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Cryptocurrencies: a journey through the blockchain technology
Written by Davies on / Reading time: 5 minutes.
Perhaps, you've already heard of these two concepts, but you have never dared to investigate more about them. Cryptocurrency and blockchain seem to have become two fashionable terms, although its origins go back several years ago.
When we refer to the first, cryptocurrency, we inevitably do a pause in the Bitcoin, the first virtual currency created. Almost ten years ago, Bitcoin became a payment and merchandise system based on a P2P network. When we refer to the second term, Blockchain, something changes. The blockchain seems to be the ally of the most modern technology. Today, we want to immerse you in a journey through their evolution, would you like to accompany us?
We look at the past to understand the present
Some people talk about a solution to a problem. Others, prefer to refer to it as a simple articulated chain of blocks. However, blockchain is much more than that.
It all started with a dream, we already mentioned it in previous articles. Satoshi Nakamoto was very clear that ideas could transform into a reality. With that goal, he wanted to create a new payment system based on decentralization. He dreamed of a project capable of changing economics and finance as we know them. Thus, Bitcoin came and, with it, the blockchain concept, applied for the first time in 2009.
Data stored in the blockchain are usually of a transactional type, as it occurs in financial activities. That is why it is common to call data as transactions. Few people doubt about the importance that the control and the need for increased and organized store massive amounts of data without the possibility of modifying them or revise themhave. In this context, the blockchain technology was born, becoming an effective system to store, transmit and confirm data.
The chain of blocks in the cryptocurrency context
It is possible that the chain of blocks has already become the best choice for all those activities that require storage, transmission and confirmation of data practices. It is with this technology that transparency and the truth are built, achieved and strengthened by members themselves. Talking about cryptocurrencies and blockchainin the same paragraph requires establishing a link, and this is the beginning of a long history that is just beginning its path.
In the field of the cryptocurrencies, the chain of blocks has a non-changeable use of all transactions, but what is the objective? Without going any further, the creators want to avoid the problem that a currency can be worn twice. Its usefulness in Bitcoin, Litecoin, Ethereum and other cryptocurrencies of recent development can be used as an example.
It is possible that virtual currencies are already part of the great inventions of the past ten years. Therefore, today we want to throw you a question: what if there is a technological breakthrough that is so powerful that it is able to transform the pillars underpinning our society? A technology that transforms the functioning of our economy...
Perhaps, this was the question that emerge in Satoshi Nakamoto’s mind. Whatever it is, a new reality was started by an idea. This technology already exists and it is called “cryptocurrency”, a concept that, even today, some people relate it unique and immediately with virtual money. There are a lot of reasons to explain this relation, but to understand what it is, it is necessary to remove the magnifying glass. The monetary aspect is just the surface of the system.
Looking beyond, we would dare to say that cryptocurrencies are a revolutionary technologyin which money is only one of the thousand possibilities that we offer. We are accustomed to use trusted third party or intermediaries to conduct our transactions. However, is it mandatory to do so? Not for virtual currencies, as they have built the opportunity to maintain a collective accounting through the internet.
This is not controlled by a person. It is public and available in one digital ledger: the blockchain.
What does the blockchain to cryptocurrencies?
Prior to establishing the contribution of the blockchain, we wanted to highlight some key moments in this technology throughout its history. It is true that we have established an origin dated in 2009, with the invention of Bitcoin. However, more specifically, there are other previous moments in history that have marked the evolution of the blockchain:
- 1997. Adam Back invented Hashcash, a decentralized system of transactions verifications applied to emails.
- 1998. With B-Money and Bit Gold invented by Wei Dai and Nick Szabo, a new notion of digital capacities distributed for the cryptocurrency management was introduced.
- 2010. First transaction with Bitcoin: the payment of two pizzas in exchange of 10.000 bitcoins made by the developer, Laszlo Hanyecz.
Now, we would like to talk about some of the contributions of the technology blockchain to cryptocurrencies:
- All transactions are blocked, including information concerning dates, participants, etc.
- Each node in the network obtains an identical copyof the full blockchain.
- Because of the previous point, there are no errors, transactions are verified by the miners.
- The cryptocurrencies are a safe systemin which each node validates the state of the chain of blocks automatically and continuously.
- Everyone has access to a shared source of transparent information.
Users are always the ones that decide what stored value represents its cryptocurrency. Companies, for example, have in front of their eyes a perfect opportunityto control their spending. The openness characteristic of virtual currencies, helps society build and innovate our financial system and administrative processes.
Are you willing to bet on transparency and efficiency?