History of blockchain
Blockchain is a relatively young technology that has experienced explosive growth in recent years. These days, almost everyone has heard about blockchain technology and its most widely known application, Bitcoin. Still, even just 10 years ago, few people knew about its existence. In this article, we’ll explore the history of blockchain technology and cryptocurrency’s emergence and development.
Blockchain and smart contracts are still in the early stages of a 20-year, if not a 50-year, adoption and maturation cycle. Some have compared it to 1994 and the Web. — Brian Behlendorf, Executive director of Hyperledger.
How did blockchain start?
When did blockchain start? The first mention of the technology for storing documents on a cryptographically secured chain of blocks dates back to 1991 when Stuart Haber and Scott Stornetta described a solution for storing digital documents with a timestamp so they couldn’t be tampered with. In 1992, Merkle trees were incorporated into blockchain’s development, allowing multiple documents to be collected into one block. However, this technology wasn’t used until the creation of Bitcoin.
In 1998, the concept of a digital currency called b-money was introduced by Wei Dai. He first proposed using a decentralised ledger and the proof-of-work concept. Almost simultaneously, another cryptographer, Nick Szabo, published a paper that laid out the principles of the digital currency Bit Gold. He proposed a major innovation: a decentralised public ledger. Its use increased confidence in the system and made it possible for each user to receive data on any transaction.
In 2004, computer technology developer Hal Finney introduced the RPoW (Reusable Proof-of-Work) network. The system had its own digital token, Hashcash, with a cryptographic signature that could be sent between users. In the RPoW system, the problem of double-spending was solved by registering token holders on a trusted server. In that way, RPoW can be called an early cryptocurrency prototype.
The emergence of cryptocurrencies
In 2008, someone under the pseudonym Satoshi Nakamoto published a document on the Internet called Bitcoin: a peer-to-peer electronic cash system. It is believed that the impetus for the invention of Bitcoin was the 2008 financial crisis when people lost faith in traditional financial institutions and instruments. The technical support and implementation of the technology took 10 months. On 3 January 2009, the first block of the Bitcoin blockchain was mined.
The first Bitcoin transaction (and, therefore, the first transaction in crypto coin history) took place just a few days later, on 12 January 2009, when Satoshi sent 10 Bitcoins to Hal Finney.
Bitcoin was the only cryptocurrency for just a short time. As its fame grew, other cryptocurrencies began to appear, designed to correct Bitcoin’s drawbacks or implement any additional ideas.
In the summer of 2011, the idea of a Proof-of-Stake (PoS) consensus algorithm appeared. In 2012, the crypto industry began to rapidly gain popularity, with the first cryptocurrency exchanges appearing and dedicated cryptocurrency wallet apps to store digital assets on a user’s computer being released. In July 2013, the first ICO was held, raising over $5 million for the Mastercoin project.
Smart contracts and the second generation of cryptocurrencies
In 2013, programmer Vitalik Buterin announced the need to develop a scripting language to create decentralised apps (dApps). Leading the development team, he created a new blockchain-based platform called Ethereum. Its main innovation was the emergence of smart contracts, which are hosted and signed on the Ethereum blockchain and can be used to conduct a transaction without involving third parties when certain conditions are met.
After the Ethereum blockchain was launched in 2015, an ICO was held to implement the project. The ICO’s participants received ETH tokens. The ability to develop dApps resulting from Ethereum’s emergence and the ICO boom soon saw a surge in the number of dApps created.
Ethereum’s success has led to the appearance of many platforms that position themselves as its competitors. While Ethereum is currently the most popular platform for building dApps, competing platforms have taken a chunk of the market away from it.
Blockchain history timeline
A brief history of the top cryptocurrencies
We have already mentioned the main important dates in Bitcoin’s history. Let’s add a few more notable moments.
- 18 August 2008. The domain name bitcoin.org is registered.
- 9 January 2009. The first version of Bitcoin v0.1 is released.
- 16 December 2009. Bitcoin v0.2 is released.
- 30 December 2009. Bitcoin mining difficulty increases for the first time.
- 7 July 2010. Bitcoin v0.3 is released. The number of Bitcoin users significantly increases.
- 15 August 2010. A bug in the Bitcoin code allows for the only successful attack on the Bitcoin network in its history. The bug is soon fixed.
- 6 November 2010. Bitcoin’s capitalisation exceeds $1 million.
- 19 June 2011. The MtGox crypto exchange is hacked.
- 28 March 2013. Bitcoin’s capitalisation exceeds $1 billion.
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Ethereum was created by a development team led by Canadian programmer Vitalik Buterin, who originally described Ethereum in a publication at the end of 2013. In early 2014, the developers founded Ethereum Switzerland GmbH in Switzerland.
In the second half of 2014, an ICO was announced as a crowdfunding development fundraiser. It raises 31,591 Bitcoins, the equivalent of $18,439,086 at that time. The first Ethereum block was mined on 20 July 2015, and the blockchain platform itself was launched on 30 July 2015.
In May 2016, hackers exploited a vulnerability in the Ethereum network, stealing about $50 million. This led to a split in the community of network participants and an Ethereum hard fork.
On 28 February 2019, the second part of the Metropolis update, Constantinople, was launched. It prepared the network to transition to the Casper PoS protocol and abolish the previous mining model.
The origins of the Ripple cryptocurrency date back to 2004, when a Canadian programmer named Ryan Fugger was developing a new payment system that could provide users with easier, more secure financial transactions. However, he didn’t manage to achieve any noticeable success at the time.
The Ripple cryptocurrency was created in 2011 by Opencoin, a corporation directed by Fugger. Ripple was positioned as a newer, faster alternative to Bitcoin that would be available to individuals and legal entities.
In 2013, the old development team decided to leave Opencoin. Chris Larsen joined the company, recruiting a new team in the process. Immediately after that, the decision was taken to rename Opencoin Ripple Labs and change the company’s main direction to focus on working with the banking sector.
The first institution to partner with Ripple Labs was a German bank called Fidor. After that, the company’s popularity began to skyrocket. The products attracted more prominent players, such as Western Union and the Commonwealth Bank of Australia.