The Early Days of Blockchain Technology

The idea behind blockchain technology was described as early as 1991 when research scientists Stuart Haber and W. Scott Stornetta
introduced a computationally practical solution for time-stamping digital documents so that they could not be backdated or tampered
with.

The system used a cryptographically secured chain of blocks to store the time-stamped documents and in 1992 Merkle trees were
incorporated to the design, making it more efficient by allowing several documents to be collected into one block. However, this technology went unused and the patent lapsed in 2004, four years before the inception of Bitcoin.

Reusable Proof Of Work
In 2004, computer scientist and cryptographic activist Hal Finney (Harold Thomas Finney II) introduced a system called RPoW, Reusable Proof Of Work.The system worked by receiving a nonexchangeable or a non-fungible Hashcash based proof of work token and in return created an RSA-signed token that could then be transferred from person to person.

RPoW solved the double spending problem by keeping the ownership of tokens registered on a trusted server that was designed to allow
users throughout the world to verify its correctness and integrity in real time.

RPoW can be considered as an early prototype and a significant early step in the history of cryptocurrencies.

Bitcoin network
In late 2008 a white paper introducing a decentralized peer-to-peer electronic cash system — called Bitcoin — was posted to a cryptography mailing list by a person or group using the pseudonym Satoshi Nakamoto.

Based on the Hashcash proof of work algorithm, but rather than using a hardware trusted computing function like the RPoW,
the double spending protection in Bitcoin was provided by a decentralized peer-to-peer protocol for tracking and verifying the
transactions. In short, Bitcoins are “mined” for a reward using the proof-of-work mechanism by individual miners and then verified
by the decentralized nodes in the network.

On the 3rd of January 2009, Bitcoin came to existence when the first bitcoin block was mined by Satoshi Nakamoto, which had a
reward of 50 bitcoins. The first recipient of Bitcoin was Hal Finney, he received 10 bitcoins from Satoshi Nakamoto in the world’s first
bitcoin transaction on 12 January 2009.

What is Bitcoin?
Bitcoin is a digital form of cash. But unlike the fiat currencies you’re used to, there is no central bank controlling it. Instead, the financial system in Bitcoin is run by thousands of computers distributed .around the world. Anyone can participate in the ecosystem by
downloading open-source software.

Bitcoin was the first cryptocurrency, announced in 2008 (and launched in 2009). It provides users with the ability to send and receive digital money (bitcoins, with a lower-case b, or BTC). What makes it so attractive is that it can’t be censored, funds can’t be spent more than once, and transactions can be made at any time, from anywhere.

What is the blockchain?
A blockchain is a special kind of database where data can only be added (and not removed or changed). Transactions are periodically added to a blockchain inside what we call blocks (made up of transaction information and other important metadata). We call the structure a chain because each block’s metadata includes a piece of information that links it to the previous one. Specifically,
it includes a hash of the previous block, which you can think of like a unique digital fingerprint. The blockchain is a ledger that is append-only: that is to say, data can only be added to it. Once information is added, it is extremely difficult to modify or delete it. The blockchain enforces this by including a pointer to the previous
block in every subsequent block.

The pointer is actually a hash of the previous block. Hashing involves passing data through a one-way function to produce a unique “fingerprint” of the input. If the input is modified even slightly, the fingerprint will look completely different. Since we chain the blocks along, there is no way for someone to edit an old entry without invalidating the blocks that follow. Such a structure is one of the components making the blockchain secure.