The first blockchain was created by an anonymous developer or group of developers known as Satoshi Nakamoto in 2008. The technology was implemented the next year, in 2009, as a key component of the now widely-recognized cryptocurrency, Bitcoin.
What is Blockchain Technology?
Blockchain serves as a distributed public ledger for all transactions carried out on the Bitcoin network. Because they are entirely decentralized, distributed ledger systems such as these require no central governance from banks or government organizations. Rather, they use peer-to-peer networks to validate, moderate, and control the operations. The Bitcoin blockchain reached a size of 20 GB in 2015 and has since grown to over 100 GB. The Bitcoin blockchain is just one of many distributed ledgers of its kind. Here’s how it works. A blockchain is a constantly-growing list of transactional data and records. Each piece of data is called a block. Blocks are linked together by cryptographic hashes. A hash is a piece of code which includes the hash of the previous block, a timestamp, and its own transaction data. Because of the hash system, blocks cannot be modified or tampered with because any changes to a block will change its hash. Therefore it will no longer match the previous block and will be deemed invalid. A blockchain is made up of countless computers which work together to verify and valid transactions. The computers are called nodes. Nodes carry out tasks in order to earn cryptocurrency. Blockchains use a number of peer-to-peer consensus mechanisms to validate transactions. The most popular consensus mechanisms are the Proof of Work (PoW) and Proof of Stake (PoS) systems. Both of these systems require a node to complete a mathematical equation to prove a block’s validity. Once the equation is completed, the block will be added. Nodes are either selected at random or on account of their amount of holdings. How they are selected depends on the system at play. Blockchain has countless use cases from facilitating transactions and crowdfunding to tracking shipping and receiving and employing digital contracts called smart contracts.