Contrary to common beliet, the blockchain technology was invented in 1974 to solve the problem of moving data over a public network and ensuring its confidentiality and authenticity. To do this files were encrypted, time-stomped and hash tagged. Hashtags are like fingerprints of files. A hash is a function where a file, however large, is mapped into a smaller set of data, for example, 256 bytes. Of course, many files can have the same hashtag. Given the timestamp, the final receiver of the file will have a good idea of how long the intermediate servers kept the file and if they had a chance to manipulate it. With normal servers, it would take a very long time to find a single file that has the same hashtag To find another file that has the same hashtag that is useful to the intermediate server (like makes the new data beneficial to the intermediate server) is practically impossible. A block is then made of the first til to be hash-tagged. The block contains the file and the hashtag. This is the genesis block of the chain The next block formed will have a reference to the genesis block with the genesis block's hashtag and the new block's own hashtag. This makes a chain of blocks that cannot be altered. The blocks are then saved on the net in a manner that ensures that multiple copies are stored Blockchains volved so that they check the blocks saved against each other and in the case of a discrepancy, they go to a vote whereby the block getting the majority of the votesis declared to be the authentic one.
Blocks cannot be modified or deleted. Also, users have their unique encryption keys. A user cannot deny their contribution to a block or a transaction since it will be signed with their key. Block data is backed up many times. All these are great features lead to the statement:, BLOCKCHAIN IS THE FOURTH WAVE OF COMPUTING (after servers – desktops – the internet). Blockchain gained publicity with the introduction of the Bitcoin cryptocurrency in 2009. Again, contrary to common thinking Bitcoin was not the first cryptocurrency. It was preceded with a few unsuccessful cryptocurrencies such as BitGold.
Bitcoin has a number of features: it is anonymous. Anyone can open an account if they have access to the internet. There are no lengthy know your client procedures like banks. This made it popular for illegal activities such as terrorism financing, money laundering, tax evasion and ransom collection. Bitcoin has received a lot of attention recently because of its wasteful mining strategy known as proof of work. Proof of work is the concept where miners (miners mine for data within the blocks to verify a proposed transaction) compete to verify the transactions within a proposed block. They do this because the first transaction in the block is a reward to themselves (changes over time). This means that possibly tens of millions of computers consume electric energy and only a few in a pool of miners win the award. It is said that the Bitcoin network of miners consumes more electricity than Switzerland.
This criticism of inefficient electric power usage was solved through the introduction of proof of stake blockchains like Ethereum and Tron. Proof of stake gives miners with more stake in the network a higher chance at verifying the data whilst maintaining that any miner gets a chance at rewards. A problem that plagues most known blockchains is the problem of double spending: a user that duplicates his/her wallet and spends the funds in it twice in two locations far from each other so that the validators are not in the vicinity of each other. This leads to that both transactions are verified. On the Bitcoin network it can take up to seventy minutes before the network will realize that double spending occurred and the branch of the chain that has the least consequences is killed.