The underlying technology behind cryptocurrency is blockchain. This technology allows each client in the network to reach consensus without ever trusting each other.
The first day
The idea behind blockchain technology was described as early as 1991 when researchers Stuart Haber and W. Scott Stornetta introduced a computationally practical solution for timestamping digital documents so that they could not be Postpone the date or intervene.
The system used a chain of cryptographically secured blocks to store timestamped texts, and in 1992, Merkle trees were incorporated into the design, making it more efficient. by allowing a block to gather several pieces of text. However, the technology was not used and the patent expired in 2004, four years before Bitcoin was born.
Proof Of Work Reuse
In 2004, computer scientist and cryptozoologist Hal Finney (Harold Thomas Finney II) came up with a system called RPoW, Reusable Proof Of Work. The system works by receiving an immutable or non-fungible Hashcash based proof of work token, and in return generates an RSA signed token that can then be exchanged directly from the person to someone else.
RPoW solved the problem of double consumption by keeping ownership of registered tokens on a trusted server; This server is designed to allow users worldwide to verify accuracy and integrity in real time.
RPoW can be seen as an initial experiment and important first steps in the history of cryptocurrency.
Bitcoin Network
In late 2008, a white paper introducing a decentralized, peer-to-peer electronic cash system – named Bitcoin – was posted on a cryptography mailing list by a person or organization using the pseudonym is Satoshi Nakamoto.
Based on the Hashcash proof of work algorithm, but instead of using a hardware-based computation function like RPoW, Bitcoin double-spend protection is provided by a peer-to-peer network protocol for tracking and authentication transactions. In short, miners “mine” Bitcoin for rewards using a proof-of-work mechanism and then verify it with decentralized nodes in the network.
On January 3, 2009, Bitcoin was born when Satoshi Nakamoto mined the first block of bitcoin, resulting in a reward of 50 bitcoin. 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, programmer and co-founder of Bitcoin Magazine pointed out that Bitcoin needed a cryptographic language to build decentralized applications. Without community approval, Vitalik began developing a new blockchain-based distributed computing platform, Ethereum, with a new cryptographic function called smart contracts.
Smart contracts are programs or scripts deployed and executed on the Ethereum blockchain, which can be used, for example, to execute a transaction when conditions are satisfied. Smart contracts are written in some specific programming language and compiled into bytecode, which a decentralized Turing-complete virtual machine, called the Ethereum virtual machine (EVM), can then read and enforcement.
Developers can also create and publish applications that run inside the Ethereum blockchain. These applications are commonly known as DApps (decentralized applications) and there are already hundreds of DApps running on the Ethereum blockchain, including social media platforms, gambling applications, and financial trading platform.
Ethereum's cryptocurrency is called Ether; it can be transferred between accounts and used to pay for the computational power used when executing smart contracts.
summary
Today blockchain technology is attracting a lot of attention in mainstream channels and has been used for many different applications, not just in the cryptocurrency sector. For more information about blockchain and other interesting topics, don't forget to check out our other videos at Binance Academy.