February 23, 2024

Nila Petersheim

Smart Applications

Blockchain: The Complete History And How It Works

Introduction

While the first blockchain was used to manage cryptocurrency, it’s now a powerful tool that has applications in many industries. Here’s how it works and how it has evolved since its inception in 2008.

The first blockchain

The first blockchain was invented by Satoshi Nakamoto in 2008. Satoshi is the name used by the unknown person or people who designed bitcoin, which is a digital currency that uses blockchain technology to record transactions and create new units of currency.

The concept of blockchain was originally developed by Stuart Haber and W. Scott Stornetta, who described it as “a method for online secure transactions” in 1991.[1] They wanted to use cryptography to provide security over the Internet and noticed that they could achieve this by linking blocks of data together into chains with hashes.[2]

Bitcoin

Bitcoin is a cryptocurrency, a digital asset designed to work as a medium of exchange that uses cryptography to control its creation and management. Bitcoin was created in 2009 by a person or group of people operating under the name Satoshi Nakamoto, who called it “a peer-to-peer electronic cash system.”

Bitcoin has no central authority, so there’s no need for banks or governments to regulate it. Instead, it uses an open source network with thousands of computers contributing processing power to confirm transactions and add new bitcoins to the money supply (a process known as mining). The bitcoin protocol specifies that only 21 million bitcoins can ever be created by miners–a number that gets smaller over time–and rewards them with newly created coins when they do so. This provides an incentive for people around the world running these computationally intensive algorithms on their computers; they receive compensation in return for helping validate transactions within this public ledger called blockchain

Smart contracts

Smart contracts are computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts can be used to encode and represent the terms and conditions of an agreement in a way that can be easily stored, accessed, and modified. The best way to understand smart contracts is through an example:

Let’s say you want to buy a car from Joe’s Used Cars. You go into his lot and see one that looks good on paper but seems too good to be true–it has low mileage and comes with all sorts of features you like but don’t need (like heated seats). You negotiate down from $10k to $9k but still balk at paying so much money without seeing how much gas mileage this thing will get when you drive it home from the lot; after all, gas prices these days can fluctuate wildly depending on where you live! So instead of handing over cash right away, Joe offers something different: if he sells your car within six months after purchase date (and after any repairs necessary due) then he’ll give back 10{6f258d09c8f40db517fd593714b0f1e1849617172a4381e4955c3e4e87edc1af} more than what he originally paid for it; otherwise no refund will be given.*

  • The exact details would vary depending upon state law requirements regarding auto sales contracts between private individuals vs businesses like dealerships which follow different rules regarding warranty periods etcetera

Decentralization and anonymity

Decentralization is the key to blockchain technology. It’s how the system works, and it’s one of the most important features of any blockchain network.

Decentralization means that no single entity controls a cryptocurrency; instead, it’s spread out among thousands of computers all over the world. These computers verify transactions and add new blocks (which contain data about those transactions) to their respective blockchains in order for them to be accepted by other nodes on that network. This makes cryptocurrencies like Bitcoin much harder for governments or other organizations with centralized control over financial systems–like banks–to tamper with than traditional currencies like dollars or euros because no one person has all the power over them at once!

Invented in 2008, blockchain technology was the first to enable peer-to-peer transactions without the need for intermediaries such as banks.

Blockchain is a distributed database that maintains a continuously growing list of records, called blocks. Each block contains a cryptographic hash of the previous block, timestamp and transaction data. New transactions are appended to the end of this chain, making it an ever-growing, decentralized ledger.

The blockchain network monitors and verifies each transaction made on its network in order to prevent double spending (i.e., sending your money twice). This process is known as Proof-of-Work (PoW) because miners must solve complex mathematical puzzles before adding new transactions to their blockchains; once they’ve solved one puzzle they’re rewarded with cryptocurrency in exchange for their work.

Conclusion

Blockchain is the most disruptive technology that we have seen in a long time. It has the potential to change the way we do business, interact with each other and even think about ourselves as human beings. Blockchain allows us to take control of our own digital identities, something that was previously impossible due to third-party reliance on centralized servers like Facebook or Google+.