Welcome to Lesson 2 of the Cryptocurrencies series by PROP365 Academy. In this lesson, we answer a crucial question: what is blockchain? You’ll explore the fundamentals of blockchain technology, its evolution, and how it plays a vital role in secure, decentralized digital transactions. Understanding this concept is essential for anyone involved in crypto.
So, what is blockchain exactly? At its core, it is a digital ledger that tracks and verifies all cryptocurrency transactions. Unlike traditional databases, it distributes identical copies of this ledger across a decentralized network. Every node in the system—operated by miners—stores the full transaction history.
Each block contains a finite number of verified transactions. As new blocks form, they link together to build a continuous, transparent, and tamper-resistant chain. This setup eliminates the need for central authorities by relying on cryptographic validation and consensus.
How Blockchain Technology Works
Blockchain finalizes a transaction only after miners validate and add it to the chain. This typically takes a few minutes. Once confirmed, the transaction becomes permanent. Unlike PayPal or credit cards, there are no refunds or chargebacks.
During the confirmation window, neither party can access the funds involved. This feature effectively prevents double spending, which is the fraudulent reuse of the same cryptocurrency.
The History and Evolution
The roots of blockchain trace back to 1991 when Stuart Haber and W. Scott Stornetta introduced a cryptographically secure chain of blocks. A year later, the addition of Merkle trees improved how documents were grouped and verified within each block.
Fast forward to 2008, Satoshi Nakamoto introduced the first decentralized technology through Bitcoin. By launching in 2009, Bitcoin solved the double spending problem using a peer-to-peer network—eliminating the need for a trusted intermediary.
Initially spelled “block chain,” the term evolved into “blockchain” by 2016. Meanwhile, Bitcoin’s blockchain file size grew from 20 GB in 2014 to over 100 GB by 2017, reflecting its rising adoption.
Blockchain 2.0 and Beyond
By 2014, the term “Blockchain 2.0” emerged to describe the next generation of it's applications. These included smart contracts, which automatically execute agreements without requiring human intervention or intermediaries.
Consequently, technology started moving beyond finance. By integrating with real-world data (via oracles and APIs), industries like voting, music, and logistics began experimenting with blockchain-based solutions.
Global corporations such as IBM have heavily invested in such development. Additionally, international discussions now focus on regulation and standardization for broader adoption.
Adoption and Future Impact
According to Accenture, adoption in financial services hit 13.5% as early as 2016. Experts now see it as a foundational technology with the potential to transform entire economic and governance systems in the coming decades.
Summary
In this lesson, you’ve learned:
- What is blockchain and how it works
- How it solves problems like double spending
- Its historical roots and development through Blockchain 2.0
- How various industries are now applying innovation
Understanding this technology is not just about knowing the tech—it’s about recognizing how it reshapes the way we store, verify, and transfer value.
Continue your journey with PROP365 Academy and apply fundamentals to your crypto strategies. Try a prop trading challenge and experience the power of blockchain in action.
