How Did the Blockchain Come to Be?

Written by Banks Editorial Team
2 min. read
Written by Banks Editorial Team
2 min. read

The history of blockchain technology stretches back further than you might think. Here’s a look at how blockchains originated and how they have evolved over the past decade.

What Is a Blockchain?

A blockchain is essentially just a special type of database. In that sense, the history of the blockchain stretches back to the 1960s, when the first computer databases appeared.

However, blockchains are different from earlier forms of databases in two main respects:

  1. On a blockchain, data is stored as a series of discrete “blocks,” or pieces of information.
  2. Blockchains distribute data across a decentralized network of hosts, rather than on a single server.

The history of each of these blockchain features can be traced separately.

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The First Blockchain-Like Data Storage

The earliest known example of the concept of storing data in discrete blocks appeared in a 1991 academic paper titled “How to Time-Stamp a Document.”

The researchers who produced the paper were interested in developing a new method for tracking when a digital asset—like a word processor document or a video file—was created. They wanted their method to require minimal computing power. They also sought a solution that would generate immutable records, meaning that time-stamped information could not be changed or erased once it was recorded.

The solution they proposed involved creating a series of blocks, each of which would store time-stamped data. Blocks would be immutable once they were created.

This time-stamping system was never actually developed. But the theory behind it anticipated the type of data architecture that plays a central role in today’s blockchains.

History of Distributed Databases

The second key feature of a modern blockchain—the decentralization of data storage—originated in part with conventional databases.

To improve data reliability and security, database administrators have spread data across multiple hosts for years. Starting about a decade ago, it became common for databases like MySQL, Cassandra or MongoDB—to name just a few popular database platforms—to be set up as clusters, with data distributed across multiple servers. In a sense, this type of distributed storage architecture served as a precedent for blockchains.

However, whereas conventional distributed databases are typically controlled by a central server even if their data is distributed across multiple nodes, a true blockchain is fully decentralized. On a blockchain, there are no “master” nodes, and no central individual group gets to make decisions about the data stored on the blockchain. Everything is achieved by community consensus.

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The First True Blockchain: Bitcoin

Bitcoin was the first example of a database that possessed both of the features discussed above.

Bitcoin was described in a whitepaper that appeared on October 31, 2008. The paper was attributed to Satoshi Nakamoto, a pseudonym for the true creator (or creators) of bitcoin. To date, Nakamoto’s true identity has not been revealed.

The bitcoin blockchain came into being a few months later. The first block on the bitcoin blockchain was recorded on January 3, 2009.

Further Blockchain Innovations

Since the birth of the first true blockchain in early 2009, the blockchain world has witnessed several significant developments.

Other blockchains were developed that operate independently of bitcoin. Smart contracts, which enable agreements to be enforced automatically via the blockchain, extended the functionality of blockchain technology. Distributed applications, or dapps, added even more functionality; dapps use the distributed computing and storage resources of the blockchain to run software. All of these innovations were not part of the original bitcoin design.

The history of blockchain is so far a short one. Blockchain remains a technology whose future promises to be more interesting than its past, at least at this point.

Banks.com provides the most up-to-date information on blockchain and banks as well as useful financial tools for the forward-thinking investor.

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