HISTORY OF BLOCKCHAIN

Digital currencies have actually been around since the 1980's. The first major one was called digi cash, but digi cash had a fatal flaw, it needed that centralized authority, that central intermediary to agree on who had send and what all of the balances were, which means they can still freeze your funds, reject your transactions and had complete control over the system, and of course which is the problem that we need blockchain for.

But why do Banks need central authorities? Simple, this is because of the double spending problem. Digital money needs some way to make sure when money is sent they are actually gone from the account and be reused again (double spending). And the way early digital currencies solve this was to have a centralized company tracking every transactions and balances.

How do we create digital money that cannot be copied and doesn't need a central authority?

This problem in computer is called the Byzantine general problem. Byzantine general problem describes how distributed system can fail to agree when some participants send false or inconsistent information (explain more)

In 2008, some or a group of people called the Satoshi nakamoto, published a paper with a solution and that solution was Bitcoin, they created the first digital currencies that did not have double spending problem and does not rely on central authority. The idea was for every one to keep track of everyone balances, no single person or organization controls Bitcoin, not even the creator Satoshi Nakamoto. The network carry out transactions according to code instructions.

A few years later, a man named vitalik buterin brought the idea of etherium in 2015, which can run codes that can do more than just tracking money but can also create credibly neutral agreements, which brings about the concept of Smart contracts.

Smart contracts idea isn't totally new, a cryptographer name Nick sarbe described it back in 1994, but blockchain and etherium made it finally possible. Smart contracts is like a normal contract or agreement written in code which the blockchain automatically enforced, it provides unbreakable agreement between two parties