The History of Blockchain: From the Establishment to Broad Adoption

A blockchain is a digital ledger of an activity that is duplicated and distributed across the entire network of computer systems on the blockchain. Sounds tricky, right? In fact, blockchain is easier to understand than that definition sounds. People join a completely open network and use their personal computers to hold records submitted by others. They receive a full copy of the blockchain. At its most basic level, it is just a chain of blocks, in chronological order, that contain information.

• Each block consists of specific data including the hash of the block and the hash of the previous block.
• The data stored inside the block depends on the type of blockchain. For example, the block may store information about transactions. Thus, it will contain the date, time, and amount of the transaction. It also stores information about the participants in the transaction. However, instead of using the participants’ actual names, it uses a unique digital signature.
• Hash is a cryptographic code created by special algorithms. The hash of the block is as unique as a fingerprint and calculated once the block is created. Hash allows us to tell what information the block stores and distinguish it from other blocks. Changing something inside the block changes the hash.
• Since the third element inside each block is the hash of the previous block, it effectively creates a chain of blocks. If someone tampers with a block, it will cause the hash of the block to change. Thus, it will make all following blocks invalid, because they no longer store a valid hash of the previous block.

It is possible to look back at the history of a blockchain and divide it into nominal stages, which are marked off by important developments and inventions.

Stage 1: Blockchain background

The history of blockchain technology can be traced through a number of innovations that can now be considered predecessors to the emergence of blockchain.

Peer-to-peer network formation

Peer-to-peer (P2P) is a decentralized infrastructure in which two or more computers or devices connect to share and exchange resources. The history of the P2P network is permeated with numerous initiatives, such as the ARPANET (1969) client-server network that initially connected the UCLA, Stanford Research Institute, UC Santa Barbara and the University of Utah, while treating them as equal computing peers, and the USENET (1979) distributed messaging system. However, while P2P systems had previously been used in several application domains, the concept was popularized with the introduction of the Napster music-sharing application, developed by Shawn Fanning in 1999.

PKI and PGP encryptions introduction

Public Key Infrastructure (PKI) and Pretty Good Privacy (PGP) are cryptographic protocols used for the encryption of information for safe exchange over the Internet. The exchange happens with the help of the public and private keys of each user. To deliver the information to a certain recipient, a sender obtains the recipient’s public key and uses it to encrypt the information. The information can then only be decrypted using the recipient's private key.

The difference between those two encryptions lies in how the two parties learn to trust each other in order to exchange messages securely. PKI has a hierarchical arrangement established through a process of registration and issuance of certificates at and by certificate authorities (CAs). Thus, a user trusts the identity of the key and its owner, relying on the certificate authority responsible for accepting requests for digital certificates and authenticating the party making the request. PGP encryption, formalized in 1991 by Phil Zimmerman, is a little different.

PGP adopts a distributed trust network for certificate identity confirmation, known as the "Web of Trust." There is no central authority that everybody trusts; instead, participants sign each other's keys and progressively build a web of individual public keys interconnected by links formed by these signatures.

Proof-of-work approach

Proof of work (PoW) is a protocol with the primary goal of deterring cyber-attacks. The protocol exhausts the resources of a computer system by sending multiple fake requests. PoW idea was originally published by Cynthia Dwork and Moni Naor back in 1993. However, the term "proof-of-work" was coined by Markus Jakobsson and Ari Juels in a document published in 1999, a decade before the invention of Bitcoin.

Blockchain outline

The blockchain technique was described in 1991 by Stuart Haber and Scott Stornetta. It was originally intended to timestamp digital documents so that it was not possible to backdate them or to tamper with them.

In 1992, Merkle trees were incorporated into the design and became the first instance of any blockchain implementation. Merkle trees created a series of data records, each connected to the one before it. The newest record in the chain would contain the history of the entire chain, making it more efficient by allowing several documents to be collected into one block. However, it went largely unused until the creation of digital cryptocurrency.