Blockchain holds the ability to revolutionize many industries. The history of Blockchain begins in the early 1990s, revealing how quickly this technology has gained global popularity. As we know from the first blog of the Blockchain series, decentralization and transparency are central to Blockchain technology and the promise of added layers of security for sensitive data. It is especially promising and revolutionary because it helps reduce risk, stamps out fraud, and brings transparency in a scalable method for diverse uses.
Although Blockchain is an innovative technology, it boasts a rich and exciting history. The following blog is a brief introduction to the history of Blockchain and how the technology works; let's make ourselves familiar with all things Blockchain!
History of Blockchain
Blockchain traces its origins back to 1991, when research scientists Stuart Haber and W. Scott Stornetta first mentioned a chain of cryptographically secured blocks in the context of digital documents, made tamper-proof by their timestamps.
The technology's first application emerged in 2008 when Satoshi Nakamoto published a whitepaper, conceptualizing the first Blockchain model as a peer-to-peer cash system. Mystery shrouds Nakamoto as it is unclear whether this is a pseudonym for a single person or a group of people. Nakamoto made the first bitcoin transaction in 2009. Following this, bitcoin and its underlying Blockchain technology saw rapid development.
In 2014, Blockchain technology was separated from the bitcoin currency. The Ethereum Project, developed by Vitalik Buterin, added computer codes to the blocks, expanding the technology's application. Today, governments around the world have begun recognizing Blockchain-based digital assets. Merchants' willingness to accept transactions embedded in Blockchain technology has also grown, cementing Blockchain's place in a digitized world.
How Does Blockchain Work?
Blockchain consists of digital blocks composed of data in chronological order. Each data block has a timestamp and a hash. A hash is a cryptographic mathematical equation generated when the block is formed. It is similar to a fingerprint and is particularly useful to identify if a block has been tampered with. Any changes made to a block will also change its hash. Each block also contains the previous block's hash, connecting it and forming a chain.
To add new blocks, miners must solve complex mathematical equations to generate a good hash for the block in a process called mining. Once changes are made, all nodes must accept them to verify the chain. All actions need to be reviewed by nodes that are part of the peer-to-peer network to maintain transparency. The process in which the new blocks are created is why Blockchain is considered highly secure, a vastly different approach from a standalone database or spreadsheet, where one person can make changes without any supervision.
Various Uses of Blockchain
Blockchain has become synonymous with cryptocurrency – a digital currency that can buy goods and services. However, its several advantages mean it can be adapted to many industries.
Its ability to make transactions that are quickly verified throughout the day facilitates its adoption in the banking sector. Ownership of Non-Fungible Tokens (NFTs) is also possible using this technology. NFTs allow artists to transfer ownership of their work as digital assets, cutting out intermediaries. Blockchain can also keep and share sensitive real estate deeds, titles, and health records.
The Ethereum Project created smart contracts – a digital contract automatically enacted once its conditions have been met. Smart contracts hold value in supply chain management, where companies with substantial amounts of distribution information can easily monitor and identify problem areas. Many companies have begun using Blockchain to track the movement of goods, including the supply of COVID-19 vaccines.
"Anything that can conceive of as a supply chain, Blockchain can vastly improve its efficiency- it doesn't matter if its people, numbers, data, money." Ginni Rometty, Ex CEO, IBM.
Many agree that Blockchain technology should be implemented in all governing bodies, especially in election systems. If implemented for identity management, such as maintaining voter information and submitting votes, the way we vote our leaders into power could effectively change, and vote-tampering and manual counting would be eliminated.
As Bob Greifeld, Nasdaq Chief Executive, states, "Blockchain is the biggest opportunity set we can think of over the next decade or so."
Blockchain for Business Growth
Businesses can leverage the elevated levels of trust Blockchain creates through its transparent and secure mechanism. Higher efficiency makes transactions and financial transfers faster. It removes the need for intermediaries, saving organizations precious time and money. While the network can review all transactions, confidential data remains undisclosed. Blockchain streamlines the transaction process, maintaining a clear record and marking funds as spent, preventing duplication or any such errors.
While the history of Blockchain points to how quickly this disruptive technology has grown, it is still in its initial stages of development. The Blockchain market is expected to grow in response to the global digitization driving the technological transformation of industries. However, regulatory issues are a challenge that all players must contend with.
While its most widespread use is currently in the fintech sector, industries including real estate, healthcare, manufacturing, retail, and e-commerce are looking to benefit from the transparency and security Blockchain promises. Can we expect this technology to permeate many aspects of our lives soon? Only time will tell. In our next blog of the Blockchain series, we cover the various business applications of Blockchain technology and continue to stay curious to see which areas the Blockchain will become more relevant in the months to come!
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