A Brief History of Blockchain: An Investor’s Perspective

Mission
Mission
Jul 18, 2017 · 15 min read
Image for post
Image for post
Photo by Twenty20.
Image for post
Image for post

Bitcoin:

In 2008, Satoshi Nakamoto (the pseudonym for an as-of-yet unidentified individual) published a white-paper called Bitcoin: A Peer to Peer Electronic Cash System. In this paper, he argued that he had solved the issue of double-spend for digital currency via a distributed database that combined cryptography, game theory, and computer science. Double spend is simply the idea that digital currency can be spent in two places. Satoshi’s creation was a huge innovation because it enabled one entity to confidently transact value directly with another entity without relying on a trusted third party to stand between them.

Image for post
Image for post
The Bitcoin Mining Process
Image for post
Image for post
Bitcoin’s Correlation to other major asset classes.

It’s Blockchain That We Love!

Around 2014, technologists and investors shifted their focus from Bitcoin to blockchain, bitcoin’s underlying technology. Though Bitcoin and blockchain are often referred to interchangeably, that’s incorrect. Bitcoin is built on a version of a blockchain. A blockchain is an open, decentralized ledger that can record transactions between two parties efficiently and in a verifiable and permanent way without the need for a central authority. The key qualities of this distributed ledger are that it is time-stamped, transparent (anyone can see the ledger of transactions), and decentralized (the ledger exists on multiple computers, often referred to as nodes).

Image for post
Image for post
The Settlement Process in June 2017
Image for post
Image for post
Image for post
Image for post

The Rise of Ethereum:

If Satoshi is the Muddy Waters of digital assets, wunderkind Vitalik Buterinis the Rolling Stones. An initial contributor to the Bitcoin codebase, Vitalik became frustrated in 2013 by Bitcoin’s programming limitations. A rebel with a cause (though arguably a much higher IQ than James Dean), Vitalik faced resistance from the Bitcoin community as he pushed for a malleable blockchain. Vitalik decided that Bitcoin’s protocol was designed too prescriptive so he decided to build public blockchain 2.0, which he called Ethereum.

Image for post
Image for post
Source: World Coin Index

Fat Protocols, Tokens, and Decentralized Business Models or “WE’RE GONNA ICO LIKE IT’s 1990!”

Since the beginning of 2017, Initial Coin Offerings (ICOs) have become the hottest new trend. An ICO is a fundraising event where a group of technologists or entrepreneurs raise money by creating and selling their own “tokens” through a crowdfunding event on a blockchain, usually Ethereum. A token is sort of like a share in a company but without many of the characteristics and protections. The money raised from the tokens is used to build new blockchain-related projects and the holders of the tokens own a stake in these projects. As blockchain technology is expanding far beyond bitcoin to power emerging networks, companies, and activities people are purchasing tokens to participate in this innovation.

Value Capture Analysis between The Web and Blockchain

Image for post
Image for post
Source: USV Website

BIBLIOGRAPHY & FURTHER READING (not exhaustive):

· HBS’s The Truth About Blockchain and a Brief History of Blockchain


If you enjoyed this story, please recommend and share to help others find it! Feel free to leave a comment below.

The Mission publishes stories, videos, and podcasts that make smart people smarter. You can subscribe to get them here.

Mission.org

A network of business & tech podcasts designed to…

Sign up for Mission Daily

By Mission.org

Mission Daily Newsletter Take a look

By signing up, you will create a Medium account if you don’t already have one. Review our Privacy Policy for more information about our privacy practices.

Check your inbox
Medium sent you an email at to complete your subscription.

Mission

Written by

Mission

Stories & podcasts that make smart people smarter: www.Mission.org. The Mission Daily: www.apple.co/2KMXjhQ. The Story podcast: www.apple.co/2HEcveQ.

Mission.org

A network of business & tech podcasts designed to accelerate learning. Selected as “Best of 2018” by Apple. Mission.org

Mission

Written by

Mission

Stories & podcasts that make smart people smarter: www.Mission.org. The Mission Daily: www.apple.co/2KMXjhQ. The Story podcast: www.apple.co/2HEcveQ.

Mission.org

A network of business & tech podcasts designed to accelerate learning. Selected as “Best of 2018” by Apple. Mission.org

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store