Blockchain is the underlying technology of digital currency, which ensures that every Internet user can reach a consensus without mutual trust.

Early-stage of blockchain

The idea of ​​blockchain technology can be traced back to 1991. To ensure that time-stamped files are not retroactive and tampered with, two scientists at the time, Stuart Haber and W. Scott Stornetta, came up with a practical computational solution.

The system uses a blockchain encrypted chain to store time-stamped files, and in 1992, Merkle trees were also incorporated into the system. This new technology of grouping multiple documents into a block greatly improves the efficiency. It is a pity that this technology was later abandoned and gradually abandoned. The patent also expired in 2004, four years before Bitcoin was born.

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Reusable Proof of Work (RPoW)

In 2004, computer scientist and cryptography enthusiast Hal Finney (Harold Thomas Finney II) introduced a system called RPoW, a reusable proof-of-work mechanism.

The system works by accepting a non-exchangeable or non-fungible, Hashcash-based proof-of-work token, and at the same time, creating an RSA-algorithm token that can be transferred between any user.

RPoW solves the double-spending problem by allowing holders to register their accounts on a fully trusted server. The server is designed to allow users around the world to verify its correctness and integrity at any time.

RPoW can be said to be an early prototype of blockchain and an important beginning in the history of digital currency.

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Bitcoin network

In late 2008, a man under the pseudonym Satoshi Nakamoto published a white paper and introduced a decentralized, peer-to-peer electronic cash system called Bitcoin.

Compared with the trusted hardware computing function of RPoW, Bitcoin uses the hashcash workload proof algorithm to track and verify transactions through a decentralized peer-to-peer protocol, thereby preventing double payments. To put it simply, Bitcoin is a “mining” reward for each miner under the workload proof mechanism, which is then verified by decentralized nodes in the entire network.

On January 3, 2009, Bitcoin was born. The first Bitcoin was obtained by “mining” Satoshi Nakamoto, and he was rewarded with 50 Bitcoins. The first person to receive bitcoin was Hal Finney, who received 10 bitcoins from Satoshi Nakamoto on January 12, 2009, which was the world’s first bitcoin transfer.

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Ethereum

In 2013, a programmer named Vitalik Buterin and co-founder of Bitcoin Magazine stated that Bitcoin needed a scripting language to build decentralized applications. Failing to gain acceptance within the Bitcoin community, Vitalik started the research and development of a new distributed computing platform based on blockchain technology. This is Ethereum. The scripting function supported by Ethereum is It’s called a smart contract.

Smart contracts are programs or scripts that are deployed and run on the Ethereum blockchain, for example, under certain conditions, they can be used to carry out a transaction. Smart contracts are written in a specific programming language and compiled into byte code that can be read and executed by a decentralized, Turing-complete Ethereum Virtual Machine (EVM).

Developers are also able to create and publish new applications on the Ethereum blockchain, often referred to as decentralized applications (DApps). At present, there are hundreds of decentralized applications running on the Ethereum blockchain, including social platforms, online gambling and financial exchanges, etc.

The digital currency of Ethereum is called Ether, which can be transferred between different accounts. Ether is usually used to pay for the computing power required to execute smart contracts.

Today, blockchain technology has received a lot of attention from mainstream media and has been applied to many real-world scenarios other than digital currencies.

For more blockchain and related industry information, stay tuned for our other Binance Academy videos.

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