The History of Blockchain
“To know where we’re going, it’s important to know where we’ve come from.”
– Inigo Molero, co-writer of Blockchain: The Industrial Revolution of the Internet
Blockchain is said to be tamper-proof, insanely secure – and it’s also mooted to be the future of pretty much everything.
Bullish investors are betting on it, bankers are scared of it and governments are wary of it.
But when did blockchain start and who invented blockchain?
There have been numerous key moments along the way in the evolution of this world-changing technology which have helped to shape blockchain.
In this article, we’ll delve into the fascinating history behind the hacker-proof technology to give you a more rounded idea of what it’s all about – and where it might be heading.
We’re going to take a look at:
➤ History of cryptography
➤ Blockchain and Bitcoin
➤ The emergence of Ethereum and Blockchain 2.0
➤ The future of blockchain
A Brief History of Cryptography and Algorithms
Most people who have a slight interest in blockchain probably know that the first Bitcoin software was openly released to the public “sometime around 2010” (it was actually at the start of 2009), but the seeds of blockchain go way back further than that.
In fact, to around the 1940s during the Second World War which was at its bloodiest peak.
Enter Alan Turing, a studious British mathematician with a knack for decoding info and who is known to be a whizz at cryptography (which itself is essential to blockchain’s).
Turing was asked to decipher the Enigma Machine, a machine the Nazi’s were using to communicate during the war.
Turing decoded it and handed the Allies a massive advantage.
Meanwhile, the American’s decoded the Purple Code, a Japanese ciphering machine.
The very fact that the Americans were able to do this meant that cryptography became a key discipline for governments.
Then, in the 1970s, a band of men and women realised that cryptography was making communication much freer and so set about to make it more accessible.
Little did they know that they were putting down the first fundamentals for blockchain.
A little later in that decade, Martin Hellman and Whitfield Diffie put together an algorithm called the Diffie-Hellman algorithm which split encrypted keys into a pair – a private key and a public key.
These keys were used to encrypt a message with a public key but in order to be able to decrypt the message a private key was required.
Together with Ralph Merkle, a US computer scientist who created an algorithm puzzled called the Merkle Trees, Hellman and Diffie are recognised as the founders of the public key cryptography – which was essential to blockchain’s creation.
From there, more advancements were made until W. Scott Stornetta and Stuart Haber described their work on a cryptographically secured chain of blocks in 1991 – the first of its type.
A year later, they added Merkle Trees to their conception, which boosted its security, performance and efficiency.
They were able to collect multiple documents on a single block.
Fast forward to 2009 when things exploded with the launch of Bitcoin …
When Was Blockchain Created?
Blockchain is synonymous with Bitcoin – and vice versa.
In 2008, during the aftermath of the Global Financial Crisis (“GFC”) a man called Satoshi Nakamoto (a man with a name but no face) released his white paper, Bitcoin: A Peer to Peer Electronic Cash System.
The electronic cash system in question was Bitcoin, and with the public unveiling of Bitcoin in 2009 came the public unveiling of Blockchain, the technology that underpins the digital coin and makes it existence possible.
When Nakamoto launched Bitcoin, there was still a lot of mistrust around digital coins.
How secure could they really be?
How easy was it to hack them and steal them?
Blockchain was to be the answer to the lack of digital trust.
Each time a transaction is made it is bundled together with other transactions and stored in a block.
The block is then placed on the chain. Once there, it can’t be changed or removed.
Blockchains have three key features:
For Bitcoin, Blockchain acts as the public ledger (a public record) of all the transactions made over the network.
The funny thing is that, despite the seeds for Blockchain having been sown over the last few decades, Nakomoto’s paper forged such a link between Blockchain and Bitcoin that many people thought of them as being the same thing.
It wasn’t until 2014 that more and more people began to realise that Blockchain could have a life outside of cryptocurrency.
After all, Blockchain is essentially a decentralised public ledger that needs no third-party (i.e. a bank or a government) to authenticate or approve the transaction.
The blockchain keeps a record of transactions between parties which makes it efficient, transparent and remarkably secure.
Entrepreneurs slowly realised this, and once they did, they began to conceive the different ways that the Blockchain technology can be used.
And so begun what could be potentially the biggest industry disruptor for all kinds of sectors, from voting to insurance, healthcare to transportation.
In 2013, however, not much was happening. There was still just one public blockchain – the Bitcoin blockchain – and it was used for currency only.
At the time, a young man called Vitalik Buterin was working for Bitcoin magazine, which he co-founded.
He was also contributing to the Bitcoin codebase.
But he was frustrated by its programming limitations and wanted a more mouldable blockchain that wasn’t just used for currency.
He knew blockchain had the potential for more than just recording transactions.
As the Financial Times reporter Sally Davies put it, “Blockchain is to Bitcoin what the Internet is to email.
A big electronic system, on top of which you can build applications. Currency is just one.”
The problem was that the Bitcoin community didn’t really agree. They were happy with things as they were and saw no reason to change or create a new chain.
So Buterin did what all determined, forward-thinking innovators do and forged ahead alone.
By 2015, he had founded and launched Ethereum, the second public blockchain.
The major difference between this new blockchain and the Bitcoin blockchain was that the former could also record contracts, loans and more, while the latter was limited by its ability to record currency and nothing else.
Ethereum is used to build something called smart contracts – contracts that process automatically once the set contract criteria which are stored on the blockchain are met without the need for any human input or influence.
This means no lawyers, bankers or middlemen. As you can imagine the potential for this is HUGE!
When did Blockchain 2.0 Start?
If you’ve heard of blockchain, you may have heard of blockchain 2.0.
In 2010, Bitcoin creator Satoshi Nakamoto said this:
“The blockchain design supports a tremendous variety of possible transaction types that I designed years ago. Escrow transactions, bonded contracts, third-party arbitrators, multiparty signatures etc. If Bitcoin catches on in a big way, these are things that we’ll want to explore in the future.”
As just shown, before Ethereum there was only one blockchain – the Bitcoin chain.
After Ethereum, there were two – and a distinct load of possibilities.
Once the Ethereum chain had shown what blockchain was capable of people began to see it as more than simply the technology that underpins decentralised cash and payments.
It became readily apparent that this technology would allow the decentralisation of more markets than just the financial markets.
The transactions stored in the blocks would no longer be limited to just money but could include registers for certificates, artworks, the legal rights to real estate and so on.
Nakomoto didn’t even use the term “Blockchain” in his 2008 paper, but instead used block and chain separately.
It wasn’t until 2016 when they became a single word – blockchain.
What Does the Future of Blockchain Hold?
There’s an incredible amount of hype surrounding blockchain, and people are constantly experimenting with it.
But for all of this, blockchain is yet to produce an app that’s worth the hype.
Folk are speculating about the currencies – and this speculation is making a lot of people very rich – but some are left asking “where’s the headline-grabbing app?”
Immutable records is one thing, but not everyone likes the idea of permanent records that can’t be erased.
Even the most die-hard of blockchain fans will have to admit that the technology hasn’t really caught on yet – and could take a while to.
That said, history tells us that these things take time.
Look at the history of the Internet: Its foundations were laid in the 1960s, but it wasn’t until the 1990s when the average Joe was online.
Moreover, blockchain has a striking amount of potential.
You could tie your own digital identity to a token on the blockchain, before using that token to open a bank account, login to different places and even apply for jobs.
Smart contracts have the potential to build social networks of the future, while blockchain’s could even be used to handle voting.
In case you’re wondering why there are so many different coins and blockchains well it’s because there is so much potential for different information to be stored, problems to be solved or existing blockchain technologies to be improved.
In this fledgling industry advancements are being made every day with new ideas, applications and improvements constantly being made.
The cryptocurrencies / tokens used to purchase services from these blockchain enterprises or to invest these startups are traded on exchanges
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