Blockchain. Where do we even start? Let’s rewind all the way back to 1982 when Cryptographer David Chaum proposed a “Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups” for his dissertation. However, at the time, the proposal was merely “similar” to blockchain technology. There were further developments to the idea some years later by Stuart Haber and W. Scott Stornetta where they made the proposed protocol tamper-proof. The next evolution, with the help of Dave Bayer, included Merkle Trees in the design and improved the efficiency of protocol by allowing data to be collected into blocks.
However, it wasn’t until 2008 that blockchain technology really established itself as an integral part of the technology lexicon. In 2008, Satoshi Nakomoto (anonymous person or group) released a white paper titled Bitcoin: A Peer to Peer Electronics Cash System. The white paper described the use of blockchain technology in the context of an electronic cash system This is also when it became harder to segregate blockchain, cryptocurrency, and Bitcoin.
So why blockchain? Again, what is blockchain? And what’s the deal?
I can’t say what inspired David Chaum to propose the initial idea in his dissertation, but I can only assume he wanted a solution. Maybe he was looking for a bookkeeping system which allowed new information to be incorporated by anybody but at the same time the information had to be verified each time it got added. And that’s what blockchain essentially is—a ledger that is absolutely immutable in nature. In the case of Bitcoin, blockchain allowed the properties of security, decentralization, and scalability.
Circling back to Bitcoin may be the easiest way to understand blockchain. Satoshi Nakamoto wanted a peer-to-peer cash system that recorded all transactions on a decentralized ledger. Transactions accepted on the ledger would be transparent and immutable. The larger the network of users subscribing to this ledger would grow, the less susceptible the system would become to malicious attacks.
The following is a simple use-case on how Bitcoin uses blockchain:
Imagine person A sends Bitcoins of a certain value to person B, the transaction is recorded on block 1. A new transaction where person C sends Bitcoins to person D takes place,this new transaction is recorded and attached as block 2 on the blockchain. As the number of transactions increase, more blocks get added to the blockchain.
On the Bitcoin network, Bitcoin miners, as participants on the network, verify and update the ledger. Because it is decentralized, all active Bitcoin miners race to process and update the transactions to the blockchain. Once the blockchain is updated, every miner has access to the updated blockchain instantly which is accepted by the majority if not all of the miners. The only way to edit transaction history on the blockchain is to have at least 51% of the miners agree on the edits, which is virtually impossible due to economic reasons, thus making Bitcoin highly secure.
After blockchain technology gained popularity, other use cases were being explored, experimented with, and adopted in various industries. Some of these use cases include: medical record-keeping, voting applications, personal identification security, supply chain tracking, etc.
Honestly, that’s a lot of words and ideas put behind the technology of verifying and recording information, but that’s what blockchain essentially is; just a highly efficient, secure, and accessible system for verifying and recording information. There’s a lot more technical concepts you can explore to understand blockchain better. I’ve listed a few down below so you can continue your own journey into learning about blockchain:
|Smart Contracts||Non Fungible Tokens|
|Blockchain Trilemma||Private Blockchain|
|Proof of Stake||Side Chains|
|Proof of Work||Hardforks|
The basis of all of the above is what I know about blockchain, and like all wise men, I know that I don’t know a lot.