Blockchain started with its first implementation using a new type of currency known as Bitcoin. Bitcoin is a type of digital currency that uses blockchain to help facilitate financial transactions. It laid the groundwork for many other ideas underlying other blockchains. Understanding how Bitcoin works is a big step towards understanding ideas that span across industries. Therefore, we are going to focus a lot on Bitcoin. In this section, we will discuss the history, and development of Bitcoin, and how it helped to develop these core ideas. For starters, Bitcoin uses the idea of blocks to group and validate transactions. A block is a group of grouped transactions. This idea is extremely important, but it’s not the first time we’ve heard about it.
The idea of grouping, validating, and linking documents actually dates back to around 1991. This was the year that Haber and Stornetta released their research paper titled, “How to Timestamp a Digital Document.” In this article, Haber and Stonnetta devised a new way to verify documents. They proposed to timestamp the documents and link them to the previous document. They explained how this could form a chain of updated and validated documents. What Haber and Stonnetta proposed then would become the forerunner of blockchain now. Fast forward to 2008, when an unidentified author by the name of Satoshi Nakamoto published a whitepaper. This article titled Bitcoin, a Peer-to-Peer Electronic Cash System laid the foundation for Bitcoin as we know it now. It has completely changed the way we see and understand currency. On January 3, 2009, Nakamoto released the Bitcoin software. Releasing the first Bitcoins in the world.
Reviewing this article will give you a solid foundation in Bitcoin, blockchain, and other types of cryptocurrencies, which we will discuss. We would like you to review Satoshi Nakamoto’s Whitepaper. As you will see, the first line has already started by describing how a peer-to-peer electronic cash system can bypass the need for a centralized bank. From there, the article discusses topics such as transactions, timestamps, proof of work, networking, and many other topics. This article covers a lot of technical details about how Bitcoin operates, and uses terms and concepts you may not be familiar with yet. But its alright. Try to focus on just a few key questions. “What problem is Bitcoin trying to solve? What solutions have they come up with? What components are used to develop this new system?
Many of the concepts that Nakamoto wrote about go beyond Bitcoin and even beyond cryptocurrency. These are fundamental concepts for building a robust blockchain for any application. As blockchain adoption continues to grow, debate and discussion will continue to drive these topics. In the course of these discussions, it’s good to go back to the source where it all started, in this whitepaper. Surprisingly, it was only after Bitcoin was developed that we began to realize the potential of the technology underlying the system, the blockchain. Abstracting these same ideas to applications beyond just financial transactions is how blockchain was able to start transforming so many industries. So take some time now to read this paper. This will help you better understand the key points underlying Bitcoin and the blockchain. You can find whitepaper@bitcoin.org/bitcoin.pdf.
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