Rydal Business Network

Rydal Business Network

While we are looking toward the future, it is still crucial for you to understand the past. There have been some “experiments” in the past, such as B-money, which was a type of cryptocurrency released in 1998 by Wei Dai. (Bitcoin was even named after B-money, so its importance cannot be underestimated.) Even before the emergence of B-money, David Chaum created ecash in 1983. People often have the idea that the search for a real “digital” currency is something new, but ever since the advent of the Internet, people have been searching for ways to implement digital currencies securely. It is in this pursuit that blockchain finds its roots. Technologies rooted in security (such as hashcash) and the idea of peer-to-peer networks (which we know from file sharing applications such as Napster and BitTorrent) all also crucial parts that eventually led to the blockchain technology.

The real name of the person who started the entire blockchain revolution remains to this day unknown. All we know is that she/he/they called themselves “Satoshi Nakamoto.” It was in 2008 that Satoshi Nakamoto published a whitepaper titled: “Bitcoin: A Peer-to-Peer Electronic Cash System.” In this paper, an alternative solution was proposed to solve the well-known Byzantine General’s problem in computer science and the double spending problem more known in economic fields. The Byzantine General’s problem refers to the issue of how one can know if a certain message is real when several parties are sending messages and one or more has become corrupted. Who do we trust and how do we know who the liar is? The double spending problem is a classic case surrounding digital currency. Physical money can only be spent once, but how do you prevent digital money from being spent twice?

In combination with earlier technologies, Satoshi Nakamoto introduced a new concept: a proof-of-work algorithm that would allow a distributed computer system to accept transactions in contrast to all earlier solutions, which needed, in one way or another, a central authority to accept transactions or create currency. Consensus is at the core of the paper; consensus between the members of the network. The main idea that you should consider when you think about the advent of blockchain is that of distrust. Bitcoin was created in a time of political and financial unrest, as the financial crisis of 2008 was unfolding all over the world. This distrust was of any central entity that could be corrupted or become “too big to fail.” Blockchain could fix this very problem, as its entire system is built on not trusting the other party. You don’t have to trust them and you don’t need some impartial third party to validate the other participants. The network itself ensures that each participant falls in line, or is eventually destroyed by the network. That last statement might sound a little bit harsh, but it is a core concept to understand.

It was a year later that the Bitcoin network saw the light of day. The first block was mined. (This was the so-called genesis block , which meant the start of the network. The first 50 Bitcoin were created with this block but were completely unspendable!). A secret message was hidden in the block by its creator: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” This confirmed the underlying ideas of the technology and the entire cryptocurrency network. Of course, the implementation has been revised by many programmers over the years. Satoshi Nakamoto was only involved with the development until 2011, after which they withdrew from the public scene. It was up to the community to not only uphold the network, but also update it regularly. This meant that consensus was not only something that was used within the algorithm of the network but also by the people surrounding it. As you will find out later, the consensus within the technology proved to be more reliable than the one in the community. Over the years, the Bitcoin network grew (as you without a doubt know to become a huge market). This could not continue unfettered and other competitors joined the market.

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