Blockchain has the potential to grow to be a bedrock of the worldwide record-keeping systems, but was launched just 10 years ago. It was created by the unknown persons behind the online cash currency bitcoin, under the pseudonym of Satoshi Nakamoto.
A brief history of blockchain:
A cryptographically secured chain of blocks is described for the first time by Stuart Haber and W Scott Stornetta
Computer scientist Nick Szabo works on ‘bit gold’, a decentralised digital currency
Stefan Konst publishes his theory of cryptographic secured chains, plus ideas for implementation
Developer(s) working under the pseudonym Satoshi Nakamoto release a white paper establishing the model for a blockchain
Nakamoto implements the first blockchain as the public ledger for transactions made using bitcoin
Blockchain technology is separated from the currency and its potential for other financial, interorganisational transactions is explored. Blockchain 2.0 is born, referring to applications beyond currency
The Ethereum blockchain system introduces computer programs into the blocks, representing financial instruments such as bonds. These become known as smart contracts.
Posting their seminal whitepaper in 2008 and launching the initial code in 2009, Nakamoto created bitcoin to be a form of cash that could be sent peer-to-peer without the need for a central bank or other authority to operate and maintain the ledger, much as how physical cash can be.
While it wasn’t the first online currency to be proposed, the bitcoin proposal solved several problems in the field and has been by far the most successful version.
The engine that runs the bitcoin ledger that Nakamoto designed is called the blockchain; the original and largest blockchain is the one that still orchestrates bitcoin transactions today.
The second generation
Other blockchains include those that run the several hundred “altcoins” – other similar currency projects with different rules – as well as truly different applications, such as:
- Ethereum: the second largest blockchain implementation after bitcoin. Ethereum distributes a currency called ether, but also allows for the storage and operation of computer code, allowing for smart contracts.
- Ripple: a real-time gross settlement system, currency exchange and remittance network, based on a public ledger.