Throughout the past decade, blockchain technology has gone from a new financial experiment with a cult following, to a potential revolutionizer of data management. As blockchain has gained more and more traction, many people still struggle to understand: what exactly is blockchain? And why would anyone want to use it? In this series, we answer those very questions and provide the foundation needed to understand blockchain and cryptocurrency.
If you have been following our series, we have discussed what blockchains and ledgers are and taken a closer look at the consensus protocols that enable blockchains. Now as we begin to look towards the future, it is helpful to take a step back and understand the history of blockchain.
Blockchain technology was initially introduced in 1991 by Stuart Harber and W. Scott Stornetta. While the theory was interesting, it took almost 20 years before it began to be applied. In 2009, someone under the pseudonym Satoshi Nakamoto launched Bitcoin, the first cryptocurrency. It is unknown who Satoshi Nakamoto is or if it is one person or multiple people. Bitcoin gained a significant following, and by 2013, the Bitcoin market had reached $1 billion. Also in 2013, Vitalik Buterin crowdsourced the funds to launch Ethereum. The Ethereum blockchain not only executed transactions, but also enabled users to create smart contracts and applications (dApps).
Blockchain, as we know it today, has many benefits. It is very secure, stable, fast, and transparent. However, there are still challenges that need to be addressed. It is difficult to modify data, it requires a lot of energy, and it is not very scalable.
In the future, blockchain can bring significant value to many businesses.
Today, the biggest application of blockchain is in cryptocurrency. Continue to the next section of this series, Blockchain 102 – Digital Currency, to learn more about how cryptocurrency works.
Want to learn more about how blockchain can bring value to your business? Reach out to us here.