Blockchain technology is a decentralized, digitized ledger that records transaction information about a cryptocurrency in chronological order. This is the technology that allows every client in a network to reach consensus without having to trust each other. The development of blockchain has led to the launch cryptocurrencies and various solutions that call for a decentralized platform.
History of Blockchain: The Highlights
While Bitcoin is just a decade old, the origins of the blockchain technology behind it and thousands of other cryptocurrencies would go way back to 1991. Two scientists found a way to use cryptography to time-stamp digital files without the risk of tampering or backdating. A year later, an efficient method of collecting documents into one block was designed.
These methods would not gain significant application until 2004 when computer scientist Hal Finney introduced the concept of proof-of-work tokens that can be transferred from person to person. This concept, widely considered as an early prototype of Bitcoin, solved the double spending problem that was existent in digital currency solutions at the time.
On October 31, 2008,Satoshi Nakamoto introduced a decentralized peer-to-peer electronic cash system called Bitcoin. (Even until now, Satoshi’s identity remains a mystery).The whitepaper proposed a system that replaces the need for central authorities like banks and financial institutions to facilitate transactions:
“What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.”
The first Bitcoin was then created via mining, also by Satoshi, on January 3, 2009. Satoshi then sent 10 bitcoins to Hal on January 12, 2009 —the world’s first Bitcoin transaction.
From there, a handful of blockchain projects emerged, one of which led to the creation of various cryptocurrencies that serve as alternatives to Bitcoin. In 2013, programmer Vitalik Buterin started developing Ethereum, a new blockchain-based distributed computing platform that allows for the creation of programs or scripts, called smart contracts, as well as decentralized applications. A cryptocurrency called Ether is used to pay for transactions involving the Ethereum blockchain.
What do the next 10 years hold for Bitcoin?
As the history of Bitcoin shows us, it certainly hasn’t been plain sailing and the challenges that faced cryptocurrency have also shaped what it has become today.
The original protocol, as set out in Nakamoto’s whitepaper, has remained largely the same, but it is the technological advances that have occured around Bitcoin that are likely to shape what it becomes in the next ten years.
Emin Gün Sirer is a Turkish-American computer scientist. He is currently an associate professor of computer science at Cornell University. He suggests that the next decade will see a period of innovation that will overhaul systems we’re currently using today.
“In another 10 years, Bitcoin will still be around close to its current form, but it will be a side show. The actual systems that people will use to transact value and to execute contracts will bear no resemblance to today’s systems.”