# Blockchain History

To fully appreciate the interchain, it is helpful to understand the origins of blockchain technology, the advances that have unfolded, and the intractable challenges of other blockchain protocols that the interchain decisively solves.

Important groundwork was laid in the 1980s and 1990s for what would later be known as blockchain technology. Although the technology itself was not created until 2008, researchers from different fields in computer science and cryptography proposed solutions to many problems regarding security, transparency, and trust. All of them contributed to the development of the first large-scale, successful public blockchain network, Bitcoin.

# 1990s

In 1991, two research scientists, Stuart Haber and W. Scott Stornetta, identified a problem: How can it be ensured that digital documents are authentic and changes to them are tracked in an immutable time-stamped manner? In How to time-stamp a digital document, they worked on the concept of append-only, cryptographically secured logs. With their work, the foundations of what much later became blockchain technology were laid.

Haber and Stornetta’s work was followed and elaborated on by Ross J. Anderson in 1996 when he described the creation of The Eternity Service (opens new window), a storage medium resistant to denial-of-service (DoS) attacks using redundancy and scattering techniques as well as anonymity mechanisms.

In 1998, Bruce Schneier (opens new window) and John Kelsey (opens new window) proposed a computationally cheap way to safeguard sensitive information and allow for computer forensics with secure audit logs using hashing, authentication keys, and encryption keys.

Another significant work arose in 1994 when computer scientist Nick Szabo first described the concept of smart contracts (opens new window). It is important to recognize that Szabo's intent was to minimize the need for trusted intermediaries. In 1998 he proposed BitGold, a conceptual predecessor to Bitcoin, as he argued for a decentralized digital currency. In both, Proof-of-Work (PoW) is used as a consensus algorithm to solve cryptographic puzzles in a peer-to-peer (P2P) network with Byzantine Fault Tolerance. The solutions are also linked by a "hash chain". Although BitGold was never implemented, many perceive it as being the direct ancestor of Bitcoin.

As we can see, these intellectual predecessors brought forward elements that are essential to blockchain technology.

# 2000s

On October 31, 2008, Satoshi Nakamoto's Bitcoin whitepaper called for a P2P system for a digital currency that would allow online payments to be sent directly from one party to another without going through a financial institution or requiring any other third-party involvement.

This sounds familiar for a reason: Nick Szabo had already mentioned a currency that would depend minimally on third parties in the 1990s. However, Satoshi’s whitepaper differed significantly - not only because of the name difference between BitGold and Bitcoin. It also proposed a data structure for the blockchain and laid out the decentralized consensus mechanism. Bitcoin became the first large-scale, successful public blockchain network.

To this day, we do not know who is behind the whitepaper or the first client implementation of Bitcoin: Satoshi Nakamoto was a pseudonym used by the person or group that published the whitepaper. As you might have seen in the news, the identity of Nakomoto has sparked plenty of conspiracy theories as several individuals have claimed to be the creator of Bitcoin. None of these claims have been verified.

What is certain is that the community initially working on the network and the client can be characterized as generally pro-capitalist, anti-regulation, anti-monopoly, and pro-free-trade. Many of those developing and driving the technology have also heralded its potential to reduce corruption and perceived human failures by pushing processes out of human reach.

All this may not seem important, but it is. Blockchain technology was built with disruption in mind. It was envisaged as the antithesis to the central control of banks, governments, and incumbent holders of monopolies. This has an influence on the direction the technology takes and remains a strong influence on its development.

Given its anti-establishment roots, blockchain technology has been seized upon by other groups interested in circumventing government, law enforcement, or regulatory control, as well as by activists persecuted by their governments.

# 2010s

As soon as it became clear that the technology presented a very attractive base infrastructure for payments, other groups and organizations adapted the technology for their purposes or developed new approaches using the same basic principles but adapting them to more traditional use cases.

In 2014, Vitalik Buterin started what is now known as the second wave of blockchain technology by publishing the paper underlying the Ethereum blockchain protocol, A Next Generation Smart Contract & Decentralised Application Platform (opens new window). Beyond a distributed ledger, the Ethereum whitepaper proposed the development of a distributed computing platform.

Around the same time, Tendermint began research into alternative methods of achieving distributed consensus. See Tendermint: Consensus without Mining (opens new window).

Have a closer look at the Ethereum whitepaper (opens new window) to discover more about the initial concept.

The Ethereum project raised roughly $20 million in one of the most successful crowdfunding campaigns up to that point. The first public network was up and running in 2015. Simultaneously it spawned the first managed blockchain network approach, when the company Eris forked a version of Ethereum and expanded it to implement a layer of permissions which made it easier to deploy custom, access-controlled networks.

Late 2015 saw the establishment of the Hyperledger Foundation (opens new window), an industry consortium with a focus on enterprise blockchain technology for managed networks and business applications, and in 2017 the Ethereum Enterprise Alliance (opens new window) was formed as an industry consortium to adapt Ethereum for enterprise use.

# Blockchain as a new computing paradigm

Imagine a computer. How do you describe its process? It takes commands and then executes them in an ordered and deterministic fashion. The sequence of execution determines the state the computer is in.

Now apply this thought to blockchain technology.

Ethereum was the first blockchain to implement Turing-complete (opens new window) smart contracts. Each transaction is in effect a command, and the "execution" of those commands results in a new state, the Ethereum computer's state. An Ethereum blockchain defines a distributed state machine with a state all nodes agree on.

A smart contract is a program on "the world computer", as Ethereum has been called. A distributed application (dApp) is a program too, as is a coordinated collection of smart contracts.

It is argued that the development of blockchain technology is initiating a new computational paradigm.

Major computing paradigms in the past were:

  • The mainframe in the 1970s.
  • The personal computer in the 1980s.
  • The internet in the 1990s.
  • Mobile and social networking, often referred to as "social media", in the 2000s.

In some opinions, mobile and social networking and the internet have been exploited regarding their commercial use. For some, the ideal of an interconnected community - in which information and knowledge are available and shared and where egalitarian values like equality, transparency, and freedom are encouraged - has led to disappointment over what could have been but never was.

Blockchain technology is often seen as presenting the possibility of more private, transparent, and equal forms of interaction and community with the possibility of preventing imbalances of power that often exist when one group is in charge of a widely used platform and can exercise privileges that are not enjoyed by the rest of the participants.

Today two broad trends are identified in the development and adoption of blockchain technology: public blockchains, and managed/private blockchains. Understanding this distinction will be important to your understanding of the interchain. The interchain is applicable to both use cases and, importantly, enables the seamless interoperability that has challenged its predecessors. You will look at this subject in the next section.


To summarize, this section has explored:

  • How, in the 1990s, key developments in computational research which occurred laid the groundwork for blockchain technology, including append-only, cryptographically secured logs; storage mediums using redundancy and scattering techniques to resist denial-of-service (DoS) attacks; the implementation of hashing, authentication keys, and encryption keys; and the work of Nick Szabo, who first conceptualized smart contracts and proposed creating a decentralized digital currency with many of the features that were later actualized in Bitcoin.
  • How, in the 2000s, the individual or group known as Satoshi Nakamoto published the Bitcoin whitepaper, which proposed a specific data structure for blockchain and laid out its decentralized consensus mechanism, with Bitcoin becoming the first large-scale, successful public blockchain network.
  • How, in the 2010s, blockchain's potential was recognized and adapted to a variety of purposes, leading to a second wave of the technology of which Ethereum was at the front, being specifically designed to provide a blockchain-based platform for the creation of independent smart contracts and distributed applications (dApps).
  • How two broad trends towards either public blockchains or private/managed blockchains can be not only satisfied but also seamlessly integrated via the interchain, which opens up the potential for interoperability between blockchains which has largely eluded its predecessors.