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History
of Blockchain:

 

The idea of Blockchain was
first presented in 2008 with a distribution of : ” Bitcoin- A peer-to-peer
Electronic cash system “, a paper by an unknown individual or group named
Satoshi Nakamoto (A nom de plume till date nobody is certain as to who it seems
to be).

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Blockchain was then for all
intents and purposes actualized in 2009 as a center segment of the digital
currency, Bitcoin.  It served as a digital public ledger which would store
all the transaction data on the network.

 

 On January 12 2009, the primary Bitcoin exchange
occurred between Hal Finney and Satoshi Nakamoto and on October 12 2009,
#bitcoin-dev is enlisted as a talk subject on freenode IRC (an open source
venture discussion) and the discussion develops.

 

The Bitcoin market is
established in October 31 2009 and it allows people to exchange paper money for
Bitcoin. This is when individuals start to remember it as a computerized cash.

 

In May 2010, the main
Bitcoin buy was of 10,000 bitcoins for a pizza. The cost around then was $25
and today, it is about $ 120000000. By November 2010, participation in the
Bitcoin marketplace increases the market cap to exceed $1M USD.

 By Febuary 2011, BTC kept on expanding in
esteem and achieved equity with USD ($1 USD= 1 BTC) and  by March 2013,
BTC market surpasses $1B USD. 10 times the growth in less than 3 years!

 

Satoshi claimed to have
solved the problem of ‘Double spend’ in digital currency using the blockchain
technology in Bitcoin. Double spend is basically the idea of spending digital
currency in two places. This is a problem which is specific to digital types of
money since it can be copied or produced again easily. This would not be an
issue is case of physical types of money since they cannot be easily copied and
the parties involved in the transaction can easily verify them. In case of
digital currency, there is a risk that the holder of the currency could make a
copy of the digital currency and send it to the merchant or someone else while
keeping/holding the original.Bitcoin became the first digital currency to have
solved this problem of double spend without requiring a third party or a
trusted administrator.

Satoshi Nakamoto vanished
from open (that is from Bitcoin discussions, papers and code contributors) in
2011. Bitcoin however kept on being created and marketized by the group which
was engaged to address different issues in the code, even in his non
appearance. Bitcoin is used by millions of people for payments, including
growing remittances market and its market capitalization hovers between $20-$25 Billion
US Dollars.

It was
in 2014, that people acknowledged Blockchain can be isolated from the money and
can be connected to different other utilize cases. This is the point at which
the attention moved from Bitcoin to Blockchain. Relatively every major monetary
foundations on the planet is looking into on blockchain now and some 15-20% of
banks are required to utilize blockchain in the present year.

-Smart
Contracts

The next development
exemplified in the second era blockchain framework called Ethereum was the
“Smart Contracts”.

In December 2013, a man
named, Vitalik Buterin releases a white paper on what might turn into the
“Ethereum venture” – a blockchain platform with the ability to build
decentralized applications.

Ethereum is a blockchain
based distributed computing, public, open-source stage highlighting smart
contract facility.

Vitalik was a noticeable
Bitcoin lover for quite a long while and was a prime supporter of the Bitcoin
magazine in 2012. He tried to update the original Bitcoin protocol and failed
to gain agreement within the Bitcoin community, post which he gathered a team
of super programmers to develop a completely new blockchain protocol featuring
‘Smart contracts’ that would allow programmers to build scripts into the
blockchain which would act as contractual agreement and execute when the
mentioned conditions are met. He named this new blockchain ‘Ethereum’.

Smart
contract is a piece of code which is stored on the blockchain network. Anything
of value, like money, property or shares can be exchanged with the help of
smart contract in a conflict-free , transparent way while avoiding the services
of a middleman. It
defines the conditions to which all parties using the contract would agree, so
certain actions are executed if the required conditions are met. A smart
contract is saved on each computer on the network and all of them must execute
it to get the same result. In this way users can be sure that the outcome is
correct.

Let us
try to understand Smart contracts in detail by using an example:

Lets say
User A want to ship a truck full of goods to User B. User Z is the trucker who
would be carrying the truck full of goods to User B. User A may have trust on
User B, but not on the trucker. On the contrary, even the trucker may not trust
the sender (User A), may be he may not pay him?

User A
would then sign an agreement with the trucker that he would process the payment
only after the goods are received by User B. Such process would usually involve
a third party wherein legal papers and contracts are signed, printed and
scanned.

Using
smart contracts, this can be made simpler and the rules can be added in the
code.

User A
can use Smart contracts to sign an agreement with the trucker wherein the
program would mention a code wherein the payment would not be processed till
the delivery is confirmed by user B. Once the delivery is confirmed, the
payment would be automatically triggered and processed by smart contract.

This can
further be modified by adding a GPS tracker attached to the truck, which would
eliminate the need for User B to confirm in this entire process and the payment
can be processed once the stated conditions are met.

To use a
smart contract on Ethereum blockchain , mini payments of Ether, the
cryptocurrency for Ethereum were required. Since smart contracts are stored on
Ethereum blockchain, anyone can access or inspect the contract for an bugs or
irregularities since its contents are public. Additionally, no one can access
the funds on the smart contracts, not even the developers.

This innovation
of smart contract in the blockchain system ethereum, built small computer
programs directly into blockchain that allowed financial instruments, like loans
or bonds, to be represented, rather than only the cash-like tokens of the
bitcoin. The ethereum smart contract platform has a market
capitalization of billions of dollars and has hundreds of projects heading
towards the market.

Ever since
its launch in 2014, Ethereum has grown significantly and is now considered the
second largest cryptocurrency after Bitcoin. By June 2014, the Ethereum project
was funded by a crowd sale. Investors realized how Ethereum could unlock a new
level of functionality for blockchains and were keen on investing in the same.
It has been growing ever since.

·         Proof of
Stake

The next
major innovation in the blockchain world was “Proof-of-stake” (POS). A
cryptocurrency blockchain network aims to achieve distributed consensus by the
Proof-of-stake algorithm. It can also be considered as an alternate process for
transaction verification on the blockchain.

Proof-of-stake
was first introduced by Sunny King and Scott Nadal in a paper in 2012 and it
intended to solve the problem of Bitcoin mining’s high energy consumption. The
average cost of maintain a bitcoin network at that time was around $150,000 a
day. Today this cost would be around $6-7M USD.

In order
to understand Proof-of-stake, it is important to have a basic idea about
Proof-of-work.

A mining
process wherein a user installs a powerful computer or a mining rig to solve
complex mathematical problems/puzzles called as proof of work problems is
‘Proof of work’.   The verified transactions of several successfully
performed calculations of various transactions are stacked together and stored
on a ‘new’ block on the distributed ledger or public blockchain. Mining creates
new currency units after verifying the legitimacy of a transaction.

The work
would be difficult for the miner to perform, however it would be considerably
easy for the network to check. Each miner on the network attempts to solve the
mathematical puzzle first, so as to receive a cryptocurrency as a reward. As
more power is added to the network, more coins are mined and the number of
calculations required to create new block increases, thus increasing the
difficulty level for miners. Miners need to recover electricity and hardware
costs in case of Proof-of-work currencies.

 

In case
of a proof-of-stake system, the creator of a new block is chosen in a
deterministic way, depending on its wealth, also defined as stake, unlike where
the algorithm rewards miners who solve mathematical problems with the goal of
validating transactions and creating new blocks. Blocks are said to be ‘forged’
or ‘minted’ and not ‘mined’, in the proof-of-stake systems. Here, forgers
(users wo create new blocks by validating transactions) are given a transaction
fee as reward and not cryptocurrencies, since the digital currencies are
created in the very beginning and their number is fixed.

So by
switching to Proof-of-stake from Proof-of-work in blockchain led to huge energy
savings and a safer network as the attacks becomes more expensive.
Proof-of-stake systems are said to be the future!

————————–

Marketers
have released organizations constructed around bitcoin and other
cryptocurrencies and have additionally decoupled the underlying blockchain
technology from bitcoin to develop new equipment and offerings. There are over
250 lively venture-backed startups inside the area and greater than 2 hundred
venture capital companies have already invested $1.3 billion into agencies
across the rising surroundings. It remains early inside the development of
corporations around the generation, with many startups nonetheless within the
evidence-of-concept stage – however, if successful, those organizations are
poised to generate first-rate value.

Bitcoin’s
fruitful use of blockchain innovation as a digital currency produced another
flood of cryptographic forms of money that ate on the whole normally referred
to as altcoins. Most altcoins carry on also to Bitcoin however every has its
own special qualities. Probably the most well-known altcoins available for use
would include Litecoin, Dash and Ether.

 

Across
the board utilization of blockchain innovation to date has come predominately
through cryptographic forms of money, which have done well to show the
influence of the innovation and animate enthusiasm for new applications. Be
that as it may, in the previous year, there has been a quick move in startup
action and speculation dollars to an extensive variety of new blockchain
applications.

 

Over
1,000 agencies now exist within the cryptocurrency category and new businesses
continue to be set up with precise offerings. In the meantime, some of the
greater hooked up corporations are starting to emerge as dominant players. One
example is Coinbase,a virtual forex service sponsored by using challenge
capital firms consisting of Andreessen horowitz and union square ventures. The
enterprise allows customers to shop for and sell bitcoins and different
cryptocurrencies, in addition to use those bitcoins to transact with on-line
traders. Coinbase has almost five million customers and has raised almost $120
million over five rounds of financing given that 2012.

 

As
digital money and blockchain markets develop, there has additionally been an
expansion in new “hybrid” companies. Those associations give
offerings, regularly specialized in nature or framework related, to the creating
unit of digital currency and blockchain associations. They likewise can give
specific projects of the innovation. One example is Bitfury, a startup that
began as a bitcoin mining undertaking and has since cutting edge directly into
an entire bearer blockchain security and time organization. It has developed
restrictive equipment and programming answers that have helped the blockchain
global scale safely. The organization is directly exploiting blockchain to
develop another casual property rights registry.

Blockchain
innovation today remains at an essential expression point. The innovation is
all the more extensively comprehended, and is being connected by business
visionaries in ever inventive ways, yet the environments around blockchain
organizations, including cryptographic forms of money, is as yet youthful.
Early buildup has to some degree died down and now the inquiry isn’t around the
capability of the innovation however how its applications will be embraced by
the market. The dynamic idea of the innovation sets it up to conceivably upset
an extensive variety of enterprises.

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