History
Satoshi Nakamoto, whose identity is still unknown, characterised Bitcoin as a “purely peer-to-peer version of electronic cash” when he wrote Bitcoin: A Peer-to-Peer Electronic Cash System. It was 2008, and the world was introduced to blockchain technology in the shape of Bitcoin. The evolution of the technology that powers Bitcoin (Blockchain) has been remarkable. It not only has the capacity to disrupt every business on the planet, but it is already doing so at an incredibly fast rate.
The Early Beginnings
"Blockchain is to Bitcoin what the internet is to email," Sally Davies, FT Technology correspondent, said it best. A large electronic system on top of which applications may be built. Currency is only one example."
Bitcoin became available to the open-source community following the publication of Nakamoto's whitepaper. Blockchain swiftly emerged as the way ahead. This was primarily due to a lack of digital trust. Specifically, documents are kept in a public place and cannot be erased.
As a result, transparency and a decentralised approach are guaranteed.
Blockchain and Bitcoin Separate
At first, the terms blockchain and Bitcoin were used interchangeably. Even now, some people may not completely comprehend the distinction. However, it wasn't until late 2013 that many began to see that the use of blockchain may have an influence on a variety of other businesses.
The blockchain procedure (a decentralised ledger that permanently documents transactions between two entities without the need for third-party verification) quickly began to reduce transaction costs.
This resulted in a surge of investment and experimentation to learn how blockchain may help supply chains in areas such as finance, healthcare, education, transportation, and many more. Almost a quarter of financial institutions are actively using blockchain technology.
Ethereum: The Next Phase
Vitalik Buterin was a major contributor to the Bitcoin codebase. However, he rapidly became dissatisfied with some of the programming constraints. He advocated for a flexible blockchain. The Bitcoin community, on the other hand, was outraged. Buterin made the decision to create his own notion, the second public blockchain, which became known as Ethereum. The most noticeable distinction between Bitcoin and Ethereum is that Ethereum records additional features other than cash, such as loans and contracts. Ethereum, which was launched in 2015, is used to create "smart contracts" (contracts that can be handled automatically based on set criteria within the Ethereum blockchain).
Transition to Proof of Stake
While the industry evolves, blockchain continues to operate on the proof of work principle. Mining, or a costly computer calculation, is created to generate a fresh set of trustless transactions (a block). A transaction is bundled into a block when it begins. Miners will answer a proof-of-work problem to ensure that any transactions within that block are authentic. This extremely complex mathematical problem is the site of extensive development. This is due to the fact that the miner who solves the problem first receives an initial pay-out as well as the ability to store the solution on the blockchain. However, there is a push for a new consensus approach known as proof of stake.
While the purpose of proof of stake is the same as proof of work (authenticating transactions and reaching consensus in the chain), it employs a different algorithm and process. This means that the architect of a new block is chosen deterministically depending on its stake (wealth). The miners receive transaction fees rather than a reward. This strategy is thought to save a large amount of money.
Blockchain Scaling
Solutions are being developed to minimise the number of computers necessary in a blockchain network to validate each transaction in order to maintain security. While Bitcoin is the most well-known crypto currency, it is only one of a growing variety of currencies and services that use blockchain technology.
