Origin of Blockchain: Technology Used Before Blockchain

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The emergence of blockchain has been a game changer in recent times. It has been transforming the ways of storing data, verifying transactions, and exchanging information. But have you ever wondered about the origin of blockchain and what existed before?

First of all, you must understand that blockchain technology came into existence only to achieve what the traditional methods couldn’t do correctly. Blockchain gave solutions for security, transparency, and fault tolerance with the concept of decentralization. It provides an approach that includes multiple applications, cryptocurrencies, smart contracts, supply chains, and so on.

Pre-blockchain era

Let’s discuss some of the technologies and methods that existed before blockchain technology emerged. We’ll also see what limitation they were facing that later blockchain technology managed to resolve.

Centralized database

Before blockchain, centralized databases were the dominant technology in storing and managing data and were still used for decades in various industries. In this, all the data is secured and worked with the help of a single server. Each data is controlled and operated by that single point, ensuring security, integrity, and data backup.

Limitation

Single point of failure

Access to the entire system is impossible if any failure occurs in the central server.

Lack of trust

Untrustworthy central authority can misuse and manipulate the data.

Costly intermediaries

It becomes costly when it comes to trust verification and transaction facilitation with the help of intermediaries.

Distributed database

After that, distributed databases came into the picture as a solution for the limitations of centralized databases a few decades ago. As the name refers, a large amount of data is spread around in different locations, sharing the idea of decentralization. It helps in efficiency, availability, scalability, and less failover.

Limitation

Lack of consensus

It often needs help achieving consensus among different nodes, making the data inconsistent and limiting scalability.

Complexity in coordination

It is complex to maintain coordination across distributed systems. Data may face synchronization issues, and conflicts may arise.

Cryptographic techniques

The idea of cryptographic techniques existed from ancient times when civilizations used this to protect sensitive messages and information. However, modern cryptography practices begin in mid 20th century. This practice, called cyphertext, involves converting the data into a hard-to-read format and securing it from unauthorized access. Methods like digital signatures and encryption are also part of cryptography techniques to protect the data or transactions confidentially.

Limitation

Lack of transparency

Cryptography indeed ensures keeping the data confidential. However, alone, it can’t offer any transparency in the records.

Centralized dependency

Primarily, it mainly depended on a single central authority, making it easier to compromise.

Peer-to-peer networks

P2P networks have been serving the digital world for several decades. Some examples we see are in 1999, called Napster, and in 2001, named BitTorrent. It also shares the idea of a decentralized structure among participants (peers). It allows peers to communicate and share resources through individual nodes directly. Each peer can exchange resources and services that are digital content.

Limitation

Sybil attacks

Any malicious participants can create fake IDs to manipulate the data somehow and take control of the process.

Lack in efficiency

With the increased number of nodes, it faces challenges in efficient communication and consistency.

Merkle trees

In 1979, Ralph Merkle introduced the idea of the Merkle tree. It’s a data structure that helps in verifying a large number of individual records efficiently. The system is hierarchical, and each level refers to a hash value. The hash values play a significant role in verifying the integrity and consistency of the data or transaction.

Limitation

Centralized trust

Markel tree depends on a central authority to validate the tree’s root. Any compromise from central authority can put the entire tree at risk.

Limited functionality

The tree can’t handle complex transactions and smart contracts, as it was initially created only for verification and integrity.

Although we had these methods, they were lacking in many areas. As a result, the origin of blockchain technology begins with a combination of a network of decentralization, cryptography, algorithms of consensus, and structure of all data. This time it made sure to address the above limitations and provide a transparent, secure, and fraud-proof system.

How did blockchain begin? (Origin of blockchain)

Know the beginning of the blockchain origin.

In 1991, Stuart Harber and W. Scott Stormetta collaborated to lay a foundation for blockchain technology. Their research paper, “How to Time-Stamp a Digital Document,” is widely known. The paper addresses the concept of creating a digital time stamped chain with the help of cryptographic hashing.

Afterward, from 1994 to 1996, a computer scientist and legal scholar, Nick Szabo, introduced the concept of smart contracts to eliminate intermediaries. Around 1998, he also introduced a decentralized digital currency named “bit gold.” Though it could never be implemented fully, later, the idea of Bitcoin came to light based on it.

Later, in 2002, David Mazieres participated in designing Kademlia, a peer-to-peer distributed hash table. This emphasized effective performance in case of a failing environment. Furthermore, in 2004, he also contributed to designing SUNDR to secure and store data on distrustful servers.

Lastly, Satoshi Nakamoto is the most considerable by people regarding blockchain innovation. It’s a pseudonymous person or a group that published the Bitcoin whitepaper in 2008. All the various existing concepts are combined that we came to know above in the Bitcoin whitepaper. Nakamoto came up with the first practical implementation of the blockchain system. That’s where the history of the blockchain’s origin ends and the era of a decentralized blockchain-based ledger with digital currency begins.

What are the main purposes of the origin of blockchain?

Know the main purpose of the origin of blockchain.

Decentralization

Blockchain doesn’t rely on the system of a central authority like traditional techniques. It gets operated by a decentralized network. Each sharer of the network maintains the blockchain copies, which ensures not allowing any single entity to control the data.

Transparency

All network sharers can see the blockchain’s ledger, making it super transparent. Many other parties can verify the transaction records if any changes occur in the data. This is to promote accountability and trust among participants.

Security

By supporting the algorithms of cryptography and consensus mechanisms, blockchain is able to achieve tight security. By opting for cryptographic techniques, malicious activities can be detected so that no data can be altered. On the other side, consensus mechanisms ensure agreement with participants before the new block gets added to the chain.

Unalterable

In the chain, it creates records chronologically, where each block references previous ones. This makes the whole transaction records unalterable and challenging to modify.

What are the six layers of blockchain technology?

Six layers of blockchain technology.

Physical layer

This includes hardware devices, the infrastructure of the network building, and other physical components such as servers, nodes, and protocols. All these physical components help in operating the blockchain network.

Data layer

This layer refers to the location that stores the actual data. It helps record all relevant data chronologically, consisting of a database and distributed ledger. The blocks are linked to create a chain.

Network layer

It facilitates smooth connectivity to all sharers in the network. It helps communication among nodes to maintain the blockchain’s peer-to-peer and decentralized nature.

Consensus layer

This layer achieves integrity with techniques like PoW (Proof-of-work) and PoS (Proof-of-state). These algorithms help in validating the agreements among peers to maintain trust.

Smart contract layer

Here, this layer allows the creation of self-executing contracts. However, it must be based on predefined rules and conditions; only then can it be executed. The contracts are programmable and can be performed automatically.

Application layer

This layer is the top level of the stack technology. It takes charge of the user interface and the application building. Cryptocurrency wallets, supply chain systems, and DeFi (decentralized finance) platforms are part of this layer.

What are the different types of blockchains?

Know about the different types of blockchains.

Public blockchain

The most popular blockchains, Bitcoin and Ethereum, allow people to join the network. People can participate in transactions and create blocks. These blockchains follow techniques of consensus mechanism, which includes PoW and PoS. Public blockchains encouraged the blockchain origin since it enables transparency and security.

Private blockchains

Often organizations use private blockchains to maintain a ledger that is shared with only trusted members. Any third party is restricted to access without permission of the central authority. Only selective members can participate.

Hybrid blockchains

Hybrid blockchains are a combination of private blockchains and public blockchains. They help to keep private transactions in a network of public blockchain systems. This is how an organization can keep any specific data confidential while allowing complete security and transparency.

Consortium blockchains

Consortium blockchains work somewhat similarly to hybrid blockchains. They share the quality of both Public blockchains and Private blockchains. They’re used by numerous organizations where each collaborates to achieve a common goal. For example, a private version of Ethereum and R3 Corda are Consortium blockchains.

Federated blockchains

Federated blockchains differ slightly from consortium blockchains as they involve only a small group of trusted multiple organizations collectively. They follow a certain level of governance to operate the system. Ripple and Steller are fine examples.

Sidechains

These are separate and independent chains, but they are compatible with the main blockchain system. They help transfer digital assets between the main chain to the side chain and enable smart contracts.

Is blockchain the future? (Wrapping up)

Blockchain technology's future.

Considering what the future blockchain holds isn’t easy to predict as the history of the origin of blockchain itself is short. However, it promises to bring more of its potential in the future. It can impact, to a great degree, to revolutionize industries like healthcare, finance, real estate, retailing, agriculture, education, entertainment, etc.

Blockchain facilitates security, transparency, and efficiency in storing data. Even so, it faces challenges with limitations as it hasn’t reached its full potential yet. It lacks to solve scalability issues, concerns about energy consumption, and some implementations. Thus, it is yet to achieve widespread adoption.

So, achieving widespread acceptance and unlocking its full potential will take some time. Numerous other factors, like advancements in the technology field and collaboration, affect its future. But, with time, blockchain will only improve with continuous research and investment for sure. The ongoing exploration and changes will help it to evolve over time.

FAQ

The answer is blockchain, as the concept of blockchain originated first in 2008 in a whitepaper to serve the digital currency Bitcoin. Later, in January 2009, a new kind of digital currency, Bitcoin, was launched. Other cryptocurrencies also started developing to support blockchain technology.

Yes, HasCash, B-Money, and Bit Gold were some technologies that used the concept of blockchain before Bitcoin. HasCash was created by Adam Back in 1997, a cryptographer to introduce the proof-of-work concept. B-Money was proposed by Wei Dei 1998, a computer engineer, to study building a decentralized digital currency. But, unfortunately, it was never implemented fully. Lastly, Nick Szabo developed Bit Gold in 2005 to work on a decentralized digital currency system.

Bitcoin blockchain is the longest-running blockchain as it is the widely accepted starting point and origin of the blockchain system.

Yes, we can credit Bitcoin for introducing the practical concept of blockchain technology. Satoshi Nakamoto published a whitepaper in 2008. The paper was named “Bitcoin: A Peer-to-Peer Electronic Cash System.” And the paper says that Bitcoin, a digital currency, will be operated on a decentralized network.

No, Bitcoin isn’t the first digital currency. Before, there were many trials for electronic payments. However, many relied on central authorities such as DigiCash and e-gold.
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