History Of Bitcoin: How The Blockchain Ecosystem Evolved

The history of Bitcoin starts before the 2008 White Paper by Satoshi Nakamoto. In 1989 first and 1991, David Chaum created DigiCash, and various cryptographers tried to solve the “double spending” problem. By 1998 Nick Szabo began working on a decentralized digital currency called “bit gold.” By 2008 the Bitcoin White Paper got published. And from there, by 2014, the Blockchain 2.0 (beyond the money use case) sprouted out.


1989 marks the very first form of anonymous transactions through cryptographic protocols with DigiCash. Founded by David Chaum, DigiCash used the cryptographic protocols Chaum created and described in his 1983 paper titled “Blind Signatures for Untraceable Payments.” These protocols closely resembled the cryptography still in use today with both public and private keys for transactions similar to the public and private keys Bitcoin uses.

Despite the impressive technology behind DigiCash that seemed ahead of its time, the company declared bankruptcy less than 10 years later in 1998. DigiCash failed to grow its user base at the rate required for sustainable revenue likely due to how early the technology entered the market. It was before eCommerce fully integrated into the internet, so the technology behind DigiCash did not have many use-cases.


For the first time, Stuart Haber and W. Scott Stornetta described a “cryptographically secured chain of blocks” in 1991.


In 1998, computer scientist Nick Szabo began working on a decentralized digital currency called “bit gold.” Later on, he coined the term “God Protocols” to refer to the concept of a set of computer protocols capable of arbitrating and facilitating private, seamless, and unbiased value exchanges involving two or more independent parties.

For this concept, “God Protocols” would act as a third party equally accessible to parties involved in exchange processes. Furthermore, as a neutral third party, “God Protocols” would uphold and execute stipulatory rules between parties reasonably and seamlessly, ensuring privacy by keeping all sensitive information from uninvolved entities.


Stefan Konst made public his theorization of cryptographically secured chains. In addition to theorizing cryptographically secured chains, he also conceptualized its possible implementation.


In 2008, a white paper containing a blockchain model was released and published by a developer, or developers going by Satoshi Nakamoto’s pseudonym.


Satoshi Nakamoto developed Bitcoin as a currency that allows peer-to-peer transactions and eliminates the necessity for a central bank or other intermediaries in operating and maintaining the ledger.

Although not the first of its kind, Bitcoin is considered the most successful version of online currency as its technology solved long-standing problems in the crypto field.

Behind Bitcoin’s successful feat is the technology that Satoshi Nakamoto, themself, designed — the Blockchain. Blockchain is the record-keeping technology behind the Bitcoin network. Up to this day, the same, original, largest blockchain is still the one that runs and facilitates transactions in the Bitcoin network.

Aside from Satoshi Nakamoto, as we saw, another notable personality in the development of blockchain and cryptography is David Chaum. Apart from pioneering cryptography and privacy-preserving technologies, the invention of digital cash also gets attributed to David Chaum.

David Chaum’s 1982 dissertation is the first blockchain protocol proposal ever known. “Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups” contained all but one vital element of the blockchain protocol, which received elaboration in Bitcoin’s whitepaper.

The year after the release of a white paper, Satoshi Nakamoto developed the first blockchain in the form of a public ledger for transactions using Bitcoin was implemented in 2009.


Developers began searching for other applications of blockchain technology beyond currencies. Hence, the birth of Blockchain 2.0, an era of exploration for blockchain’s potential in other financial, inter-organizational transactions apart from currency.

In the same year, the Ethereum blockchain network introduced Smart Contracts, integrating computer programs that represent financial instruments like bonds into the blockchain technology.

Monero, the ultimate privacy coin, was also released in 2014 on April 18th.


Shortly after introducing smart contracts, the Ethereum network released on July 30, 2015. Its initial release included 72 million coins with the first trade valuing a single coin at $2.77 USD. However, this value quickly fell the very next day to $0.81.

In 2015, Coinbase also became the first U.S. bitcoin exchange to open after receiving a $75 million investment. Since then, Coinbase has grown into the largest cryptocurrency exchange in the United States.


With 2017 came some exciting altcoins looking to solve existing problems in the crypto space. First, there was Bitcoin Cash which was released in August. It aimed to reduce the volatility of transaction fees that were plaguing the Bitcoin network by increasing the maximum block size. This reduces the cost of a transaction by allowing larger blocks of data to transfer with a single transaction.

Next came the release of Cardano in September. Cardano differentiates itself through its heavily researched and peer-reviewed whitepaper helping to establish credibility for smart contracts built on the network. The creators of Cardano even established an organization dedicated to research related to blockchain and cryptocurrencies called IOHK. Cardano’s strong documentation and research-based approach make it a great solution for building decentralized apps and smart contracts.

2017 also saw the first hard fork of Ethereum with the Byzantium hard fork aimed to improve the privacy, security, and scalability of Ethereum as a whole.

At the same time as these impressive projects launched, bitcoin reached a major milestone. One bitcoin became worth more than one ounce of gold. While looking back this may not seem like a major feat, at the time it solidified that Bitcoin provided real value that could not be ignored.


Based on a whitepaper created in 2017, EOS.io first released in June by Block.one. It aims to nearly eliminate transaction fees that still cause difficulties in the widespread adoption of cryptocurrencies. EOS.io also set out to make their platform extremely easy for other developers to work with. They created extensive documentation on working with their platform as well as training courses and certifications specific to their platform.


Throughout 2020, most major cryptocurrencies continuously climbed in value with Bitcoin reaching over $20,000 USD and Ethereum reaching over $500 USD by the end of the year. This trend is continuing into 2021 with Bitcoin reaching over $60,000 USD in April and Ethereum reaching over $2,700 USD at the end of April marking a new all-time high for both cryptocurrencies.

Blockchain 2.0 and New Business Platforms 

As Bitcoin successfully created a blockchain-based form of currency, developers began separating blockchain from currency and started exploring other use cases for such technology.

Although blockchain was not exhumed from currency as several other “altcoins” began building on the blockchain technology, there were genuinely different blockchain applications developed.

This is an extract from Blockchain Business Models


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Read Also: Proof-of-stakeProof-of-workBitcoinEthereumBlockchain.

Related Blockchain Business Frameworks


Web3 describes a version of the internet where data will be interconnected in a decentralized way. Web3 is an umbrella that comprises various fields like semantic web, AR/VR, AI at scale, blockchain technologies, and decentralization. The core idea of Web3 moves along the lines of enabling decentralized ownership on the web.

Blockchain Protocol

A blockchain protocol is a set of underlying rules that define how a blockchain will work. Based on the underlying rules of the protocol it’s possible to build a business ecosystem. Usually, protocol’s rules comprise everything from how tokens can be issued, how value is created, and how interactions happen on top of the protocol.

Hard Fork

In software engineering, a fork consists of a “split” of a project, as developers take the source code to start independently developing on it. Software protocols (the set of rules underlying the software) usually fork as a group decision-making process. All developers have to agree on the new course and direction of the software protocol. A fork can be “soft” when an alteration to the software protocol keeps it backward compatible or “hard” where a divergence of the new chain is permanent. Forks are critical to the development and evolution of Blockchain protocols.

Merkle Tree

A Merkle tree is a data structure encoding blockchain data more efficiently and securely. The Merkle tree is one of the foundational components of a Blockchain protocol.


The nothing-at-stake problem argues that validators on a blockchain with a financial incentive to mine on each fork are disruptive to consensus. Potentially, this makes the system more vulnerable to attack. This is a key problem that makes possible underlying blockchain protocols, based on core mechanisms like a proof-of-stake consensus, a key consensus system, that together the proof-of-work make up key protocols like Bitcoin and Ethereum.

51% Attack

A 51% Attack is an attack on the blockchain network by an entity or organization. The primary goal of such an attack is the exclusion or modification of blockchain transactions. A 51% attack is carried out by a miner or group of miners endeavoring to control more than half of a network’s mining power, hash rate, or computing power. For this reason, it is sometimes called a majority attack. This can corrupt a blockchain protocol that malicious attackers would take over.

Proof of Work

A Proof of Work is a form of consensus algorithm used to achieve agreement across a distributed network. In a Proof of Work, miners compete to complete transactions on the network, by commuting hard mathematical problems (i.e. hashes functions) and as a result they get rewarded in coins.

Application Binary Interface

An Application Binary Interface (ABI) is the interface between two binary program modules that work together. An ABI is a contract between pieces of binary code defining the mechanisms by which functions are invoked and how parameters are passed between the caller and callee. ABIs have become critical in the development of applications leveraging smart contracts, on Blockchain protocols like Ethereum.

Proof of Stake

A Proof of Stake (PoS) is a form of consensus algorithm used to achieve agreement across a distributed network. As such it is, together with Proof of Work, among the key consensus algorithms for Blockchain protocols (like the Ethereum’s Casper protocol). Proof of Stake has the advantage of security, reduced risk of centralization, and energy efficiency.

Proof of Work vs. Proof of Stake


Proof of Activity

Proof-of-Activity (PoA) is a blockchain consensus algorithm that facilitates genuine transactions and consensus amongst miners. That is a consensus algorithm combining proof-of-work and proof-of-stake. This consensus algorithm is designed to prevent attacks on the underlying Blockchain.

Blockchain Economics

According to Joel Monegro, a former analyst at USV (a venture capital firm) the blockchain implies value creation in its protocols. Where the web has allowed the value to be captured at the applications layer (take Facebook, Twitter, Google, and many others). In a Blockchain Economy, this value might be captured by the protocols at the base of the blockchain (for instance Bitcoin and Ethereum).

Blockchain Business Model Framework

A Blockchain Business Model is made of four main components: Value Model (Core Philosophy, Core Value and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.


Blockchain companies use sharding to partition databases and increase scalability, allowing them to process more transactions per second. Sharding is a key mechanism underneath the Ethereum Blockchain and one of its critical components. Indeed, sharding enables Blockchain protocols to overcome the Scalability Trilemma (as a Blockchain grows, it stays scalable, secure, and decentralized).


A decentralized autonomous organization (DAO) operates autonomously on blockchain protocol under rules governed by smart contracts. DAO is among the most important innovations that Blockchain has brought to the business world, which can create “super entities” or large entities that do not have a central authority but are instead managed in a decentralized manner.

Smart Contracts

Smart contracts are protocols designed to facilitate, verify, or enforce digital contracts without the need for a credible third party. These contracts work on an “if/when-then” principle and have some similarities to modern escrow services but without a third party involved in guaranteeing the transaction. Instead, it uses blockchain technology to verify the information and increase trust between the transaction participants.

Non-Fungible Tokens

Non-fungible tokens (NFTs) are cryptographic tokens that represent something unique. Non-fungible assets are those that are not mutually interchangeable. Non-fungible tokens contain identifying information that makes them unique. Unlike Bitcoin – which has a supply of 21 million identical coins – they cannot be exchanged like for like.

Decentralized Finance

Decentralized finance (DeFi) refers to an ecosystem of financial products that do not rely on traditional financial intermediaries such as banks and exchanges. Central to the success of decentralized finance is smart contracts, which are deployed on Ethereum (contracts that two parties can deploy without an intermediary). DeFi also gave rise to dApps (decentralized apps), giving developers the ability to build applications on top of the Ethereum blockchain.

History of Bitcoin

The history of Bitcoin starts before the 2008 White Paper by Satoshi Nakamoto. In 1989 first and 1991, David Chaum created DigiCash, and various cryptographers tried to solve the “double spending” problem. By 1998 Nick Szabo began working on a decentralized digital currency called “bit gold.” By 2008 the Bitcoin White Paper got published. And from there, by 2014, the Blockchain 2.0 (beyond the money use case) sprouted out.


An altcoin is a general term describing any cryptocurrency other than Bitcoin. Indeed, as Bitcoin started to evolve since its inception, back in 2009, many other cryptocurrencies sprouted due to philosophical differences with the Bitcoin protocol but also to cover wider use cases that the Bitcoin protocol could enable.


Ethereum was launched in 2015 with its cryptocurrency, Ether, as an open-source, blockchain-based, decentralized platform software. Smart contracts are enabled, and Distributed Applications (dApps) get built without downtime or third-party disturbance. It also helps developers build and publish applications as it is also a programming language running on a blockchain.

Ethereum Flywheel

An imaginary flywheel of the development of a crypto ecosystem, and more, in particular, the Ethereum ecosystem. As developers join in and the community strengthens, more use cases are built, which attract more and more users. As users grow exponentially, businesses become interested in the underlying ecosystem, thus investing more in it. These resources are invested back in the protocol to make it more scalable, thus reducing gas fees for developers and users, facilitating the adoption of the whole business platform.


Solana is a blockchain network with a focus on high performance and rapid transactions. To boost speed, it employs a one-of-a-kind approach to transaction sequencing. Users can use SOL, the network’s native cryptocurrency, to cover transaction costs and engage with smart contracts.


In essence, Polkadot is a cryptocurrency project created as an effort to transform and power a decentralized internet, Web 3.0, in the future. Polkadot is a decentralized platform, which makes it interoperable with other blockchains.


Launched in October 2020, Filecoin protocol is based on a “useful work” consensus, where the miners are rewarded as they perform useful work for the network (provide storage and retrieve data). Filecoin (⨎) is an open-source, public cryptocurrency and digital payment system. Built on the InterPlanetary File System.


BAT or Basic Attention Token is a utility token aiming to provide privacy-based web tools for advertisers and users to monetize attention on the web in a decentralized way via Blockchain-based technologies. Therefore, the BAT ecosystem moves around a browser (Brave), a privacy-based search engine (Brave Search), and a utility token (BAT). Users can opt-in to advertising, thus making money based on their attention to ads as they browse the web.

Decentralized Exchange

Uniswap is a renowned decentralized crypto exchange created in 2018 and based on the Ethereum blockchain, to provide liquidity to the system. As a cryptocurrency exchange technology that operates on a decentralized basis. The Uniswap protocol inherited its namesake from the business that created it — Uniswap. Through smart contracts, the Uniswap protocol automates transactions between cryptocurrency tokens on the Ethereum blockchain.

Read Next: Proof-of-stakeProof-of-workBitcoinEthereumBlockchain.

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