History of Blockchain Technology

The fundamental technology underlying cryptocurrencies is blockchain. This allows each client on the network to reach consensus without having to trust anyone else.


First days

The idea of ​​blockchain technology was described back in 1991, when research scientists Stuart Haber and W. Scott Stornetta implemented a computationally practical solution for digital documents to be timestamped so they could not be backdated or counterfeited.

The system used a cryptographically secured blockchain to store time-stamped documents, and in 1992 Merkle trees were included in the design, 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 Bitcoin was created.


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 obtaining 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 maintaining ownership of tokens registered on a trusted server that was designed to allow users around the world to verify its correctness and integrity in real time.

RPoW can be considered an early prototype and a significant early step in the history of cryptocurrency.


Bitcoin network

In late 2008, a white paper introducing a decentralized peer-to-peer (P2P) electronic cash system called Bitcoin cryptography was sent out by mail, by an individual or group, using the pseudonym Satoshi Nakamoto.

Based on Hashcash's proof of work algorithm, but instead of using a hardware-based trusted computing function such as 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 a fee using a proof-of-work mechanism for individual miners and are 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 recipient of Bitcoin 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 one of the founders of Bitcoin magazine, stated that Bitcoin needed a scripting language to create decentralized applications. Without receiving consent from the community, Vitalik began 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 and 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 executed by a decentralized virtual Turing machine called the Ethereum Virtual Machine (EVM).

Developers can also create and publish applications that run inside the Ethereum blockchain. These applications are commonly called DApps (decentralized applications), and there are already hundreds of DApps running on the Ethereum blockchain, including social media platforms, gambling and financial exchanges.

Ethereum's cryptocurrency is called Ether, it can be transferred between accounts and is used to pay fees for the computing power used to execute smart contracts.


Bottom line

Today, blockchain technology is becoming mainstream and is already used by a variety of applications, which does not limit it only to cryptocurrencies. Don't forget to watch other videos to get even more information about blockchain technology and other interesting topics on Binance Academy.