When one wants to understand the history and potential of Blockchain technology, one can only start with the Bitcoin protocol, the world’s first cryptocurrency, which uses the Blockchain technology. It is to this digital currency that Blockchain and Distributed Ledger Technology owe their good fortune. The history of Bitcoin coincides, therefore, with the history of the Blockchain. In this article we will try to trace the history of Bitcoin and the Blockchain, with the help of theBlockchain & Web3 Observatory of the Politecnico di Milano., starting from Bitcoin’s birth and initial reticence, through the media hype of Blockchain and the “crypto-winter,” to the interest from European institutions and the innovative push of public Blockchains.

How Blockchain was born, the history of the technology in eight stages

Before recounting the evolution of the Blockchain starting with the birth of Bitcoin, however, a necessary introduction is necessary regarding what Bitcoin is and how it works:

Bitcoin represents a protocol that uses cryptographic technologies, computer networks, and mechanism design to achieve a decentralized, secure, and programmable system of recording and exchanging value, characterized by its immutable and censorship-resistant nature.

1. Birth of Bitcoin

Bitcoin came into being in late 2008, when Satoshi Nakamoto-a person or group of people whose identity is still unknown-published a white paper explaining his idea of a peer-to-peer (P2P) cryptographic virtual currency without intermediaries, governed by algorithms. The proposed idea is a veritable declaration of war on the banking world, which at that time was engulfed in a deep crisis.

In 2009, the Bitcoin network began to function; the community began to grow and Bitcoin was used for the first time to purchase a good in the physical world: a pizza. In 2012 Bitcoin reached a capitalization of $1 billion.

2. Early relations with press and regulators

However, the first problems arise. In 2010-2011 Bitcoin, because of its use of pseudonyms and the absence of a supervisory authority, became associated with the illegal market, from drugs to terrorism, and was therefore relegated to a niche phenomenon of little interest to the business world.

Regulators in several nations are beginning to wonder at this point how Bitcoin should be considered. Some recognize it as a currency, some as a financial instrument, and still others prohibit it or advise against its use by banks.

3. From Bitcoin to Blockchain

Since 2014 there has been a phase where interest begins to shift to the technology behind Bitcoin: the Blockchain. Platforms that exploit some of Bitcoin‘s founding principles are thus beginning to emerge: Ethereum, a platform geared toward the creation of smart contracts , and Ripple, established in 2012 to facilitate interbank payments in different currencies, which gathers membership from the first banks.

R3, a consortium composed of the world’s leading banks, was also established in 2015 to develop the Corda platform. Also in 2015, the Linux Foundation begins work on the Hyperledger project for the collaborative development of a platform that can also be used by businesses. It therefore comes to a crossroads: there are those who believe only in cryptocurrencies and those who believe that the underlying technology can also be applied to other areas.

4. Blockchain becomes a fad

In 2016, the Blockchain fad takes hold. The press is starting to talk about it and it is increasingly being presented in sharp separation from Bitcoin (in late 2015 The Economist devotes the cover to it and counts it among the technologies that will revolutionize digital in the coming years). As a result of this media hype, corporate awareness of Blockchain begins to increase, and numerous trials are initiated.

5. Blockchain and cryptocurrencies between fluctuations and perplexity

At the end of 2017, we enter the so-called disillusionment phase of thehype cycle of Gartner: the first perplexities arise about the revolutionary potential of blockchain technology, which struggles to materialize the promises made, while cryptocurrencies continue to fluctuate in their value. Bitcoin ‘s network validation process (the so-called mining process) has some limitations as the network grows: slowness in making a transaction, high energy consumption for validation, and risk of centralization of computers dedicated to this activity).

6. The “crypto-winter”

After the strong media attention they received in 2017, driven by their price growth, 2018 is characterized by an unstoppable collapse in terms of capitalization. The Blockchain community coins a new term to define this moment: “crypto-winter“. Winter, however, has not come for the technology behind cryptocurrencies. Blockchain, in fact, continues to attract great interest from companies. The technology is evolving, thanks in part to the efforts of the developer communities revolving around public Blockchain.

7. The entry of institutions

2020 and 2021 will see an explosion in central banks’ plans to create their own digital currencies, the so-called Central Banks Digital Currencies (or CBDCs). This new application of technology seems to be making its way into the world. In fact, about 40 percent of central banks have initiated a research project on the issuance of a possible CBDC.

Meanwhile, the first signs of a possible legal framing of Blockchain and cryptocurrencies, such as Bitcoin, are beginning to arrive, with the European Commission including within the Digital Finance Package a regulation on crypto-assets.

8. Public blockchain innovation

In contrast, 2021 and the first half of 2022 are characterized by a strong innovation drive. Decentralized applications (DApp, short for Decentralized Applications), particularly those in the financial field. It is in November 2021, in fact, that decentralized finance applications (DeFi, an acronym for Decentralized Finance) manage the equivalent of $178 billion. In addition to DApps, non-fungible tokens are introduced (NFT, an acronym for Non-Fungible Token).

This new technical standard enables several new use cases, from tokenization of financial assets, to collectibles phenomena. Indeed, among private users, the market for collectibles: usually made in collections of varying numbers, they replicate collectibles phenomena by adding features of uniqueness to multimedia content, mainly concerning works of art, music and online games. In the second half of 2022, however, the use of the term Web3, which is used to describe a new decentralized version of the Web based on Blockchain.

What will follow remains to be written.