Strange it may seem, but the concept of blockchain was invented long before Satoshi Nakamoto created Bitcoin as A Peer to Peer Electronic Cash System.
Let’s take a look at the events preceding Bitcoin’s blockchain appearance.
- The idea takes its roots from coding and deciphering. Early in the 1940s, a British mathematician Alan Turing, who was the first known cryptographer, deciphered the Enigma Machine. At the same time, the Americans decoded the Purple Code, a Japanese ciphering machine.
- In the 1970s, Martin Hellman and Whitfield Diffie invented a special algorithm which split the encrypted keys into a pair — a private and a public key.
- Then, in 1992, W. Scott Stornetta, Stuart Haber added Merkle Tree to the cryptography concept, boosting security, performance, and efficiency.
- However, this technology was not used, and the patent ended in 2004, four years before Bitcoin appeared.
- In 2004, a scientist and cryptographer Hal Finney introduced a system called RPoW, which was Reusable Proof Of Work. The system operated by getting a non-exchangeable Hashcash based PoW token and in return created an RSA-signed token that could then be transacted from person to person.
- RPoW solved the double-spending problem by keeping the ownership of tokens registered on a trusted server. It also allowed users worldwide to verify its correctness and integrity in real-time.
- In 2009, Satoshi Nakamoto introduced his white paper Bitcoin: A Peer to Peer Electronic Cash System. The technology that underpinned the Bitcoin was called blockchain. It solved the problem of trust because each time a transaction was made, it was bundled together with other transactions and stored in a block. The block was then placed on the chain, which couldn’t be changed.
- Based on the Hashcash PoW algorithm, but rather than using tools trusted computing function like the RPoW. The double-spending protection was provided by a decentralized peer-to-peer protocol for verifying and tracking the transactions. In simple words, Bitcoins are “mined” for a reward using the proof-of-work mechanism by miners and after verified by the decentralized nodes in the network.
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