Blockchain technology is still complex to a lot of people because its concept seems unattainable. I’ll make it simple. Visualise a moment where you can sell an artefact you won from playing the game The Assassin Creed to a fellow player for a lot of money, or where you can buy a virtual land. This is not the future, it is our present, and it is happening. These are a few of the significant blockchain technology use cases that are changing how we live and operate.
I understand if you are still sceptical at this point. By the time you finish this post, you would have understood:
- What blockchain is;
- What blockchain technology is;
- The history of blockchain technology, and
- The types of blockchain
What is Blockchain?
A blockchain is a digital ledger system that is stored across different networks. All information stored on the blockchain is recorded as a block. The information could be on an asset, which may be tangible (for example, land) or intangible (for example, copyright ownership). The information that is recorded in the block could be on who, what, when, where, how much, and even the condition, such as the temperature of a food shipment. It is a connected block of information for anything of value to be tracked.
The information is blocked together in an irreversible chain; a blockchain. Every new block reinforces the prior block’s verification, and by extension, the blockchain as a whole. This gives the blockchain an immutable status making it secure and free from tampering.
What is Blockchain Technology?
Blockchain technology is the protocol that supports the operation of the blockchain. Cryptocurrencies like Bitcoin are made possible by blockchain technology, the same way that a car can move because of a car engine.
History of Blockchain
The evolution of blockchain has been steady. They involve a series of notable innovations:
Digital Cash/Blind Signatures
Cryptographer David Chaum is credited with inventing and using the first blockchain-like protocol that is used today and the system that is known as blockchain technology. Chaum pioneered the idea of digital currency for his 1983 paper, which led to the cryptographic primitive of a blind signature. This achievement established the foundation for cryptocurrency, which is now widely used 40 years after Chaum’s invention.
Time-stamping
In 1991, Stuart Haber and W. Scott Stornetta created a system that used the concept of a cryptographically secured chain of blocks to store time-stamped documents. They wanted to deliver a computationally feasible solution for time-stamping digital documents to prevent them from being backdated or tampered with.
Merkle Trees/Hash Functionality
In 1992, Ralph C. Merkle, the inventor of cryptographic hashing, created the Merkle Trees design. Merkle Trees makes blockchain more efficient by allowing multiple information to be collected into a single block. Merkle Trees are employed in the construction of a ‘secured chain of blocks.’ It kept a series of data records, each one linked to the one before it and the most recent record in this chain contains the entire chain’s history. This technology, however, went unused, and the patent expired in 2004.
Reusable Proof of Work (RPoW)
In 2004, computer scientist and cryptographic activist Hal Finney introduced a system called Reusable Proof Of Work (RPoW) as a prototype for digital cash. It was a significant early step in the history of cryptocurrencies. The RPoW system worked by receiving a non-exchangeable or a non-fungible Hashcash-based proof of work token in return, creating an RSA-signed token that further could be transferred from person to person.
RPoW solved the double-spending problem by keeping the ownership of tokens registered on a trusted server. This server was designed to allow users throughout the world to verify its correctness and integrity in real-time.
In 2004, Hal Finney, a computer scientist and cryptographic activist, introduced Reusable Proof Of Work (RPoW) as a prototype for digital cash. It was a significant early step in cryptocurrency history. The RPoW system worked by exchanging a non-exchangeable or non-fungible Hashcash-based proof of work token for an RSA-signed token, which could then be transferred from person to person.
RPoW prevented double-spending by keeping token ownership registered on a trusted server. This server was created to allow users all over the world to validate its accuracy and authenticity in real-time.
Distributed Blockchain/Bitcoin
In 2008, Satoshi Nakamoto (possibly a pseudonym), invented the first blockchain network; distributed blockchain. He improved the Merkle Tree design in a new way that enables blocks to be added to the initial chain without having to be signed by trusted parties. The modified trees would keep a secure record of data exchanges. It timestamps and verifies each exchange using a peer-to-peer network. The blocks could be managed autonomously, without the need for a centralised authority.
These advancements make up the key elements of blockchains, and ultimately, the backbone of cryptocurrencies. Today, blockchain serves as the public ledger for all cryptocurrency transactions.
Types of Blockchain
Blockchain technology can be built in a variety of ways. They can be:
- Public blockchains
- Private blockchains
- Hybrid or Consortium blockchains
- Sidechains
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