History On January 12 2009, the primary Bitcoin exchange

History
of Blockchain:

 

The idea of Blockchain was first presented in 2008 with a
distribution of : ” Bitcoin- A peer-to-peer Electronic cash system “,
a paper by an unknown individual or group named Satoshi Nakamoto (A nom de
plume till date nobody is certain as to who it seems to be).

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

 

Blockchain was then for all intents and purposes actualized in 2009
as a center segment of the digital currency, Bitcoin.  It served as a
digital public ledger which would store all the transaction data on the
network.

 

 On January 12 2009, the
primary Bitcoin exchange occurred between Hal Finney and Satoshi Nakamoto and
on October 12 2009, #bitcoin-dev is enlisted as a talk subject on freenode IRC
(an open source venture discussion) and the discussion develops.

 

The Bitcoin market is established in October 31 2009 and it allows
people to exchange paper money for Bitcoin. This is when individuals start to
remember it as a computerized cash.

 

In May 2010, the main Bitcoin buy was of 10,000 bitcoins for a
pizza. The cost around then was $25 and today, it is about $ 120000000. By
November 2010, participation in the Bitcoin marketplace increases the market
cap to exceed $1M USD.

 By Febuary 2011, BTC kept
on expanding in esteem and achieved equity with USD ($1 USD= 1 BTC) and
 by March 2013, BTC market surpasses $1B USD. 10 times the growth in less
than 3 years!

 

Satoshi claimed to have solved the problem of ‘Double spend’ in
digital currency using the blockchain technology in Bitcoin. Double spend is
basically the idea of spending digital currency in two places. This is a
problem which is specific to digital types of money since it can be copied or
produced again easily. This would not be an issue is case of physical types of
money since they cannot be easily copied and the parties involved in the
transaction can easily verify them. In case of digital currency, there is a risk
that the holder of the currency could make a copy of the digital currency and
send it to the merchant or someone else while keeping/holding the original. Bitcoin
became the first digital currency to have solved this problem of double spend
without requiring a third party or a trusted administrator.

Satoshi Nakamoto vanished
from open (that is from Bitcoin discussions, papers and code contributors) in
2011. Bitcoin however kept on being created and marketized by the group which
was engaged to address different issues in the code, even in his non-appearance.
Bitcoin is used by millions of people for payments, including growing remittances
market and its market
capitalization hovers between $20-$25 Billion US Dollars.

It was
in 2014, that people acknowledged Blockchain can be isolated from the money and
can be connected to different other use-cases. This is the point at which the
attention moved from Bitcoin to Blockchain. Relatively every major monetary
foundation on the planet is looking into blockchain now and some 15-20% of
banks are required to utilize blockchain in the present year.

-Smart Contracts

The next development
exemplified in the second era blockchain framework called Ethereum called “Smart
Contracts”.

In December 2013, a man
named, Vitalik Buterin releases a white paper on what might turn into the
“Ethereum venture” – a blockchain platform with the ability to build
decentralized applications.

Ethereum is a blockchain
based distributed computing, public, open-source stage highlighting smart
contract facility.

Vitalik was a noticeable
Bitcoin lover for quite a long while and was a prime supporter of the Bitcoin
magazine in 2012. He tried to update the original Bitcoin protocol and failed
to gain agreement within the Bitcoin community, post which he gathered a team
of super programmers to develop a completely new blockchain protocol featuring
‘Smart contracts’ that would allow programmers to build scripts into the
blockchain which would act as contractual agreement and execute when the
mentioned conditions are met. He named this new blockchain ‘Ethereum’.

Smart
contract is a piece of code which is stored on the blockchain network. Anything
of value, like money, property or shares can be exchanged with the help of
smart contract in a conflict-free , transparent way while avoiding the services
of a middleman. It
defines the conditions to which all parties using the contract would agree, so
certain actions are executed if the required conditions are met. A smart
contract is saved on each computer on the network and all of them must execute
it to get the same result. In this way users can be sure that the outcome is
correct.

Smart
contracts are gaining popularity in ecommerce industry. Several people are
starting to see the potential of smart contracts. Every minute change and
detail is documented within the blockchain. In other words it allows everything
to be recorded during the transactional process and tampering of the data is
extremely unlikely making it more safe for storing data.

 

Let us
try to understand Smart contracts in detail by using an example:

Let us
say User A want to ship a truck full of goods to User B. User Z is the trucker
who would be carrying the truck full of goods to User B. User A may have trust
on User B, but not on the trucker. On the contrary, even the trucker may not
trust the sender (User A), owing to the fear of not getting paid.

User A
would then sign an agreement with the trucker that he would process the payment
only after the goods are received by User B. Such process would usually involve
a third party wherein legal papers and contracts are signed, printed and
scanned.

Using
smart contracts, this can be made simpler and the rules can be added in the
code.

User A
can use Smart contracts to sign an agreement with the trucker wherein the
program would mention a code wherein the payment would not be processed till
the delivery is confirmed by user B. Once the delivery is confirmed, the
payment would be automatically triggered and processed by smart contract.

This can
further be modified by adding a GPS tracker attached to the truck, which would
eliminate the need for User B to confirm in this entire process and the payment
can be processed once the stated conditions are met.

To use a
smart contract on Ethereum blockchain , mini payments of Ether, the
cryptocurrency for Ethereum were required. Since smart contracts are stored on Ethereum
blockchain, anyone can access or inspect the contract for a bugs or
irregularities since its contents are public. Additionally, no one can access
the funds on the smart contracts, not even the developers.

This
innovation of smart contract in the blockchain system Ethereum, built small
computer programs directly into blockchain that allowed financial instruments, like loans
or bonds, to be represented, rather than only the cash-like tokens of the
bitcoin. The Ethereum smart contract platform has a market
capitalization of billions of dollars and has hundreds of projects heading
towards the market.

Ever since
its launch in 2014, Ethereum has grown significantly and is now considered the
second largest cryptocurrency after Bitcoin. By June 2014, the Ethereum project
was funded by a crowd sale. Investors realized how Ethereum could unlock a new
level of functionality for blockchains and were keen on investing in the same.
It has been growing ever since.

· Proof of Stake

The next
major innovation in the blockchain world was “Proof-of-stake” (POS). A
cryptocurrency blockchain network aims to achieve distributed consensus by the
Proof-of-stake algorithm. It can also be considered as an alternate process for
transaction verification on the blockchain.

Proof-of-stake
was first introduced by Sunny King and Scott Nadal in a paper in 2012 and it
intended to solve the problem of Bitcoin mining’s high energy consumption. The
average cost of maintain a bitcoin network at that time was around $150,000 a
day. Today this cost would be around $6-7M USD.

In order
to understand Proof-of-stake, it is important to have a basic idea about
Proof-of-work.

A mining
process wherein a user installs a powerful computer or a mining rig to solve
complex mathematical problems/puzzles called as proof of work problems is
‘Proof of work’.   The verified transactions of several successfully
performed calculations of various transactions are stacked together and stored
on a ‘new’ block on the distributed ledger or public blockchain. Mining creates
new currency units after verifying the legitimacy of a transaction.

The work
would be difficult for the miner to perform, however it would be considerably
easy for the network to check. Each miner on the network attempts to solve the
mathematical puzzle first, so as to receive a cryptocurrency as a reward. As
more power is added to the network, more coins are mined and the number of
calculations required to create new block increases, thus increasing the
difficulty level for miners. Miners need to recover electricity and hardware
costs in case of Proof-of-work currencies.

 

In case
of a proof-of-stake system, the creator of a new block is chosen in a
deterministic way, depending on its wealth, also defined as stake, unlike where
the algorithm rewards miners who solve mathematical problems with the goal of
validating transactions and creating new blocks. Blocks are said to be ‘forged’
or ‘minted’ and not ‘mined’, in the proof-of-stake systems. Here, forgers
(users who create new blocks by validating transactions) are given a
transaction fee as reward and not cryptocurrencies, since the digital
currencies are created in the very beginning and their number is fixed.

So
switching to Proof-of-stake from Proof-of-work in blockchain led to huge energy
savings and a safer network as the attacks become more expensive.
Proof-of-stake systems are said to be the future!

Marketers
have released organizations constructed around bitcoin and other
cryptocurrencies and have additionally decoupled the underlying blockchain
technology from bitcoin to develop new equipment and offerings. There are over
250 lively venture-backed startups inside the area and greater than 2 hundred
venture capital companies have already invested $1.3 billion into agencies
across the rising surroundings. It remains early inside the development of
corporations around the generation, with many startups nonetheless within the
evidence-of-concept stage – however, if successful, those organizations are
poised to generate first-rate value.

Bitcoin’s
fruitful use of blockchain innovation as a digital currency produced another
flood of cryptographic forms of money that ate on the whole normally referred
to as altcoins. Most altcoins carry on also to Bitcoin however each one has its
own special qualities. Probably the most well-known altcoins available for use
would include Litecoin, Dash and Ether.

 

Across the board, utilization of blockchain
innovation to date has come predominately through cryptographic forms of money,
which have done well to show the influence of the innovation and animate
enthusiasm for new applications. Be that as it may, in the previous year, there
has been a quick move in startup action and speculation dollars to an extensive
variety of new blockchain applications.

 

Over 1,000 agencies now exist within the
cryptocurrency category and new businesses continue to be set up with precise
offerings. In the meantime, some of the greater hooked up corporations are
starting to emerge as dominant players. One example is Coinbase, a virtual
forex service sponsored by using challenge capital firms consisting of
Andreessen Horowitz and union square ventures. The enterprise allows customers
to shop for and sell bitcoins and different cryptocurrencies, in addition to
use those bitcoins to transact with on-line traders. Coinbase has almost five
million customers and has raised almost $120 million over five rounds of
financing as of 2012.

 

As digital money and blockchain markets
develop, there has additionally been an expansion in new “hybrid”
companies. Those associations give offerings, regularly specialized in nature
or framework related, to the creating unit of digital currency and blockchain
associations. They likewise can give specific projects of the innovation. One
example is Bitfury, a startup that began as a bitcoin mining undertaking and
has since cutting edge directly into an entire bearer blockchain security and
time organization. It has developed restrictive equipment and programming
answers that have helped the blockchain scale globally safely. The organization
is directly exploiting blockchain to develop another casual property rights
registry.

Blockchain
innovation today remains at an essential expression point. The innovation is
all the more extensively comprehended, and is being connected by business
visionaries in ever inventive ways, yet the environments around blockchain
organizations, including cryptographic forms of money, is as yet youthful.
Early buildup has to some degree died down and now the inquiry isn’t around the
capability of the innovation however how its applications will be embraced by
the market. The dynamic idea of the innovation sets it up to conceivably upset
an extensive variety of enterprises.