A Short History of Blockchain
The development of blockchain technology comprises a mixture of various disciplines, such as:
Cryptographic science.
Game theory.
Software engineering.
Distrinutive computing networks.
Blockchain is the combination of these fields that comprise a new technological solution for a scalable, stable, trustless software system, that lays the foundation for security of digital transactions and units, and supporting worldwide decentralized peers network along with the financial incentives for these peers to stabilise the network. Practical blockchain use cases encompassing these multidisciplinary fields are frequently covered under the term cryptocurrency although it's use cases may be more elaborate than just a replacement for central bank backed fiat currencies.
Blockchain is now part of common everyday language in part due to the success of Bitcoin. No conversation about blockchain technology is possible without talking about it. In 2008 Satoshi Nakamoto (whoever he/she/they are) published a paradigm shifting paper on cryptography. He suggested a method to solve the double-spend situation - a problem that overwhelmed earlier attempts at cryptocurrencies. He defined its data structure using a hashed chain of timestamps. Every timestamp would comprise the earlier timestamp in a hash, which would ultimately make a chain with an individual additional timestamp supporting the ones trailing it. The notion was thus placed out: a chain comprising blocks, every block cryptographically associated to the earlier one by means of a hash digest. Thus a blockchain is a special order of records, each linked and hashed to the preceding block in effect a digital ledger.
This solution was in itself not enough to eradicate the double spend problem. In a double spending problem, the attacker spends the same digital assets twice before either is authenticated. For a blockchain to counter this, Bitcoin required a mechanism for its network to develop consensus. Satoshi Nakamoto suggested proof-of-work as the consensus in which computers on the network would recurrently hash the block with a nonce (random number) till a value less than a stated target is attained. Once determined, the block would then be added to the existing blockchain. Peer-to-peer decentralized means that any person/institute/entitiy can contribute in the consensus model such as proof-of-work to authenticate transactions.
The cryptocurrency Bitcoin required a data structure (ledger) into which it might record the various series of transaction, validate them, and keep a permanent record of it over the network forever.
This immutable and secure blockchain relies on the following technological advancements:
1. A cryptographic link among records that becomes increasingly more difficult to solve with a longer the chain length.
2. The data distribution to all contributing network nodes on the decentralised network in which it is predicted that honest nodes surpasses all the attacks.
The usage of a blockchain in Bitcoin is executed in a distributed style so that no single user managed the currency, and there exists no single point of failure with the exception of a 51% attack read more about it here - what-is-a-51-percent-attack ?
Its main benefit was to empower direct digital financial transactions among users without the necessity for a third party. It also permitted the mining of new currency via miners, who maintained the blockchain and permitted small transaction charges for using the system. The incentives behind mining nodes that powers distributed management of the system allow for decebtralisation. Also, the blockchain permitted node users to be anonymous (relatively anonymous - possibly more on this in a separate PUBLISH0X post) and their accounts to be unknown. All their transactions can be observed publicly to manage authenticity. This has efficiently empowered Bitcoin to propose relative anonymity since accounts can be formed without any government issued IDs like driving permits etc.
Let me know what you guys think in the comments and if I may have made any mistakes.
This is not financial advice, DYOR.
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