Blockchain4All

Blockchain and Bitcoin: How did it all start?

2017-10-03T07:12:00.002-07:00

Yes, we know we know. Our blog is called “Blockchain4All”, and now we want to talk about Bitcoin?

Well, yes. And that is because they are rather interconnected. Or, more precisely, blockchain is the technology beneath Bitcoin, allowing its system to run. Writing about Bitcoin is therefore writing about blockchain as well, and it beautifully displays the practical side of this technology. As we will see in the upcoming posts, blockchain can be applied to a host of industries other than cryptocurrencies.

Source: Giphy.com

But now, let’s get to the point. As many of you already know, Bitcoin is the world’s most famous cryptocurrency. The transaction of bitcoins between users is executed directly, without the need for a third party such as PayPal, Master Card or any bank. These transactions are registered in a distributed ledger (which we talked about in our last post!) in the big blockchain of the bitcoin network consisting of communicating nodes.

Ok, this is where things get technical... But, before we give you a massively simplified explanation of how Bitcoin works, we will walk you through a short history of it. In order to really get to know this technology, it is good to check out how it all started, and how it developed over time.

As shortly explained above, bitcoin is tightly connected to the blockchain technology. Actually, it all goes back to the beginning of 1990s, where the initial work of Stuart Haber and W. Scott Stornetta resulted in the creation of blockchain. If you want to learn more about Digital Time-Stamping at that time, click here and here.

Let’s press the fast forward button to the financial crisis, back in 2008. The world’s financial system showed its weaknesses, and Lehman Brothers, the fourth-greatest investment bank of US, broke down. Just a couple of weeks after that, Satoshi Nakamoto (whose identity is still unknown) realized the idea of making a decentralized digital currency called bitcoin; a political statement, a new means of exchange. This meant, among other things, no third-party seizure (no control by the government or a central bank), no tracking or regulations, and no transaction costs or taxes.

Source: Depositphotos

In the next two years, bitcoin started to develop slowly but surely, and made its way up in the currency world. On February 6, 2009, the first Bitcoin currency exchange ever was set up by so called “dwdollar”. A week later, the first bitcoin transaction was made between Satoshi Nakamoto and the cryptographer Hal Finney. “The bitcoin was born”.

The first purchase ever in Bitcoin was made in May 2010. Laszlo Hanyecz, from Florida, offered 10 000 Bitcoins in exchange for two pizzas. A man from London accepted the offer, and, making a long distance call, ordered the pizzas from a pizza store. This was the first step into the digital payment system of bitcoin. For the curious ones - today, the value of 10 000 bitcoins is $44 M. With this money, you could buy approximately 3 million pizzas.

The first controversy around bitcoin was a platform called Silk Road, created by Ross Ullbricht. This marketplace allowed people to anonymously and securely buy drugs and guns, among other things, using Bitcoin as a method of payment. The FBI shut this online black market down in October 2013, calling the site “the most sophisticated marketplace on the Internet”. This is obviously because bitcoin provides anonymity to its users. “Bitcoin tends to be suited for illegal activities” – the sceptics said at the time. Half a year later, the US government auctioned off the bitcoins collected from the Silk Road, effectively detaching them from their “criminal” usage nature by selling them off to the general public.

By October 2012, BitPay (Bitcoin payment provider) announced that 1000 merchants accepted bitcoin payments. Since that time, a number of corporations such as Microsoft, Dell, Barklays, etc., announced their willingness to accept bitcoin as a form of payment. Reading the newspapers last weeks, we found out that Google might also jump on the bitcoin wagon.

The market value of Bitcoin increased rapidly at the end of 2013, and within 3 months rose from $125 to $1100. Mt. Gox, one of the biggest online exchanges for buying Bitcoins, unexpectedly collapsed in February 2014. The price of Bitcoin eroded at the same time.

The current value of Bitcoin is around $4400, while it reached its peak on September 1st, 2017 ($5000)!!

Learn even more about bitcoin in our next post!

Yours truly,

The Blockchain4All Team.

HISTORY OF BITCOIN

So... you want to invest in bitcoins?

2017-10-03T00:09:00.000-07:00

For more, see this twitter account:

https://twitter.com/bitcoin_memes

To all our Blockchain Fans!!

2017-09-29T08:33:00.000-07:00

It's a Brave New World!

2017-09-25T08:53:00.000-07:00

Welcome to Blockchain4All

Created by a devoted group of Masters students at IE Business School, Blockchain4All is a new, humble voice that aims to lay out the basic principles of blockchain technology as well as its diverse and disruptive future applications which have the potential to reshape the landscape of many industries. We will broadcast our insightful content through social media and a weekly newsletter to which you can subscribe here.

Blockchain...

"A spreadsheet in the sky”

Source: BlockchainHub

Blockchain, a decentralized ecosystem to initiate and verify transactions

Source: KPMG

You may have heard the terms “blockchain” or “bitcoin” without really knowing what the fuss is all about.

This article is here to introduce this brand new world to all of you, in the most accessible way possible.

Most of you are probably wondering how the underlying structure of this technology works. This part gets slightly technical, however it is crucial to understand how blockchain works in practice to better acknowledge its potential, in both information systems and business.

Blockchain owes its name to the way it stores data: a chain that is built out of blocks linked one after the other. Each block contains a hash code, which is an alphanumerical digital sequence that identifies uniquely the block to which it belongs. The existence of any block relies on the existence of the one that comes before it. This enables complete security because it is impossible to edit the chain once yet another block is added to it. For a block to exist, it must also contain the hash code of the previous block. Therefore, any subsequent block provides additional strength to the chain itself.

The result is a shared, distributed ledger, completely decentralized and free to access transparently for all parties involved. This architecture allows all participants (called nodes in the system) to see at any given moment, by means of peer-to-peer relationships, a synchronized version of the network where all users can both subscribe to and publish additional blocks, as well as monitor and analyze the state of the chain.

Source: Goldman Sachs Global Investment Research

Depending on the type of network, the addition of new blocks is subject to certain rules. Taking the bitcoin blockchain as an example, each and every transaction must be validated by devices that are actively participating in the network, “making sure” that these transactions are legitimate and belong to the network. This activity is performed via dedicated devices. A transaction has a minimum number of validations that must be met before it’s made final. “Miners”, or the nodes that are actively involved into the validation of new blocks, are rewarded with bitcoin to offset the costs of electricity, connection and CPU power.

Source: BlockchainForDummies, IBM

Generally speaking, this type of consensus can arise from the following validation tools:

Blockchain technology has already proven it has the potential to solve a range of issues that were unsolvable to date. It allows for transactions to happen simply between two parties rather than involving institutions, such as banks and national states, while ensuring privacy and increasing auditability, as it is indelible and secure. Decentralization solves agency issues, as well as trust issues deriving from a lack of transparency. Imperfect information is tackled at its root by providing a technology thanks to which trust becomes an inherent, rooted aspect of the structure itself.

If you want to find out more about the many developments of blockchain technology, stay posted for our future articles!
Next week’s article will be about the most common type of digital transaction using blockchain: bitcoin.

Yours truly,

The Blockchain4All Team.