What is Blockchain Technology? History and Evolution of Blockchain

October 23, 2018

Blockchain technology (Bitcoin, Ethereum and others) is today’s trend in technology as well as many others related to this technique. We could easily find, hear about them anywhere, anytime. So what is Blockchain exactly? How does it matter?
In this blog, we will cover Blockchain fundamentals for those are non-tech guys, or beginners could have an overview look at the big picture of Blockchain world.


Back to the historical stream, at the period of 2007 to 2009 when the world financial crisis happened that affected all aspects of life (economics, politics, social life, …) in the world. The collapse of Lehman Brothers Nadir was considered as the iconic failure of the whole American economic system and was called Unique point of failure.
At the same period of time, Satoshi Nakamoto published a whitepaper named Bitcoin: A peer-to-peer e-cash system. In his/her (until now we still don’t have any idea about this pupil) paper, Cryptocurrency (firstly known case is Bitcoin) was introduced that it could distribute trusts to get rid of Unique of failure. And Blockchain is the technology under the hood that manipulates this system.

What is Blockchain?

Blockchain is Chain of Blocks. Yes, what simple it is!
In advance, Blockchain is:

  • A fully-decentralized system: Nocentral authority takes responsibility of managing, monitoring or manipulating the network.
  • A peer-to-peer distributed ledger: Every node participates in Blockchain network has the same of roles, they hold identical copies of the Blockchain state (blocks, transactions, …)
  • Cryptographically secure: Technically, Blockchain is secured by a bunch of algorithms to control the activities of the system.
  • Immutable content: There’s no way to mutate contents that were written to Blockchain.
  • Append-only: New blocks could be appended to Blockchain through its consensus mechanism.
  • Consensus mechanism that brings agreement among peers in the network. By omitting this, nodes could add new blocks to Blockchain.

What’s inside Ethereum Blockchain?

Since Ethereum is known as the most common Blockchain so far, so we will take a deeper look inside Ethereum Blockchain.

1. Nodes:

A physical machine (laptops, computers or even phones) on the Internet that participates on Blockchain network
Node’s duties:

  • Replicate Ethereum blockchain state
  • Forward transactions to network
  • Answer queries
  • Verify/ Serve as the witness for new blocks

2. Blocks:

The most basic concept of Blockchain is Block which includes a block’s hash, a hash from the previous block (if it’s not the first block, aka Genesis block), timestamp, nonce, and a Merkle Root to trace back the transaction.

concept of Blockchain
Concept of Blockchain

Use Block Explorer tools like Etherscan, we can see Block’s information as below:

Block’s information
Block’s information

3. Consensus:

All the decisions are taken by the leader or a board of decision makers. This isn’t possible in a blockchain because a blockchain has no “leader”. For ­Blockchain to make decisions, they need to come to a consensus using “consensus mechanisms”.
Note: The most popular Consensus mechanism is Proof-Of-Work (aka POW). In this blog, for ease of understanding basic concepts of Blockchain, we will only cover POW as the main consensus. However, there’re many consensus or proof concepts out there, you could find out more here.


Satoshi Nakamoto, Bitcoin’s creator, was able to bypass the problem by inventing the proof of work protocol.
This process includes these steps:

  • To append new blocks, nodes (miners) will append a “nonce” to the block to solve a challenge. The nonce can be any random hexadecimal value.
  • After that, they hash the block info appended with a nonce and see the result.
  • If the hash conditions are satisfied, they will broadcast to the network they’ve found the desired nonce and become the winner of this challenge. If not, then they will keep on changing the value of the nonce randomly until they get the desired result. This action is extremely tedious and time-consuming and takes a lot of computation power.
  • Becoming the winner of the challenge, a miner could get the reward for their computational resources and efforts. Then this miner will append new block to the current Blockchain.

All of the above steps are called Mining. It could be summarized by the following image:

blockchain minning
blockchain minning

4. Smart Contracts:

Was first theorized by Nick Szabo in the late 1990s.
A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract.
Smart contracts allow the performance of credible transactions without third parties. These transactions are trackable and irreversible.

Where to use Smart Contract?

Smart Contract could be helpful in several aspects of life, such as:

  • Government: Imagine your voting system could be autonomously operated without need of a central, trusty authority. With the secure thank to massive computational resource, the ability for hackers to tamper, manipulate is down to 0.
  • Supply chain: If I receive cash on delivery at this location in a developing, emerging market, then this other product, many, many links up the supply chain, will trigger a supplier creating a new item since the existing item was just delivered in that developing market. All too often, supply chains are hampered by paper-based systems, where forms have to pass through numerous channels for approval, which increases exposure to loss and fraud. The blockchain nullifies this by providing a secure, accessible digital version to all parties on the chain and automates tasks and payment.
  • Real Estate: You can get more money through smart contracts. Ordinarily, if you wanted to rent your apartment to someone, you’d need to pay a middleman such as Craigslist or a newspaper to advertise and then again you’d need to pay someone to confirm that the person paid rent and followed through. The ledger cuts your costs. All you do is pay via bitcoin and encode your contract on the ledger. Everyone sees, and you accomplish automatic fulfillment. Brokers, real estate agents, hard money lenders, and anyone associated with the property game can profit.
  • And even more like HealthcareAutomobileManagement, Exchange Market,…

Take advantage of Smart Contract in Ethereum, with the language named Solidity, developers could adopt and develop their own Smart Contracts applications (aka DApps), e.g. CryptoKittiesCryptoZombies, …

Blockchain Types

So far the Blockchain world has 3 types:

  1. Public:

  • Completely opened
  • Everyone can read, write or append new blocks.
  • Representations of Public Blockchain are Bitcoin and Ethereum Blockchain
  1. Private:

  • Invitation-only: Only nodes are validated and had permission by Nodes that operates the system or preset rules could participate in.
  • The ability to write information and validate transactions is limited to one organization
  • Read permission can be public or restricted, that depends on the operating organization.
  • This type of Blockchain is suitable for big company/ organization that wants to operate internal Blockchain.
  • Representation of Private Blockchain is Hyperledger
  1. Permissioned/ Consortium/ Federated:

  • A hybrid between public and private blockchains.
  • Read permission is only available to permissioned parties.
  • Consensus process is controlled by a pre-selected set of nodes.
  • Representation of Permissioned Blockchain is Hyperledger

Blockchain Evolution

Blockchain Evolution
Blockchain Evolution

As you can see, with Blockchain 1.0, it’s just a Ledger that records incoming transactions, as first use-case Bitcoin described by Satoshi Nakamoto
From Blockchain 2.0, we could interact with Blockchain which takes advantage of Smart Contracts. Furthermore, we could build a logical business layer over Smart Contract and end-user applications (aka DApps). Ethereum is the most common platform represents for Blockchain 2.0
But the precursors of Blockchain have their own drawbacks like scalability, interoperability,…
Blockchain 3.0 was first introduced as the pioneer to resolve the previous version Blockchain disadvantages. ArcBlock is known as the very first showcase for Blockchain 3.0


The Future of Blockchain
From Forbes Magazine Imagine a technology that could:

  • Improve the graduation rates of Nigerian girls by automatically generating cash payments to families when their daughter achieves a 90% attendance rate.
  • Enable a musician to automatically donate 50% of royalties from a specific song to their charity of choice.
  • Coordinate what resources (financial, medical, etc.) have already been provided to a refugee by a variety of aid organizations that have historically not been able to ‘compare notes’ in this way.
  • Help homeowners conserve electricity with a ‘smart’ refrigerator and then automatically donate the money saved to charity.

These are all increasingly possible thanks to the emergence of blockchain technology. While still in the ‘early adopter’ phase, blockchain has huge potential for social impact programs around the globe.
Depending on your sector, your company may already be watching or experimenting with technologies like blockchain and bitcoin, but this is one advance you’re going to need to understand if you plan to be involved in 21st-century social impact programs.
At Designveloper, we’re at early adopt phase in the emergence of Blockchain technology. We see the bright future of Smart Contract based applications or Blockchain technology in general. We hosted some workshop to help our developers get familiar with Blockchain. You can find out more technically tutorial about how to develop your own DApps here if you’re interested in. We’re happy to collaborate with any companies, organizations those are in the gorgeous party of the Blockchain World.

Phạm Thành Công,

Senior Developer

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