- Bitcoin became the face of blockchain technology and the first cryptocurrency after its launch.
- Today, blockchain is used for several purposes, including healthcare, supply chain management, education, and others.
Bitcoin was the first practical application of blockchain technology, which until then resided only on the computers of researchers and developers, who stepped foot in the open public. Satoshi Nakamoto, the anonymous founder behind Bitcoin, called it digital cash and the network, a peer-to-peer system.
However, Bitcoin was neither the first nor the only digital currency to be developed. There were several other examples as well, but those could not solve the issue of double spending. In physical cash, either a person has a $10 note or doesn’t have one. It means I can spend a $10 note only once and if I gave it to you, as payment, I no longer possess it and can no longer buy something from thin air.
Digital cash, however, is made up of pieces of code and digital files that can be easily copied and spent again and again. This would cause the collapse of such a system, where even malicious transactions are processed with honesty. The only possible solution came from banks or other third parties, who would maintain the ledger, check for authenticity, and make sure only honest transactions were cleared.
As mentioned, the call for third parties made the systems centralized. There was an authority, above users, who had the power to control transactions, and for the system to work efficiently, it demanded trust from users. This trust had already been broken several times, most notably during the 2008 economic crisis, which led to the collapse of more than 200 banks and other financial institutions.
Bitcoin emerged as a digital currency that relied on a decentralized network through the exploitation of blockchain technology. The network used cryptographic problems and the Proof of Work (PoW) concept to tackle the double spending problem. During the initial days, as with any technology, it gathered less attention and was limited to just a few tech-savvy minds.
People used the network as a means to appreciate others and send Bitcoins if they liked any comments or photos. Laszlo Hanyecz spent 10 thousand bitcoins to buy two pizzas, which although it seems overpriced now, marked the official entry of bitcoin into the commodity market. The network was also popular in the black market to purchase illegal drugs, and weapons and finance terrorist and human trafficking activities. Silk Route was one of the major Bitcoin scandals that happened in the early days of the network.
However, people soon realized the potential of networks and their value. Investors started flooding in and buying Bitcoin. Its rarity, only 21 million, helped to soar its process in the years to come and the several use cases helped it diversify its portfolio from just a payment system to an investment option as well. The Bitcoin community became highly active in keeping the network active and updated and the inherent features already contributed to its robust security.
Following Bitcoin, several blockchain networks launched, which promised even better features and far use cases. Ethereum, launched in 2015, came up with the features of smart contracts and decentralized apps (dApps) and marked the beginning of decentralized finance (DeFi). Ripple, Solana, Polkadot, Cardano, and others, are prominent blockchain networks, attracting several users and investors.
Conclusion
With the innovation and development in blockchain, the technology is not only limited to cryptocurrencies but also supports non-fungible tokens (NFTs), which have become a sensation and have hooked up athletes, singers, celebrities, and several other people. Blockchain is also used for creating renewable energy solutions (SolarCoin), and Internet of Things (IoT) solutions like IOTA, and with further research, will surely see its implementation in several other sectors as well.