The Blockchain Chronicles: The Technology That Changed the World

Why was blockchain technology invented? How did crypto come about? We’ll tell you in 5 minutes in our new article.

In the previous article, we learned what blockchain is and where this technology is applied besides crypto. If you haven’t read that article yet, be sure to check it out at the link.

Now, we’ll delve deeper into the history of blockchain. We’ll trace the development of crypto and highlight key events that have influenced the industry as a whole.

The Creation of Blockchain

The idea of blockchain was born in 1991 when scientists Stuart Haber and W. Scott Stornetta developed a system to protect digital documents from tampering. However, this technology still needs to be implemented. Despite its forward-thinking design, the technology was dormant, and the patent expired in 2004, just four years before the creation of Bitcoin.

In the same year, 2004, Hal Finney introduced the Proof of Work (PoW) system to solve the double-spending problem in crypto. Double spending refers to the attempt to spend the same coins twice. In traditional finance, this problem is solved with the help of a centralized, regulated intermediary, such as a bank, which keeps track of funds and transactions. In crypto, there is no central authority to prevent this – a malicious actor may attempt to simultaneously send the same coins to different recipients before one of the transactions is completed. Therefore, the creation of PoW was an important step in the development of crypto.

The Development of Crypto: Bitcoin

The history of crypto began in 2008 when Satoshi Nakamoto (a pseudonymous individual or group – still unknown) published a whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.”

A whitepaper is a document that describes the technical aspects of a product or technology in detail. It is needed to explain an idea’s potential and relevance to people. This event became a catalyst for the development of an industry that is currently changing the structure of our world:

• On January 3, 2009, Satoshi Nakamoto mined the first Bitcoin block and received 50 Bitcoins as a reward.
• On January 12, 2009, Satoshi Nakamoto transferred 10 Bitcoins to Hal Finney, the first Bitcoin transaction in the world.

As we mentioned in the previous article, miners mine Bitcoins. The scheme works like this: miners use special high-performance computing equipment. The main task of a miner is to solve complex mathematical problems that require testing many combinations. When a miner finds a solution, they create a new block of transactions; other nodes on the network verify this block and then added to the Bitcoin blockchain. For each block added to the blockchain, the miner receives a reward in the form of new Bitcoins and fees for the transactions included in that block.

We’ll tell you more about Bitcoin in one of the next articles. But for now, let’s look at another pivotal moment in the history of crypto.

The Emergence of a Competitor: Ethereum

The emergence of the Ethereum blockchain was the second important event that irreversibly changed the crypto sphere. In 2013, Vitalik Buterin, co-founder of Bitcoin Magazine, presented a language for creating decentralized applications.

The main reasons for creating Ethereum:

• Expanding blockchain capabilities: Initially, you could only conduct transactions on the Bitcoin blockchain. On the other hand, Ethereum extended the blockchain’s capabilities for creating decentralized applications and smart contracts. Now, blockchain is for more than just transactions. Smart contracts contain various information: agreement terms, party identification data, computational logic, notifications, token values, and other arbitrary information. This information is recorded in the smart contract code as program instructions executed automatically in the blockchain network when certain conditions are met.
• Solving Bitcoin’s problems: Bitcoin has limitations, including low scalability and poor flexibility. Improving scalability is critical for the blockchain to process large volumes of transactions. Ethereum addressed these issues.
• Decentralization: Like Bitcoin, Ethereum aimed to create a decentralized blockchain network independent of a central governing body.

What’s Next?

In March 2024, Bitcoin reached historic price highs, surpassing $70,000. As of May 2024, over 10,000 different cryptocurrencies are in circulation. The exact number constantly changes as new crypto emerges, and some projects cease.

Blockchain technology was initially used for the crypto sphere, but has long since transcended its boundaries and is now applied in many other areas. The popularity and use of digital currencies are growing, with new ways of using them emerging: crypto ATMs, stores accepting crypto, and crypto donations.

Several countries worldwide have already issued CBDCs, a digital currency a country’s central bank issued. CBDCs are a digital analog of physical banknotes and coins. Other central banks are also developing and testing digital currencies.

And although blockchain technology has already had a significant impact on our world, this is only the beginning of its development. It opens up the prospects of decentralized technologies in the future.

And we, in turn, urge you to stay with us and follow the development of blockchain and crypto. Subscribe to our social media channels.