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What is Blockchain?

 

Surely in recent years you have heard the word blockchain a lot on the internet, in the media and even in everyday life, and if you want to know what it is, you have come to the right place.

We are going to take a tour from the roots of this technology to the present, its advantages and problems.

 

The beggining

To begin, we must go back to the year 1991, when scientists W. Scott Stornetta and Stuart Haber, through cryptography, managed to create a blockchain in which the hosted documents could not be modified or corrupted by other users. Then in 1992 an enhancement using Merkle trees was added, allowing this to host more than one document in a single block.

 

Stuart Haber (left) and W. Scott Stornetta at Bellcore Research Labory.

Stuart Haber (left) and W. Scott Stornetta at Bellcore Research Labory.

 

This revolutionary technology was very new for its time, so it was not very useful and was left unusable, but not for long, since it would be the seed for several years after giving birth to the Bitcoin protocol.

 

Bitcoin, the beginning of the revolution

On October 31, 2008, a document called Bitcoin: A Peer-to-Peer Electronic Cash System was sent through an email list, which detailed a new electronic cash system, peer-to-peer, decentralized and Open Source. For the operation of the network, nodes were needed, that is, people who validate transactions simultaneously to prevent a Bitcoin from being used more than once or from corrupting the transaction information.

It was signed by Satoshi Nakamoto, a person (or group of people) whose identity is unknown to this day.

This protocol proposal generated a lot of interest in the users of the Metzger, Dowdeswell & Co. community and in less than two months, on January 3, 2009, the first peer-to-peer network based on the Nakamoto document went live under the Bitcoin name.

 

The identity of Satoshi Nakamoto, creator of Bitcoin is still unknown.

The identity of Satoshi Nakamoto, creator of Bitcoin is still unknown.

 

This would be the first case of blockchain carried out for the circulation of crypto assets. For this, software was used to connect to the nodes, who would validate the transactions and mine the Bitcoin blocks to be rewarded.

Satoshi Nakamoto mined the first Bitcoin block, also known as the genesis block, receiving a 50 Bitcoin reward.

9 days later, on January 12, 2009, the first Bitcoin shipment was made through the network, the recipient of it was Hal Finney, having received a total of 10 Bitcoin.

This would be the beginning of a digital revolution through a technology that years ago seemed obsolete and useless.

 

Ethereum and the second generation Blockchain

In 2013 the Russian developer and writer, Vitalik Buterin, proposed an improvement for the Bitcoin protocol, which, through a scripting language (Turing) we could develop decentralized applications (dApps), although it did not have the full support of the community Bitcoin managed to carry out the project in 2014 thanks to a crowdfunding platform.

Thus, on July 30, 2015, the Ethereum Virtual Machine (EVM) was launched, a computing platform based on blockchain technology that presented us with what are known as smart contracts.

Smart contracts are decentralized programs that allow us to execute a registered agreement between two or more parties through the logic ''If..., then...''. These contracts cannot be modified or canceled once created, unless the developer adds the function to destroy them (SelfDestruct) in their code.

 

Smart contracts are written in different programming languages. Solidity is used in the case of Ethereum.

Smart contracts are written in different programming languages. Solidity is used in the case of Ethereum.

 

This improvement to the Bitcoin network opened up an infinite range of possibilities, such as the execution of dApps in Ethereum, which today present a great variety and growth, from buying and selling applications, to social networks and games. Without a doubt, Ethereum marked a before and after in the blockchain.

 

Third generation and near future

Although Ethereum had achieved a great technological advance when it comes to blockchain, new problems began to arise.

Vitalik Buterin coined the term ''Blockchain Trilemma'' to refer to the main problem facing today, the harmony between decentralization, scalability and security.

 

The blockchain trilemma through some project examples.

The blockchain trilemma through some project examples.

 

The large number of dApps and smart contracts running at the same time generate problems in the scalability of networks, raising commission prices and affecting their processing time.

Although blockchain technology is very secure, there are ways to alter it, a clear example is that a malicious person who takes over 51% of a network has the power to modify it to his liking, so the more nodes exist on a network, the more secure it will be.

On the other hand, in many cases, in order to carry out the two previous points, decentralization is left aside, the blockchain being managed by a company, concentrating the decision-making power in it. This goes against the idea of ​​decentralization and is currently being resolved.

There are many projects on the way to achieve it, but nothing is certain yet. The world of blockchain is very broad and advances at great speed in its development, therefore, it will not be long before these problems are resolved and new challenges appear.