Blockchain5. History of Blockchain

History of Blockchain

The first ever consumer grade application of Blockchain technology was a crypto currency Bitcoin, started in 2008. The successful implementation of Bitcoin came under spotlight and people started to realize the potential and opportunities this technology could offer to solve many challenges faced by business in present day world.

Since then, the elevation process flared and it became under spotlight. The blockchain is being considered as one of the greatest innovations of the 21^st Century. We can divide the whole evolving process of Block chain into the following three phases;

1.       Pre application Phase: The development of Blockchain till its application in Bitcoin.

2.       Blockchain 1.0 emergence of Bitcoin: from 2008 when the first application of blockchain was surfaced in the shape of Bitcoin.

3.       Blockchain 2.0 2013 Start of Ethernet and other application of Blockchain:

1.    Pre application Phase

Although the notable emergence of the blockchain started after the start of Bitcoin in 2008, the concept of blockchain dates back to 1991 when Stuart Haber and W. Scott in an article proposed cryptographically secured chain of blocks which was secure from tempering through timestamping of digital documents. Later in 1992 they upgraded their design by incorporating “Markle Trees” (an approach for digital signature) thus enabling multiple transactions to be incorporated into a single block.

Moving forward in 1997 the concept of proof of Work was introduced to verify computational efforts and deter cyberattacks. Besides, in 1998 a computer scientist by the name of Nick Szabo published his work on decentralized digital currency. Furthermore, in 2000 Stafan Konst published his theory and idea for implementation of Cryptographic Secured chain of Block.

2.    Blockchain 1.0 Introduction of the Bitcoin

Before the release of Bitcoin in 2008, ideas mentioned in pre-application phase, were scattered and most of the time were, in theoretic form. In 2008, a developer or group of developers, by the factious name of Satoshi Nakamoto published a white paper describing the practical model for the implementation of Cryptographic currency i.e. Bitcoin. The Bitcoin was well equipped to enhance the digital trust by taking decentralization approach. This means no one will ever have the absolute control over the currency.

Nakamoto introduced the infrastructure behind the Bitcoin, which was based on the decade long technological concepts of blocks, chained through cryptographic hashing, and validated through peer-to-peer network, instead of, a trusted central authority e.g. Banks and Governments etc. The proposed mechanism also claimed elimination of the need for digital signatures/ timestamping of the digital blocks by introducing the concept of series hashing from previous block where each transfer from one owner to the other owner is encoded through hashing which ultimately recorded and validated by each node on the network.

·         The conceptual work of Satoshi Nakamoto was realized in January 03, 2009 when he/ they mined the first bitcoin block. This block contained 50 bitcoin and was known as Genesis Block (Block 0).

·         Probably the first commercial transaction through bitcoin was carried on May 22, 2010, when Laszlo Hanyecz paid 10,000 bitcoins for two Papa John’s pizzas.

·         In July 2010, Mt. Gox first Bitcoin exchange, was established in Tokyo, Japan and initially it handled almost 70% of bitcoin transactions.

·         However, in August 2010, a hacker exploited a bug in blockchain code and created more than 184 billion bitcoins. This shed significant doubt over the credibility of Bitcoin being the immutable digital currency.

·         Nakamoto published a new version of the bitcoin software and setup the system so there may never be more than 21 million bitcoins (as of August 2021 18.77 million bitcoin have been mined). Till the end of the year i.e. 2010 Nakamoto disappeared completely.

·         Despite the disappearance of Nakamoto the bitcoin kept gaining popularity and in February 2011 the value of bitcoin reached equal to one US dollar.

·         Later on, Mt. Gox was hacked and bitcoins were stolen.

·         In October 2011 Litecoin, the first spine of crypto currency was released.

·         By the year 2012, cryptocurrencies became well established and the value of 1 BTC remained equivalent to $5. In the same year, Bitcoin Magazine and Bitcoin Foundation was established to enhance public perception about bitcoins and cryptocurrencies.

·         The mining and trading of bitcoins kept upwards trajectory. The Coinbase, a crypto exchange reported selling $ 1 Million worth of Bitcoins during the month of February, 2013.

·         Till the end of March of 2013, the market cap for Bitcoins reached at $1 Billion.

·         The rapid popularity in the digital currency necessitated for launching of 1^st ever ATM in Vancouver, B.C. USA.

·         Thailand and China both banned Bitcoin. Further, U.S Federal Court seized funds for Mt. Gox (the first Bitcoin Exchange) in U.S. In another similar activity, FBI confiscated 26,000 Bitcoin from the Silk Road, an online black and modern darknet marketplace.

3. Blockchain 2.0

Birth of Ethereum

While the bitcoin kept its upward trajectory as a cryptographic digital currency, the Blockchain (backbone behind bitcoin) became under the spotlight. Vitalik Buterin among other developers, believed that bitcoin have not yet fully benefited from potential, the blockchain technology could offer.

Buterin was an active contributor to codebase of Bitcoin thus, was aware to its inefficiencies. He realized that besides, being a peer-to-peer network of nodes, a blockchain can perform various other value-added activities therefore, other possible uses of the technology shall be explored.

In 2014, the work of Buterin, resulted into the introduction of Ethereum as a new public blockchain. This development became a defining moment in the history of Blockchain as Ethereum had added many other functionalities compared to the Bitcoin. It enabled the users of blockchain to record assets other than the cryptocurrencies on the chain/ block e.g. contracts.

Writing a contract on a blockchain means execution of a specific computing code after occurrence of an event. For example, Mr. A transferred the ownership of an Asset, say ownership of a car, to Mr. B. The occurrence of this event will automatically trigger the transfer of other underlaying asset, say currency, from Mr. B to Mr. A. This fundamental functionality empowered the developers to transform the Ethereum from being cryptocurrency to a platform to develop various decentralized applications.

Beside the shift of focus from Bitcoin to Ethereum, the year 2014 was not good for Bitcoin itself. The Mt. Gox filed bankruptcy and vice chairman of Bitcoin foundation was arrested for money laundering.

Still Bitcoin managed to recognize as private money by UK tax authorities and various companies like sun-times, PayPal, Expedia, Microsoft and Overstock.com, started to accept transactions in Bitcoin.

in the same year, NEO Project Is Launched as Antshares by Da Hongfei and Erik Zhang.

2015

Introduction of Ethereum was termed as Blockchain 2.0. Financial institutions and businesses started to explore the potential efficiencies blockchain can offer. The ability of the blockchain network to write contracts enabled developers to experiment and develop decentralized blockchain solutions, which can be installed on live networks.

In the same year the Linux Foundation launched Hyperledger project. Hyperledger, encourages cross industry global business transactions and developments of efficient and reliable distributed ledgers.

Moreover, in the same year NASDAQ originated a blockchain trail. Further, nine financial institutions formed a R3 consortium to explore how this new technology can benefit their operations. In coming six months the number of participating financial institutions turned to 40.

2016

In year 2016, Hyperledger project launched by Linux entered into partnership with the Chamber of Digital Commerce to enhance public understanding and advocacy of Blockchain technology.

On the other hand, the decentralized autonomous code of Ethereum was exploited and in another event Bitifinex Bitcoin exchange was hacked and nearly 120,000 Bitcoins worth of $66 million were stolen from the exchange.

2017

The Year 2017 saw a significant boom as the Japan recognized bitcoin as legal currency and Bitcoin hit historic $20,000 value.

7 European banks formed a consortium to develop digital trade finance blockchain based platform. During the year 2017, almost 15% of global banks used blockchain technology in some capacity.

However, the biggest breakthrough in the blockchain industry in year 2017 was, the introduction of EOS.10 by the Block.one Company. EOS was a blockchain based network protocol along with an operating system which provided opportunities to develop commercial decentralized applications.

2018

At its 10^th anniversary, the year 2018 showed adversity for Bitcoin as its value dropped to $3,800 and it saw resistance from the major digital advertisement giant like Facebook, Google and Twitter which, banned the advertisement of Bitcoin. Further South Korea banned trading in cryptocurrencies but showed it commitment to invest in Blockchain initiatives.

2019

In 2019, the research and development in the Blockchain industry took the center of many organizations. Walmart announced a supply-chain system based on Hyperledger platform. Further, Amazon declared the general availability of its Amazon Managed Blockchain service on AWS.

On the other hand, Ethereum kept its momentum of popularity and its transaction volume exceeded 1 million transactions per day.

2020

·         Ethereum launched the Beacon Chain in preparation for Ethereum 2.0.

·         Stablecoins saw a significant rise because they promised more stability than traditional cybercurrencies.

·         There was a growing interest in combining blockchain with AI to optimize business processes.

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