History and Evolution of Blockchain Technology
A blockchain is, at its most basic level, a series of transactions. A set of timestamped immutable data records managed by a collection of computers not owned by a single entity, each of these data blocks (i.e., block) is protected and linked by cryptographic principles (i.e., chain). The blockchain network has no centralized authority; it is the epitome of a decentralized system. Because it is an immutable, shared ledger, the information it contains is visible to all. Therefore, anything built on the Blockchain is transparent by its very nature, and everyone involved is held accountable for their actions. In other words, Blockchain is immutable, distributed, decentralized.
1991-2008: Early years of Blockchain technology
How did Blockchain come about? In 1991, Stuart Haber and W. Scott Stornetta conceived of what is now known as Blockchain. Their first task was to work on a cryptographically protected blockchain where no one could change documents’ timestamps.
In 1992, they updated their system to incorporate efficiency-enhancing Merkle trees, allowing more documents to be collected in a single block. However, in 2008, the History of Blockchain begins to gain relevance, thanks to the work of a person or group by the name of Satoshi Nakamoto.
Satoshi Nakamoto is credited as the mastermind in the background of blockchain technology. People believe Nakamoto could be a person or a group of people who worked on Bitcoin, the first application of digital ledger technology.
In 2008, Nakamoto created the first Blockchain, from which the technology has evolved and developed into many applications other than cryptocurrencies. Satoshi Nakamoto released the first report on the technology in 2009. The information provided details of how the technology was well equipped to improve digital trust; given the decentralization aspect, no one would control anything.
Since Satoshi Nakamoto left the scene and handed over the development of Bitcoin to other developers, digital ledger technology has evolved and spawned new applications that make up the history of Blockchain.
The general question is, when was Blockchain invented? We can see that Blockchain was created in 1991.
Structure of the Blockchain
In layman’s terms, Blockchain is a secure peer-to-peer distributed ledger used to record transactions across multiple computers. The content of the record can only be updated by adding another block linked to the previous block. It can also be viewed as a peer-to-peer network running on top of the internet.
Inlay or business terms, Blockchain is a platform where people can conduct transactions of all kinds without the need for a central or trusted arbiter.
The blocks that make up a blockchain contain batches of transactions approved by the participants in a network. Each block comes with a cryptographic hash of a previous block in the chain.
Blockchain Evolution: Phase 1- Transactions
2008-2013: Blockchain 1.0: Bitcoin Emerges
The vast majority of people confuse Bitcoin and Blockchain. That is not the case because one is the core technology that powers most applications, one of which is cryptocurrency.
Bitcoin was born in 2008 as the first application of Blockchain technology. Satoshi Nakamoto, in his white paper, described it as a peer-to-peer (point-to-point) electronic system. Nakamoto formed the genesis block, from which other blocks were mined, interconnected, resulting in one of the largest blockchains carrying different pieces of information and transactions.
Since Bitcoin, a blockchain application, became known, several applications have emerged that seek to take advantage of the principles and capabilities of digital ledger technology. Consequently, the history of the Blockchain contains a long list of applications that have emerged with the evolution of technology.
Blockchain Evolution: Phase 2- Contracts
2013-2015: Blockchain 2.0: Ethereum Development
In a world where innovation is the order of the day, Vitalik Buterin, one of the earliest contributors to Bitcoin’s codebases, is among a growing list of developers who felt that Bitcoin had not yet reached that point when it came to leveraging all of them. The capabilities of blockchain technology.
Ethereum was born as a new public blockchain in 2013 with additional functionalities compared to Bitcoin. This development has turned out to be a turning point in the history of Blockchain.
Blockchain Evolution: Phase 3 – Applications
2018: Blockchain 3.0: The Future
The history and evolution of Blockchain do not stop with Ethereum and Bitcoin. In recent years, several projects have emerged, taking advantage of the full capabilities of blockchain technology. The new projects have tried to address some of the shortcomings of Bitcoin and Ethereum and offer unique features that take advantage of the capabilities of the Blockchain.
Some of the new blockchain applications include NEO, heralded as the first decentralized, open-source blockchain platform launched in China. Even though the country has banned cryptocurrencies, it remains active when it comes to blockchain innovations. NEO presents itself as the Chinese Ethereum that has already received the endorsement of Alibaba CEO Jack Ma, as it plans to have the same impact as Baidu in the country.
In the race to accelerate the development of the Internet of Things, some developers took advantage of blockchain technology and created IOTA. This cryptocurrency platform is optimized for the IoT ecosystem as it strives to provide zero transaction fees and unique verification processes. It also addresses some of the scalability issues associated with Blockchain 1.0 Bitcoin.
In addition to IOTA and NEO, other second-generation blockchain platforms also have a ripple effect in the sector. The Monero Zcash and Dash blockchains emerged to address some of the security and scalability issues associated with early blockchain applications. Called Privacy Altcoins, all three blockchain platforms seek to provide high levels of privacy and security regarding transactions.
The blockchain story described above involves public blockchain networks so that anyone can access the contents of a network. However, with the evolution of technology, several companies have started to adopt the technology internally to improve operational efficiency.
How does Blockchain work?
The operation of Blockchain is best explained by understanding the communal aspect. It is based on what is called distributed ledger technology. All members of the peer-to-peer network that make up these records can see the same information in individual blocks.
A transaction recorded on a computer or node is visible to each computer on the electronic network. Everyone has access to the same data. Furthermore, they can reject or confirm what they see. All of the other blocks in the chain receive the information.
This is why the technology is so difficult to hack. No computer has control over the data, and modifying it in one block implies that the entire chain should as well. Everyone has a copy that is automatically updated; all network users must verify changes. Furthermore, with the addition of programmable code (first suggested by Russian Canadian Vitalik Buterin, co-founder of the Ethereum Network), the technology can create “smart contracts” that can execute agreements when certain conditions are met.
The Advantages of Blockchain
Blockchain technology’s transparency and immutability provide several benefits to organizations:
Transparency: The data on the Blockchain is visible to all participants and cannot be changed. This reduces risk and fraud while increasing trust.
Security: Because Blockchain is distributed and encrypted, it will be difficult to hack. This demonstrates the potential for enterprise security and the Internet of Things (IoT).
Fewer intermediaries: Blockchain is an existing peer-to-peer network that will reduce reliance on external intermediaries. This improves process efficiency, resulting in fewer opportunities for data entry errors and lower transaction fees.
Traceability: Because blockchain data is immutable, it is ideal for tracking and tracing items of provenance along complex supply chains.
Increased efficiency and ROI: Distributed ledgers will provide a quick turnaround time—a quick return on investment by helping companies create more agile, efficient, and profitable processes.
Faster processes: Blockchain can speed up processes in multi-party scenarios and enable more secured transactions that are not limited by office hours.
Automation: Blockchain is programmable, making it possible to automatically activate actions, events, and payments once the conditions are met.
Data confidentiality: while the information is verified and added to the Blockchain through a consensus process, the data itself is translated into a series of letters and numbers using hexadecimal hash code Participants in the network are unable to solve that information in the absence of a key.
What are the four different kinds of blockchain networks?
There are four significant types of blockchain networks, each of which is suitable for a specific purpose:
Blockchains that are open to the public
Bitcoin and Ethereum, the first and most well-known examples of blockchain networks, are public networks. They are considered “without permission.” anyone can read a public blockchain, send transactions to it, or participate in the consensus process. All transactions are shared, and users can remain anonymous. This is the type of blockchain that 1COIN operates – 1COIN Network (Smart Chain).
Semi-private blockchains are operated by a single company that grants access to any user who meets the pre-established criteria. Although not truly decentralized, this type of “authoritative” Blockchain is attractive for business-to-business use cases and government applications.
A single organization also controls private blockchains decides who can read them, submit transactions to them, and participate in the consensus process. Private blockchains are helpful as test environments but not for effective production because they are entirely centralized.
Of the four methods for establishing a blockchain network, the consortium is currently the most accepted model for business. In consortium blockchains, the consensus process is controlled by a preselected group – a group of companies, for example. The right to read the Blockchain and send transactions to it can be public or restricted to participants. Consortium blockchains are considered “authorized blockchains” and are the most suitable for use in business.