You will often hear blockchain technology discussed alongside things like cryptocurrency, but they are not the same, even though they overlap. So, what is a blockchain, how has it evolved and what can we expect to see in the future when it comes to blockchain technology?
What is Blockchain Technology?
In its simplest form, a blockchain is a growing list of data blocks. The data blocks are connected and linked together – like a chain. This means old data blocks can’t be removed because the newer ones are attached. Similarly, the newer blocks act as proof that previous blocks were created.
As an example, normal payment (in USD or any currency) would need a third party to help with a purchase. For example, you take your money and want to buy a game directly from a store or vendor. Your bank is the third party that allows you to use your money to make that purchase and helps the store to keep the money secure.
With cryptocurrency, blockchain technology means that a third party (the bank) isn’t really needed. The transactions are clear and recorded permanently on the blockchain, meaning you could buy directly from the store and the currency goes straight to them without the need for a middle man.
For some people, this means additional privacy for purchasing but it can also prevent things like fees and charges that many third parties put in place.
If something is published on a blockchain, active participants become witnesses. This creates transparency and adds another layer of security. For public blockchains, a transaction is approved using peer-to-peer review. A network of computers reaches a consensus that decides whether a new block is valid or not. When approved, the block becomes permanent in the chain and is secured to previous data.
The History of Blockchain Technology
The idea of blockchain technology was loosely proposed in 1982 by cryptographer David Chaum in his dissertation about “Mutually Suspicious Groups” and how they could together manage and maintain computer systems.
In 1991, Stuart Haber and W. Scott Stornetta explored the possibility of data stamps for documents to prevent tampering. This feature is key to many blockchain technologies that we see today. Just a year later they further developed this idea, creating opportunities for several pieces of evidence to be collected in a single block, making the whole system more efficient.
Decentralization of a blockchain (removing an authority or centralized governing voice) didn’t happen until years later in 2008.
A group under the name of Satoshi Nakamoto found a way to remove the need for a “trusted party verification”, without allowing too many blocks to be added too quickly.
They used a proof-of-work system that required users (or their computers) to complete problems to be able to add to the blockchain.
This type of system is found commonly for email providers to help differentiate spam from proper emails. It identifies whether the writer of the email has input significant time to indicate whether it is likely spam or not. This proof-of-work system is the basis of many types of cryptocurrency, including bitcoin.
The Future of Blockchain Technology
For now, cryptocurrency is one of the most popular uses of blockchain technology but with a rise in interest in NFTs and the metaverse, we will likely see the use of this technology expand.
We are still in the early adoption stages but are starting to see some blockchain technologies appearing in gaming industries with big companies like EA and Ubisoft discussing their interest.
Learning about these future technologies now will no doubt give young, aspiring programmers insight into what the future might hold for computer scientists and what technologies and ideas might shape the products we create in the future.