A history of blockchain: the rise from complete unknown to world-changing technology
It’s quite possible that you’d never even heard of blockchain even a decade ago. There is little doubt that this technology is one of the greatest innovations that the world has seen. While it is perhaps most recognised for the role that it plays with cryptocurrency, the uses of blockchain technology have spread far beyond this. This is one of the reasons that it has caught the eye of investors: its uses and practical applications are almost limitless.
Already we are seeing the impact that blockchain is having in business, manufacturing, health, and education. The exciting thing is that this technology is only really just getting started and there is so much more to come.
So, how did blockchain go from a tech which was largely unknown, to one that everyone wants a part of? Let’s take a look at the journey that has been taken so far.
What is blockchain?
Before we take a look at the blockchain story, it’s worth just refreshing ourselves with what blockchain actually is. To put it into simplistic terms, it is a peer-to-peer distrusted ledger. It has high levels of security and can be used to record transactions across numerous computers. The only way that the ledger’s content can be updated is via the addition of a new block that is linked to the previous one.
Looking at blockchain from a business point of view, or to try and understand its practical applications, it is a platform that allows for a variety of transactions to be carried out. These transactions are carried out, and verified, without the need for any kind of central or trusted arbitrator.
The database that is created is fully transparent and shared amongst those who are part of the network. This means that all participants can access the content. The database is managed autonomously using peer-to-peer networks and a time standing server.
1991 – 2008: The early years
When blockchain is mentioned, the first thought probably goes to bitcoin. The truth, however, is that this technology came into existence over a decade before the world had even heard of the cryptocurrency. It was Stuart Haber and W. Scott Stornetta who envisioned the tech that would become known as blockchain. This was all the way back in 1991.
The first work carried out by this pair saw them looking to develop a cryptographically secured chain of blocks. The goal was to create technology with the highest possible levels of security and this saw it being developed as being tamper-proof and with timestamps of documents.
1992 saw upgrades being made to the system. This involved the incorporation of Merkle trees to enhance efficiency. This allowed for more documents to be stored on a single block. Despite the strides made by Haber and Stornetta, it wouldn’t be until 2008 that blockchain gained any real relevance.
Accredited as being the brains behind blockchain, the reality is that very little is known about Satoshi Nakamoto. Nobody actually knows if the name refers to a single person or a group of people. Whatever the truth may be, it was Nakamoto that worked on Bitcoin and this provided the first practical application for a digital ledger. The white paper, released in 2008, described the cryptocurrency and the role that blockchain was to play.
While the technology had been envisioned back in 1991, it was Nakamoto that conceptualised the first blockchain some 17 years later. The journey since has been quite astounding, with the technology evolving to serve a multitude of practical applications.
Looking back at Nakamoto’s white paper, it seems that the future of blockchain was already laid out: it is just that the masses chose to originally ignore it. It provides details of exactly how the technology was more than well equipped to enhance digital trust via decentralisation.
Blockchain 1.0: The emergence of Bitcoin (2008 – 2013)
There is a common misconception that blockchain and Bitcoin are the same thing. The truth is that one of these is the underlying technology that powers the other. Blockchain is needed in order for Bitcoin to operate in the way that it does, but they are still separate entities.
What Bitcoin is, in the story of blockchain, is the first practical application of the technology. It was referred to by Nakamoto, in his white paper, as a peer-to-peer system. It is Nakamoto who formed the genesis block. It is from this original block that all others are mined. The blocks are all interconnected which results in one of the largest chains of blocks that exist.
While Bitcoin laid the foundations, by demonstrating just how blockchain could be utilised, it is by no means the only practical application. As history shows, there are numerous applications being employed that all leverage the benefits offered by digital ledger technology.
Blockchain 2.0: Development of Ethereum (2013 – 2015)
As developers begin to fully understand the potential that blockchain held, many began to question the effectiveness of Bitcoin. There were some who believed that Bitcoin hadn’t taken full advantage of what the technology had to offer and that there was the possibility to do better. So, that’s what companies attempted to do.
Vitalik Buterin was one such developer. He voiced concerns about the limitations of Bitcoin and commenced work on a malleable blockchain. This blockchain was to be used for a variety of functions rather than being limited to being a peer-to-peer network. It was 2013 when Ethereum was born, and a new public blockchain came into existence. This was, perhaps, the biggest single development in blockchains history: the newfound capabilities were what launched blockchain to where it is today.
It was 2015 when Ethereum was officially released. What made this blockchain stand out was its ability to support smart contracts. These smart contracts have since been used to perform a huge range of functions.
While not sharing the same exposure as Ethereum, Hyperledger is an open-source blockchain project that was released by the Linux Foundation in 2015. Led by Brian Behlendorf, its aim is to seek cross-industry collaboration for the development of blockchain. The focus is on encouraging the use of blockchain that enhances reliability and performance of current systems to support global business transactions.
2017 saw a white paper being published that gave details of a new blockchain protocol that was to be powered by EOS as its native currency. This blockchain protocol differed from others as it tries to emulate attributes of real computers. That includes CPU and GPU. As well as being a decentralised operating system, EOS is also a smart contract platform.
Blockchain 3.0: A rise in applications (2018 – present)
While blockchain has already seen monumental changes, its evolution is not simply limited to bitcoin and Ethereum. Recent times have seen numerous projects come into existence, all of which have looked to harness, and leverage, blockchain technology. While looking for new features that blockchain has to offer, new projects have also attempted to visit and resolve, perceived deficiencies that exist with Bitcoin and Ethereum.
Given that the country has banned cryptocurrencies, it is perhaps surprising to see China coming to the fore in terms of blockchain development. What this highlights is the fact that there is so much more to blockchain than crypto. The country launched NEO which is the first open-source, decentralised, blockchain in China. It refers to itself as being China’s answer to Ethereum and has received high profile investment from Alibaba CEO, Jack Ma.
There has been the arrival of other blockchains such as Monero, Zcash and Dash that have sought to address the issues of scalability that existed with earlier versions. These all refer to public blockchain where anyone is able to access the contents of the network. Beyond this, there has been a rise in companies that have begun to embrace the technology internally and utilise its capabilities in order to enhance operational efficiency.
The future of blockchain
The future of blockchain is certainly a bright one. This is thanks, in no small part, to the way in which businesses and enterprises are continuing to embrace, and invest in, the technology. Investment is significant in terms of developing blockchain further to bring us to the next stages of innovations and applications.
This is a technology that is already been used in the likes of supply management. It is also being used in cloud computing and there are even whole nations adopting it for projects in order to display full transparency. The uses are endless.
A report by Gartner Trade Insights has explored what is likely to come of businesses that are built on blockchain. The prediction is that, by 2025, one such company will be valued at $176 billion and exceed a valuation of £ trillion by 2030. This highlights the opportunity that blockchain presents and shows why so many people are keen to get on board and invest in its future.