Assignment 1

1. What is blockchain?

A blockchain is a digital record book (ledger) that is shared across many computers instead of being kept by one company or bank. It is decentralized, so no single person controls it. New transactions are grouped into blocks, and every block contains a hash (a unique digital fingerprint) of the previous block, so the blocks form a chain. Before a block is added, the network uses a consensus mechanism, such as Proof of Work or Proof of Stake, to agree that the transactions are valid. Because of this linking, changing an old record would break every block after it, and the network would reject it. This makes blockchain practically immutable. Most well-known blockchains, like Bitcoin and Ethereum, are public, but private ones also exist.

2. History Timeline

1979: Ralph Merkle invented Merkle trees, a way to combine many hashes into one. Blockchains use this later.

1982: David Chaum described a vault-based system for groups that don't trust each other. It is often seen as an early idea behind blockchain.

1991: Stuart Haber and W. Scott Stornetta created a way to timestamp digital documents with hashes, so they can't be backdated or changed.

1992: Haber, Stornetta and Dave Bayer added Merkle trees to make timestamping more efficient.

1997: Adam Back proposed Hashcash, a Proof of Work system to make spam emails costly to send.

1998: Nick Szabo designed Bit Gold (published in 2005), and Wei Dai proposed B-money. Both were early ideas for digital money.

2004: Hal Finney built RPOW, a working system for reusable Proof of Work tokens. It still depended on a trusted server.

October 31, 2008: Satoshi Nakamoto published the Bitcoin whitepaper, combining earlier ideas to solve double-spending without a trusted middleman.

January 3, 2009: Nakamoto mined the Genesis Block, starting the Bitcoin network. Its message referenced a Times newspaper headline about bank bailouts.

2013: Vitalik Buterin published the Ethereum whitepaper, proposing a blockchain that can run programs, not just send payments.

July 30, 2015: Ethereum launched its mainnet, the first major platform for general-purpose smart contracts (code that runs automatically on the blockchain).

3. Blockchain vs. Traditional Databases

Difference 1: Who controls it. A bank keeps your balance on its own server, so you must trust the bank, and if the server goes down, the service stops. Bitcoin is copied on thousands of independent computers, so no single owner can shut it down or change the rules alone.

Difference 2: How data can be changed. In a company database, an administrator can run an UPDATE or DELETE command and change a stock number from 100 to 80, and the old value is gone. On a blockchain, old records can't be erased. A mistake is fixed by adding a new transaction, so the full history stays visible.

Difference 3: Speed. Databases like PostgreSQL can handle tens of thousands of operations per second. Bitcoin handles about 7 transactions per second and Ethereum about 15 to 30, because every node must verify each transaction. Layer-2 networks now help Ethereum go faster. Because of this, blockchain is a poor choice for simple high-speed data storage but a good one when trust and transparency matter more.