Blockchain was initially proposed as the distributed ledger that underpins bitcoin transactions in 2008. Since then, the technology has taken on a life of its own, attracting interest from a wide range of sources. Governments, corporations, and other organizations are investigating and adopting blockchain technology to address a wide range of issues, the majority of which have nothing to do with digital money.

Across a dispersed network, blockchain provides security, immutability, traceability, and transparency.
As a result, it is highly suited to use cases that are challenging to handle with standard infrastructure.
A blockchain is a database that acts as a public ledger for recording transactions without the requirement for a third party to validate each one. A peer-to-peer (P2P) network is used to disseminate the blockchain.

– It is made up of data chunks that are connected together to form an immutable chain.
– To avoid a single point of failure, each computer in the network keeps a copy of the ledger.
– The blocks are inserted sequentially and are permanent and tamperproof.

A blockchain begins with an initial block, known as the Genesis block, which records the first transactions.
The block is also given an alphanumeric string called a hash, which is dependent on the timestamp of the block.
Blocks are added to the chain in a consecutive order. Each block utilizes the hash from the preceding block to generate its own hash, so connecting the blocks.

Blockchain also employs a computational method known as consensus to check the legitimacy of a block before it is accepted or can be connected to the chain. As part of this procedure, the majority of nodes in the blockchain network must agree that the hash of the new block was accurately calculated. Consensus guarantees that all distributed ledger copies are in the same state.

This is a breakdown of how blockchain works.

Blockchain first served as a distributed public ledger to support the cryptocurrency bitcoin.
In a trustless environment, blockchain enabled the recording of bitcoin transactions without the requirement for a central authority to create trust. This not only increased transaction efficiency, but it also removed the costs associated with third-party verification.

In addition, blockchain offers improved transparency, traceability, and security as compared to traditional techniques to handle dispersed transactions. Despite the fact that blockchain has only been around for a short time, its impact has already been seen extensively.

1979-2007: Blockchain’s inception and early years

Many of the technology on which blockchain is built were in development long before bitcoin. The Merkle tree, named after computer scientist Ralph Merkle, is one of these technologies. Merkle’s 1979 Ph.D. thesis for Stanford University presented a method for public key distribution and digital signatures known as “tree authentication.”

He eventually patented this concept as a way to provide digital signatures. The Merkle tree is a data structure that may be used to validate individual records. But Merkle was not the only one who helped lay the groundwork for blockchain. David Chaum described a vault method for setting up, managing, and trusting computer systems.

In his 1982 Ph.D. dissertation for the University of California, Berkeley, by mutually suspicious groups
This was a system that embodied many of the components of a blockchain.
Chaum is also credited with developing digital currency, and he formed the DigiCash firm in 1989.

Stuart Haber and W. Scott Stornetta released an essay on time stamping digital documents in 1991. The paper suggested a method to prohibit users from backdating or forward dating electronic documents. The objective was to make the document completely private without necessitating record-keeping by a timestamping service.
Haber and Stornetta revised the architecture in 1992 to include Merkle trees, which allowed numerous document certifications to reside on a single block.

There was lots of other stuff going on during these early years.

Throughout these early years, there was a lot of additional activities that contributed to blockchain’s success.
This era, for example, witnessed the birth of the peer-to-peer (P2P) network, a notion popularized in 1999 by the now-defunct Napster.

Some believe that Napster was not a real peer-to-peer network since it relied on a centralized server.
Nonetheless, the service aided in reviving the P2P network by allowing the creation of a distributed system that could benefit from the compute power and storage capacity of thousands of machines.

In this era, the notion of proof-of-work (PoW) was also created to validate computing effort
and discourage intrusions. This paved the way for hashcash, a PoW technique that provides denial-of-service protection.

Adam Back invented hashcash in 1997 to combat email spam. Then, in 2004, Hal Finney invented reusable PoW, a technique for exchanging a non-exchangeable – or non-fungible – hashcash token for an RSA-signed token.
The PoW method is critical in bitcoin mining.

2008-2009: Bitcoin and blockchain are born.

Satoshi Nakamoto released a white paper outlining the principles of bitcoin and blockchain in 2008.
Nakamoto is assumed to be a pseudonym adopted by the person – or group of people – who suggested the technique.
According to the white paper, blockchain infrastructure will enable safe, peer-to-peer transactions without the need for trusted third parties such as banks or governments. Although Nakamoto’s exact identity is unknown, there has been no shortage of ideas.

Bitcoin and blockchain framework which was presented in 2008, was based on technology and concepts developed over the previous three decades. The notion of a “chain of blocks” was also introduced by Nakamoto’s design. This enabled the addition of blocks without the need for them to be signed by a trusted third party.

In reality, Nakamoto characterized an electronic coin as a “chain of digital signatures,” with one owner transferring the coin to the next. This is accomplished by “digitally signing a hash of the previous transaction and the public key of the next owner and adding both to the end of the coin,” according to his white paper.

However, Nakamoto’s white paper was only the beginning.Bitcoin went from concept to reality in 2009.

January 3, 2009.
Nakamoto was the first to mine a bitcoin block, verifying the blockchain idea.
The Genesis block – also known as block 0 – contained 50 bitcoins.

January 8, 2009.
Bitcoin v0.1 was distributed as open-source software by Nakamoto on SourceForge.
Bitcoin is now available on GitHub.

January 12, 2009.
In block 170, Nakamoto transferred Hal Finney 10 bitcoin, which was the first bitcoin transaction.

October 12, 2009.
For bitcoin developers, the Internet Relay Chat channel #bitcoin-dev was formed.

October 31, 2009.
Bitcoin Market, the first bitcoin exchange, was launched, allowing individuals to trade paper money for bitcoin.

November 22, 2009.
Nakamoto established the Bitcoin talk forum in order to disseminate bitcoin-related news and information.

Nakamoto designed the protocol such that there will never be more than 21 million bitcoin. More than 18 million have already been mined. Based on the current pace of mining, bitcoin should approach the 21-million limit around 2140.
Meanwhile, despite price swings, their worth continues to rise. In October 2009, a bitcoin was worth less than one penny. Today, one bitcoin is worth more than $35,000 USD (USD).

2016 until the present: Blockchain has entered the mainstream.

Currently, a growing number of companies see blockchain as a viable technology independent from bitcoin or other cyber currencies. Despite this tendency, every year from 2016 to the present has had its ups and downs.

2016

The term blockchain came to be accepted as an one word, rather than as two ideas, as they were in Nakamoto’s original article. The Chamber of Digital Commerce and the Hyperledger project established a collaboration to improve industry lobbying and education.

A defect in the Ethereum decentralized autonomous organization code was exploited, causing the Ethereum network to hard split. The Bitfinex bitcoin exchange was hacked, and roughly 120,000 bitcoin were taken, amounting to a $66 million prize.

2017

– Bitcoin reached a new high of over $20,000.
– Bitcoin has been recognized as legal tender in Japan.
– The Digital Trade Chain consortium was created by seven European banks to develop a blockchain-based trade finance infrastructure.

The Block.one firm launched the EOS blockchain operating system, which is intended to allow commercial transactions and business-to-business decentralized applications. In some form, blockchain technology was employed by around 15% of the world’s banks.

2018

– This year marks the tenth anniversary of Bitcoin.
– Bitcoin’s value continued to fall, reaching around $3,800 by the end of the year.
– Stripe, an online payment company, has ceased taking bitcoin payments.
– Google, Twitter, and Facebook have all prohibited bitcoin advertising.

South Korea has prohibited anonymous cryptocurrency trading but has declared that it would spend millions of dollars in blockchain ventures. The Blockchain Observatory and Forum was established by the European Commission and Baidu announced the launch of its blockchain-as-a-service platform.

2019

1) Walmart has built a Hyperledger-based supply chain system.
2) Amazon has announced the general availability of its Amazon Managed Blockchain service on Amazon Web Services (AWS).
3) The number of transactions on the Ethereum network has surpassed one million per day.

As corporations/enterprises adopted blockchain technology and decentralized applications, blockchain research and development gained center stage.

2020

According to Deloitte’s 2020 Global Blockchain Survey, about 40% of respondents have integrated blockchain into production, and 55% see blockchain as a major strategic goal.

– In preparation for Ethereum2.0, Ethereum established the Beacon Chain.
– Stablecoins grew in popularity because they offered greater stability than regular cyber currencies.
– There was a rising interest in merging blockchain with artificial intelligence to streamline corporate operations.

Throughout these five years, there has been an increase in interest in utilizing blockchain for purposes other than cryptocurrency. This trend is expected to continue through 2021, as governments and businesses seek to blockchain for a number of use cases.

Voting, real estate, fitness monitoring, intellectual property, the internet of things, and vaccine delivery are all examples. Furthermore, numerous cloud providers now provide blockchain as a service, and there is a higher than ever demand for competent blockchain developers.

Blockchain technology’s future

Predicting the future of any technology is difficult, and blockchain is no exception, especially given its short history. However, if blockchain continues on its present trajectory, it will have an impact on a wide range of industries, including retail, mining, travel, healthcare, education, agriculture, and entertainment.

The greatest impact might be felt in financial services, particularly with the rising shift toward
decentralized finance in which permissioned blockchains are used to address sophisticated
financial use cases. Governments will almost certainly continue to embrace blockchain technology.

Blockchain technology will only develop as universities, governments, and private firms continue to explore and invest in it. They must, however, first overcome the issues that blockchain presents, notably in terms of security, privacy, scalability, and interoperability.

Blockchain is also not appropriate for every use case, and businesses must weigh the pros and cons of implementing it before investing in the technology and putting it into production.