In 2009, the anonymous person or group known as Satoshi Nakamoto changed the way we perceive the world and money by creating the first modern cryptocurrency and introducing to the wider world the blockchain architecture that makes Bitcoin and other cryptocurrencies possible.

The blockchain before bitcoin

Bitcoin is undoubtedly Nakamoto's creation, but blockchain was invented in a completely different time and place. A generation before Nakamoto's white paper was produced, a UC Berkeley doctoral student named David Chaum outlined a blockchain database in his dissertation, "Computer Systems Created, Maintained, and Trusted by Mutually Suspicious Groups." All this action takes place in 1982: 27 years before Bitcoin.

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Decentralized databases existed before Chaum, but if you're ever on a game show and asked who invented blockchain, citing Chaum should win you the prize. When was blockchain invented? In 1982

Chaum's suspicious networks weren't specifically designed to support digital currencies, but the connection is obvious. Building on his work in blockchain technology, Chaum started a company called DigiCash in 1989. In 1995, the company introduced cryptocurrency, variously called digicash, eCash, and cyberbucks.

DigiCash's digital currency showed great promise, bearing many of the characteristics of modern cryptocurrencies. The company emphasized anonymity as a key benefit. According to the company, not even the government can decrypt encrypted eCash transfers. But Chaum was unable to convince banks to back the project, and without an internet infrastructure to support P2P transactions and only exchanges, the project failed. DigiCash filed for bankruptcy in 1998.

History almost repeats itself

In 2008, the story of blockchain technology again came to the fore and sparked interest after a related scientific article appeared in online discussion forums. The paper was titled "Bitcoin: A P2P Electronic Money System" and was authored by Satoshi Nakamoto.

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Experts say that the blockchain protocol described in Nakamoto's paper is essentially the same as David Chaum's. The only major difference is the addition of Bitcoin's proof-of-work consensus mechanism by which blocks of data are validated and coins are mined. However, most people believe that it was Satoshi Nakamoto who created blockchain technology.

In 2008, Nakamoto uploaded the source code of his blockchain to SourceForge so that software developers around the world could contribute to the project. The first modern blockchain was launched in January 2009 along with its associated cryptocurrency Bitcoin.

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At first, it seems as if history is ready to repeat itself and that the Bitcoin project will suffer the same unfortunate fate as DigiCash. It took one bitcoin more than two years to reach the symbolic value of one US dollar.

It was not until 2017 that the value of Bitcoin reached 1,000 euros per piece. Since then, the value of the coin has maintained its characteristic volatility, while at the same time tending to rise sharply.

Blockchain abundance

For two years, Bitcoin was the only functioning blockchain system and cryptocurrency in the world. In 2011, developers released blockchain-based cryptocurrencies called Litecoin and Namecoin – both derivatives of the Bitcoin project. In 2012, Peercoin followed. In the following year, five blockchain projects were introduced,

including the first memecoin – Dogecoin.

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In 2015, the Ethereum blockchain was introduced by a team that included contributors to the Bitcoin project.

Ethereum was different from what we are used to seeing. Other blockchains existed only to support specific cryptocurrencies. Ethereum was introduced as a platform for working with decentralized applications. The Ethereum blockchain contains data and executable source code, so it serves as the foundation for thousands of blockchain-based applications. The flexibility of the Ethereum blockchain makes it ideal for hosting both NFTs (non-fungible tokens) and decentralized applications.

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Today, different developers are experimenting with different variants of the basic blockchain architecture. Mainstream blockchain systems perform well under light workloads, but have scaling issues that prevent them from supporting full-scale applications. Transaction fees are rising and processing times are stretching from hours to days. Many of the new blockchain chains include innovative solutions to these problems, writes kriptomat.io. 

Scientists continue to experiment with consensus mechanisms, coordination of parallel subchains, private blockchains, and other technical issues.

Most new cryptocurrencies are introduced to support specific applications or industries, not to serve as general-purpose replacements for government-issued fiat currencies.

Many new blockchain applications have nothing to do with cryptocurrency at all. These applications sometimes benefit from modifications to the underlying blockchain architecture.

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Even if world governments somehow succeed in legally banning the cryptocurrency market, these blockchain chains will continue to serve important functions in healthcare, identity management, supply chain management, entertainment, and other fields. Blockchain is here and will be here for a long time.

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