Block Chain: History | Description | Applications | Bitcoin | Blockchain Roles | Case Studies
The first work on a cryptographically secured chain of blocks was described in 1991 by Stuart Haber and W. Scott Stornetta. In 1992, Bayer, Haber and Stornetta incorporated Merkle trees to the design, which improved its efficiency by allowing several documents to be collected into one block.
A blockchain database is managed autonomously using a peer-to-peer network and a distributed timestamping server. The first blockchain was conceptualised by an anonymous person or group known as Satoshi Nakamoto in 2008. It was implemented the following year as a core component of the digital currency bitcoin, where it serves as the public ledger for all transactions on the network. By using a blockchain, bitcoin became the first digital currency to solve the double spending problem without requiring a trusted administrator and has been the inspiration for many additional applications.
Double-spending is a potential flaw in a digital cash scheme in which the same single digital token can be spent more than once. This is possible because a digital token consists of a digital file that can be duplicated or falsified. As with counterfeit money, such double-spending leads to inflation by creating a new amount of fraudulent currency that did not previously exist. This devalues the currency relative to other monetary units, and diminishes user trust as well as the circulation and retention of the currency. Fundamental cryptographic techniques to prevent double-spending while preserving anonymity in a transaction are blind signatures and particularly in offline systems, secret splitting. Prevention Strategies for Double-spending: It has taken two general forms: centralized and decentralized.
- Centralized: This is usually implemented using an on-line central trusted third party that can verify whether a token has been spent.This normally represents a single point of failure from both availability and trust viewpoints.
- Decentralized: The cryptocurrency Bitcoin implemented a solution in early 2009. It uses a cryptographic protocol called a proof-of-work system to avoid the need for a trusted third party to validate transactions. Instead, transactions are recorded in a public ledger called a blockchain. A transaction is considered valid when it is included in the blockchain that contains the most amount of computational work. This makes double-spending impossibly difficult, and more infeasible as the size of the overall network grows.Other cryptocurrencies also have similar features.
In August 2014, the bitcoin blockchain file size, containing records of all transactions that have occurred on the network, reached 20GB (gigabytes). In January 2015, the size had grown to almost 30GB, and from January 2016 to January 2017, the bitcoin blockchain grew from 50GB to 100GB in size. The words block and chain were used separately in Satoshi Nakamoto's original paper, but were eventually popularized as a single word, blockchain, by 2016.
The term blockchain 2.0 refers to new applications of the distributed blockchain database, first emerging in 2014. The Economist described one implementation of this second-generation programmable blockchain as coming with "a programming language that allows users to write more sophisticated smart contracts, thus creating invoices that pay themselves when a shipment arrives or share certificates which automatically send their owners dividends if profits reach a certain level." Blockchain 2.0 technologies go beyond transactions and enable "exchange of value without powerful intermediaries acting as arbiters of money and information". They are expected to enable excluded people to enter the global economy, protect the privacy of participants, allow people to "monetize their own information", and provide the capability to ensure creators are compensated for their intellectual property. Second-generation blockchain technology makes it possible to store an individual's "persistent digital ID and persona" and are providing an avenue to help solve the problem of social inequality by the way wealth is distributed".As of 2016, blockchain 2.0 implementations continue to require an off-chain oracle to access any "external data or events based on time or market conditions to interact with the blockchain".
In 2016, the central securities depository of the Russian Federation (NSD) announced a pilot project, based on the Nxt blockchain 2.0 platform, that would explore the use of blockchain-based automated voting systems.IBM opened a blockchain innovation research center in Singapore in July 2016. A working group for the World Economic Forum met in November 2016 to discuss the development of governance models related to blockchain.According to Accenture, an application of the diffusion of innovations theory suggests that blockchains attained a 13.5% adoption rate within financial services in 2016, therefore reaching the early adopters phase. Industry trade groups joined to create the Global Blockchain Forum in 2016, an initiative of the Chamber of Digital Commerce.
In early 2017, the Harvard Business Review suggested that blockchain is a foundational technology and thus "has the potential to create new foundations for our economic and social systems." It further observed that, while foundational innovations can have enormous impact, "It will take decades for blockchain to seep into our economic and social infrastructure."
The term blockchain 2.0 refers to new applications of the distributed blockchain database, first emerging in 2014. The Economist described one implementation of this second-generation programmable blockchain as coming with "a programming language that allows users to write more sophisticated smart contracts, thus creating invoices that pay themselves when a shipment arrives or share certificates which automatically send their owners dividends if profits reach a certain level." Blockchain 2.0 technologies go beyond transactions and enable "exchange of value without powerful intermediaries acting as arbiters of money and information". They are expected to enable excluded people to enter the global economy, protect the privacy of participants, allow people to "monetize their own information", and provide the capability to ensure creators are compensated for their intellectual property. Second-generation blockchain technology makes it possible to store an individual's "persistent digital ID and persona" and are providing an avenue to help solve the problem of social inequality by the way wealth is distributed".As of 2016, blockchain 2.0 implementations continue to require an off-chain oracle to access any "external data or events based on time or market conditions to interact with the blockchain".
In 2016, the central securities depository of the Russian Federation (NSD) announced a pilot project, based on the Nxt blockchain 2.0 platform, that would explore the use of blockchain-based automated voting systems.IBM opened a blockchain innovation research center in Singapore in July 2016. A working group for the World Economic Forum met in November 2016 to discuss the development of governance models related to blockchain.According to Accenture, an application of the diffusion of innovations theory suggests that blockchains attained a 13.5% adoption rate within financial services in 2016, therefore reaching the early adopters phase. Industry trade groups joined to create the Global Blockchain Forum in 2016, an initiative of the Chamber of Digital Commerce.
In early 2017, the Harvard Business Review suggested that blockchain is a foundational technology and thus "has the potential to create new foundations for our economic and social systems." It further observed that, while foundational innovations can have enormous impact, "It will take decades for blockchain to seep into our economic and social infrastructure."
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