History of Blockchain Technology
The underlying technology behind cryptocurrencies is blockchain. This allows every client on the network to reach consensus without having to trust anyone else.
First days
The idea of blockchain technology was described as early as 1991, when research scientists Stuart Haber and W. Scott Stornetta implemented a computational-practical solution for time-stamped digital documents so that they could not be backdated or forged.
The system used a cryptographically secured chain of blocks to store timestamped documents, and in 1992 Merkle trees were included in the development, making it more efficient by allowing multiple documents to be collected into a single block. However, this technology was not used and the patent was lost in 2004, four years before the creation of Bitcoin.
Reusable Proof of Work
In 2004, computer scientist and cryptographic activist Hal Finney (Harold Thomas Finney II) introduced a system called RPoW, Reusable Proof Of Work. The system worked by generating a non-fungible or non-fungible Hashcash token, based on proof of work and signed in RSA, which could then be transferred from person to person.
RPoW solved the problem of double spending by retaining ownership of tokens registered on a trusted server, which was designed to allow users around the world to verify its correctness and integrity in real time.
RPoW can be considered as an early prototype and a significant early step in the history of cryptocurrency.
Bitcoin network
At the end of 2008, a white paper representing a decentralized peer-to-peer (P2P) electronic money system called Bitcoin, cryptography was sent out by mailing list, by a person or group, using the alias Satoshi Nakamoto.
Based on the proof of work algorithm of Hashcash, but instead of using a hardware-based trusted computing function like RPoW, Bitcoin's double-spend protection was provided by a decentralized peer-to-peer (P2P) protocol to track and verify transactions. In short, bitcoins are "mined" for rewards using a proof-of-work mechanism for individual miners and then verified by decentralized nodes on the network.
On January 3, 2009, Bitcoin was born when the first bitcoin block was mined by Satoshi Nakamoto, who had a reward of 50 bitcoins. The first Bitcoin recipient was Hal Finney, who received 10 Bitcoins from Satoshi Nakamoto in the world's first Bitcoin transaction on January 12, 2009.
Ethereum
In 2013, Vitalik Buterin, a programmer and co-founder of Bitcoin magazine, stated that Bitcoin needed a scripting language to build decentralized applications. With no consent from the community, Vitalik set about developing a new, distributed, blockchain-based computing platform, Ethereum, which featured scripted functionality called smart contracts.
Smart contracts are programs or scripts that are applied and executed on the Ethereum blockchain, they can be used, for example, to complete a transaction if certain conditions are met. Smart contracts are written in specific programming languages compiled into bytecode, which can then be read and run by a decentralized Turing Virtual Machine called the Ethereum Virtual Machine (EVM).
Developers can also create and publish applications that run inside the Ethereum blockchain. These applications are commonly referred to as DApps (Decentralized Applications), and there are already hundreds of DApps running on the Ethereum blockchain, including social media platforms, gambling, and financial exchanges.
The Ethereum cryptocurrency is called Ether, it can be transferred between accounts and is used to pay fees for computing power used in the execution of smart contracts.
Outcome
Today, blockchain technology is becoming mainstream and is already being used by a variety of applications, which is not limited to cryptocurrencies. Don't forget to watch other videos for even more information about blockchain technology and other interesting topics at Binance Academy.
