How did blockchain technology evolve?
Blockchain technology has its roots in the late 1970s when a computer scientist named Ralph Merkle patented Hash trees or Merkle trees. These trees are a computer science structure for storing data by linking blocks using cryptography. In the late 1990s, Stuart Haber and W. Scott Stornetta used Merkle trees to implement a system in which document timestamps could not be tampered with. This was the first instance in the history of blockchain.
The technology has continued to evolve over these three generations:
First generation – Bitcoin and other virtual currencies
In 2008, an anonymous individual or group of individuals known only by the name Satoshi Nakamoto outlined blockchain technology in its modern form. Satoshi’s idea of the Bitcoin blockchain used 1 MB blocks of information for Bitcoin transactions. Many of the features of Bitcoin blockchain systems remain central to blockchain technology even today.
Second generation – smart contracts
A few years after first-generation currencies emerged, developers began to consider blockchain applications beyond cryptocurrency. For instance, the inventors of Ethereum decided to use blockchain technology in asset transfer transactions. Their significant contribution was the smart contracts feature.
Third generation – the future
As companies discover and implement new applications, blockchain technology continues to evolve and grow. Companies are solving limitations of scale and computation, and potential opportunities are limitless in the ongoing blockchain revolution.
What are the benefits of blockchain technology?
Blockchain technology brings many benefits to asset transaction management. We list a few of them in the following subsections:
A. Advanced security
Blockchain systems provide the high level of security and trust that modern digital transactions require. There is always a fear that someone will manipulate underlying software to generate fake money for themselves. But blockchain uses the three principles of cryptography, decentralization, and consensus to create a highly secure underlying software system that is nearly impossible to tamper with. There is no single point of failure, and a single user cannot change the transaction records.
B. Improved efficiency
Business-to-business transactions can take a lot of time and create operational bottlenecks, especially when compliance and third-party regulatory bodies are involved. Transparency and smart contracts in blockchain make such business transactions faster and more efficient.
C. Faster auditing
Enterprises must be able to securely generate, exchange, archive, and reconstruct e-transactions in an auditable manner. Blockchain records are chronologically immutable, which means that all records are always ordered by time. This data transparency makes audit processing much faster.
