What is blockchain technology and where did it come from?
The story of blockchain and Bitcoin are one and the same. It begins with a group of individuals, called cypherpunks, who predicted that the current centralized system for dealing with private information would lead to an internet that was unprotected, wherein individuals’ information was potentially used in malicious or undesirable ways, or left open to be used in those ways, by corporations or government entities.
The banking system provided a major backdrop to the cypherpunks’ concerns. A bank is most often a private or government corporation that is trusted by a country or global population to store all financial and relevant personal information and manage all financial transactions.
The relationship between a collective population and the bank is therefore one based on trust: trust that the bank won’t steal money, mishandle transactions, or misuse the data and information that is entrusted to them. Beyond the risk that a bank will act intentionally to exploit this trust, there are also inherent risks that arise from a technical system that requires a central entity to manage, process, and safeguard all of the data that is stored with them.
If you’re reading this in the West, you might not completely relate to the problem blockchain was and is trying to solve, but the quote below from Vitalik Buterin (the creator of Ethereum) helps to frame it from the perspective of those populations in countries where trust in their national banking system is perhaps weaker than it is in the US and other Western countries:
"When I speak about it in the West, people say they trust Google, Facebook, or their banks. But the rest of the world doesn’t trust organizations and corporations that much — I mean Africa, India, the Eastern Europe, or Russia. It’s not about the places where people are really rich. Blockchain’s opportunities are the highest in the countries that haven’t reached that level yet."
Out of the brewing of collective concern pioneered by the cypherpunks, the notorious Satoshi Nakamoto was born.
Read more here: Blockchain explained: A guide to one of the modern world’s greatest innovations