Bitcoin block and received 50 Bitcoins as a result. Afterward, 10 of them were transferred to Hal Finney on the 12th of January, making Hal the first-ever receiver of Bitcoins.
In 2013, Vitalik Buterin, a now well-known Russian programmer and founder of the Bitcoin Magazine, stated that Bitcoin is required to have a scripting algorithm that aids the development of Decentralized Applications (dApps) upon its blockchain. However, at the time, a great majority disagreed with his comments, resulting in Vitalik’s development of his own blockchain system, called Ethereum, which is a decentralized platform that allows the functionality of writing scripts in the form of “smart contracts”.
A smart contract is programmable scripting that is used on the Ethereum blockchain. They are writing under the coding function called Solidity and compute based on byte-codes. After that, the system’s Turing-complete virtual machine, called Ethereum virtual machine (EVM), would function based on the information provided in each particular case.
With smart contracts, software and application developers have been able to create their own applications on the Ethereum blockchain, all of which have been called dApps, furthering developing into an ecosystem of its own.
Currently, there are over 3,000 applications built on the Ethereum blockchain, all of which with differing purposes, ranging from financial goals, social media or even gaming purposes. The blockchain’s native currency is Ether (ETH). It is utilized to exchange and pay transaction fees in smart contracts.