The History of Blockchain Explained

Binance Academy provides a brief introduction to the history of blockchain, beginning in 1991 when research scientists, Stuart Haber and W. Scott Stornetta, introduced a computational practical solution for time-stamping digital documents so they could not be back-dated or tampered with. The system used a cryptographically secure chain of blocks to store the time-stamped documents.

In 1992, Merkle Trees were incorporated into the design, making it more efficient by allowing several documents to be collected into one block.

Merkle Trees are a fundamental component of blockchains that underpin their functionality. They allow for efficient and secure verification of large data structures.

In 2004, Hal Finney introduced Reusable Proof of Work (RPoW).

For reference, and going back a little earlier in time, a proof-of-work (POW) system is an economic measure to deter denial of service attacks and other service abuses such as network spam, by requiring some work from the service requester, usually meaning processing time by a computer. The concept was invented by Cynthia Dwork and Moni Naor as presented in a 1993 journal article.

The term “Proof of Work” or POW was first coined and formalized in a 1999 paper by Markus Jakobsson and Ari Juels.

Returning to 2004, Hal Finney built on the proof-of-work idea, yielding a system that exploited reusable proof of work (“RPOW”) and solved the problem of potential double-spending of digital currencies, which was designed to allow other non-associated users to confirm its integrity and correctness in real time. This can be considered an early prototype in the history of cryptocurrencies.

The next milestone is noted in the much publicized introduction of the decentralized, peer-to-peer electronic cash system by the anonymous Satoshi Nakamoto, which the world knows as Bitcoin.

Bitcoin introduced the idea of independent “Miners” to track and verify the transactions in exchange for financial reward.

The first Bitcoin transaction went from Satoshi Nakamoto to Hal Finney on Jan 12, ,2009.

In 2013, Vitalik Buterin, a programmer and co-founder of Bitcoin Magazine, stated that a scripting language was needed for building decentralized applications (Dapps). Since he was not able to gain a consensus in the Bitcoin community, he began development of a new blockchain called Ethereum, which featured a scripting functionality called Smart Contracts, which are Dapps deployed and executed on Ethereum.

Ether is the cryptocurrency used on Ethereum.

In brief, cryptocurrencies are based upon blockchain. However, certain blockchains offer much more functionality than solely supporting digital currencies.