This timeline explores Bitcoin's inception to Ethereum's establishment, clarifying their relationship and key industry terms to build foundational blockchain knowledge.
Bitcoin (BTC) – Blockchain 1.0
In 2008, "Satoshi Nakamoto" (a pseudonymous individual/group) published Bitcoin: A Peer-to-Peer Electronic Cash System, introducing digital cryptocurrency. By 2009, the Bitcoin network launched, with Nakamoto later fading from public view.
1. Decentralization & Distributed Ledger
Bitcoin pioneered decentralization—replacing centralized authorities (e.g., banks) with a distributed ledger maintained by thousands of nodes globally. To alter data, 51% of nodes must consent, making tampering nearly impossible (e.g., 11,703 nodes in January 2024 required 5,968 simultaneous approvals).
2. Mining & Incentives
Users ("miners") run Bitcoin software to validate transactions and earn BTC by solving cryptographic puzzles ("proof-of-work"). High-performance hardware increases mining success rates, spurring a dedicated industry.
3. Scalability Limits
Bitcoin’s 1MB block size struggles with high transaction volumes. Attempts to upgrade via community consensus failed due to disagreements, highlighting inflexibility.
4. Hard Forks
Divergent solutions led to hard forks, creating independent chains like Bitcoin Cash (BCH) and Bitcoin Gold (BTG).
Ethereum (ETH) – Blockchain 2.0
Proposed in 2013 by Vitalik Buterin, Ethereum expanded blockchain’s utility by enabling decentralized applications (DApps) and smart contracts.
1. Smart Contracts
Self-executing code enforces rules transparently, enabling solutions for supply chains, certifications (e.g., Alibaba’s anti-counterfeit system since 2016), and more.
2. Graphene Framework
This modular toolkit simplifies DApp development—akin to building with pre-fabricated components—boosting efficiency.
3. Data Storage Mechanism
Blockchains store data hashes (not raw files), linking each block cryptographically. Altering historical data requires recomputing all subsequent blocks, ensuring immutability.
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FAQ
Q: Why is Bitcoin called "digital gold"?
A: Its capped supply (21 million BTC) and decentralized nature mirror gold’s scarcity and independence from governments.
Q: Can Ethereum replace Bitcoin?
A: They serve different purposes—Bitcoin as currency; Ethereum as a platform for programmable contracts.
Q: Is mining still profitable?
A: Yes, but requires specialized hardware (ASICs) due to rising computational difficulty.