How The Blockchain Works

It is oftenly said that the whole point of using a blockchain is to let people, that is, people who don't trust one another to share valuable data in a secure and tamperproof way.

Blockchain consists of three important concepts: blocks, nodes and miners.

Blocks

Every chain consists of several blocks and each block got three basic elements:
- The data in the block. A 32-bit number called a nonce. It is randomly generated each time a block is created, which then generates a block header hash. The hash is a 256-bit number wedded to the nonce. Usually starts with a huge number of zeroes (that is, be extremely small).

When the first block of a chain is created, a nonce generates the cryptographic hash. The data in the block is considered signed and forever glued to the nonce and hash unless it is mined.

Miners

Miners create new blocks on the network through the Mining process.
In a blockchain network, every block has its own unique nonce and hash, but aswell also references the hash of the previous block in the chain, so mining a block isn't easy, especially on large chains of network.

Miners make use of special softwares to solve the incredibly complex math problem of getting a nonce that generates an accepted hash. Because the nonce is made of only 32 bits and the hash is 256 bits, there are roughly four billion possible nonce-hash combinations that should be mined before the right one is found. When that happens, miners are said to have found the "golden nonce" and their block is added to the chain.
When a block is successfully mined, the change is accepted by all of the nodes on the network and the miner is rewarded financially.

Nodes

One of the most important ideas in blockchain tech is decentralization. No one computer or organization can own the chain to itself. Instead, it is a distributed ledger via the nodes connected to the chain. Nodes can be any kind of electronic device that maintain copies of the blockchain and keeps the network functioning.
Every node has its own copy of the blockchain and the network must first approve any newly mined block to verify, trust and update the chain. Since blockchains are transparent, every action in the ledger can be easily checked and viewed. Each participant is given a unique alphanumeric identification number that shows their transactions.

The Blockchain History

Despite blockchain being a new technology, it already displays a rich and interesting history. The following is a brief timeline of some of the most important and notable events in the development process of the blockchain.

2008

Satoshi Nakamoto, a pseudonym for a person or group, publishes “Bitcoin: A Peer to Peer Electronic Cash System."

2009

The first successful Bitcoin (BTC) transaction happened between computer scientist Hal Finney and the annonymous Satoshi Nakamoto.

2010

A programmer based in Florida, Laszlo Hanycez completed the first ever purchase using Bitcoin for two Papa John’s pizzas. Hanycez transferred 10,000 BTC’s, worth about $60 at that time. Today it's worth morethan $500 million. And that same here the market cap of Bitcoin exceeded $1 million.

2011

1 BTC = $1USD, giving the cryptocurrency a comparison with the US dollar. The Electronic Frontier Foundation, Wikileaks and other organizations started accepting Bitcoin for donations.

2012

Blockchain and cryptocurrency were mentioned in popular television shows like The Good Wife, making the blockchain become mopre popeular. Bitcoin Magazines wrere launched by early Bitcoin developer Vitalik Buterin.

2013

BTC market cap surpassed $1 billion.
Bitcoin reached $100/BTC for first time.
Buterin published “Ethereum Project" paper suggesting that blockchain has other possibilities besides Bitcoin (example with smart contracts).

2014

Gaming company like Zynga, The D Las Vegas Hotel and Overstock.com all started accepting Bitcoin as payment method. Buterin’s Ethereum Project crowdfunded via an Initial Coin Offering (ICO) raising morethan $18 million in BTC and opening up new avenues for the blockchain technology.
R3, a group of over 200 blockchain firms, was formed to discover new ways blockchain can be improved in technology.
PayPal announces Bitcoin integration.

2015

the number of merchants accepting BTC exceeded 100,000.
NASDAQ and San-Francisco blockchain company teamed up to test the technology for trading shares in private companies.

2016

International Business Machine IBM announced a blockchain strategy for cloud-based business solutions. Government of Japan recognized the legitimacy of blockchain and cryptocurrencies.

2017

Bitcoin reached $1000/BTC for first time.
Cryptocurrency market cap reaches $150 billion cap.
JP Morgan CEO Jamie Dimon says he believes in blockchain as a future technology, offering the ledger system a vote-of-confidence from Wall Street.
Bitcoin reached its all-time high at $20,000/BTC from coinbase.com
Dubai announced it government will be blockchain-powered by 2020 year of Expo...

2018

Facebook accepted to start a blockchain group and also hints at the possibilities of creating its own cryptocurrency.
IBM developed a blockchain-based banking platform with large banks like Citi and Barclays signing on to it...
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