What is blockchain technology? Is it just another buzzword you use without understanding the terminology? If it is, I’m here to elevate your knowledge and shed valuable insight on the term. Blockchain technology is one of the major innovations in today’s world. It is one of the founding blocks of web3 technology on which smart contracts, cryptocurrencies, DAOs, Dapps, and Defi stand.

Thus, all revolutionary innovations that are changing the world’s digital trajectory have their roots in this technology. So, you’re right to marvel at this wonderful information you’ll soon learn a lot about.

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What Is Blockchain? Exploring Its Basic Concepts

If we aim to understand the present, we must seek to uncover the past and trace the roots to reach the branches. Hence, it’s pertinent for us to understand how blockchain sprung up. But first, let’s define and explain the word blockchain. Blockchain is a decentralized ledger technology network functioning on a consensus mechanism that stores information using cryptographic hashes, records transactions, and tracks assets alongside other utilities.

To further explain, blockchain’s decentralization feature means that no single central power holds authority in the system. Therefore, this makes it possible for a peer-to-peer network where all nodes can connect, thus facilitating transparency. Distributed Ledger Technology (DLT) is a digital database system that replicates and records digital data across servers, making it almost impossible to alter any records. Thus, this prevents theft and enhances security in the system.

The consensus mechanism is the process of verifying and approving transactions and adding them as new blocks to the blockchain ledger. It serves as a means to achieve agreement, trust, and security across the decentralized computer network. The two major consensus mechanisms are Proof of Work (POW) and Proof of Stake (POS). They both have the same aim but employ different means to actualize it. Bitcoin uses POW, where the block creators are called miners, whereas Cadarno and Ethereum 2.0 use POS.

However, the Proof of Work mechanism is slower, less efficient, and less scalable, making it difficult to host other tokens on the network. But in the proof of stake mechanism, those who stake their tokens are randomly selected as validators. This system is more energy efficient and gives fees as rewards to validators, whereas in POW, blocks are the rewards for miners. This consensus method is the newer of the two, and as such, newer cryptocurrencies use it to validate and record transactions.

Separate blocks linked together by cryptographic hashes store all information. Thus, altering one block means that you have to alter all previous blocks. So, you can see how hard it is to steal or hide information on any blockchain network. The high security level makes blockchain feasible in various sectors, especially finance. Other industries where blockchain technology is applied include banking, healthcare, entertainment, art, and government.

Categories of Blockchain Network

There are four major types of blockchain networks in existence. First is the fully decentralized public blockchain with an open-source code that allows anyone to join, engage in transactions, diagnose issues, and suggest fixes. It functions with total anonymity, and under the public network, every peer has a copy of the ledger and can access all records. However, the records are unalterable. So, the system is open, transparent, and secure but has scalability issues.

Next is the private, unpermissioned, or business blockchain network with a single central authority. It’s accessible by authorized users; hence, not everyone can join. Therefore, the network is smaller and suitable for organizations or companies. Due to the size of the network, transactions are faster, unlike in the public blockchain system, but users may not like the centralization aspect of the network.

Additionally, there’s a hybrid blockchain that merges features of both the public and private blockchain systems. Thus, this system has some form of control alongside permissionless processes. However, it isn’t fully transparent as not all data is public, and the central management chooses who can access the available data via smart contracts. But, the hybrid system is less expensive to run.

Lastly is the consortium or Federated blockchain, which a group of people control. It is also a form of the hybrid system suitable for different companies and businesses in the same industry. The difference is that several members work in conjunction on a decentralized network. However, in the hybrid system, only one organization wields control.

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A Brief History of The Evolution and Progression of Blockchain Technology

Most modern studies say that the founder of Blockchain technology is an anonymous person or group of people bearing the pseudonym Satoshi Nakamoto. Satoshi Nakamoto conceptualized Bitcoin, the first revenant blockchain technology, in 2008, but the roots and elements of blockchain go way back to 1982.

David Chaum made the first proposition for a blockchain-like system in his 1982 research papers. However, his proposition wasn’t for digital currencies. But in 1989, he pioneered Digicash, an electronic money company. However, the company crashed because there was no suitable internet structure and funding.

Then, between 1991 and 1992, Stuart Haber and Scott Stornetta introduced cryptographic storage for time-stamping digital documents to prevent backdating and tampering. By collaborating with Dave Bayer, they introduced Merle trees, which allowed the storage of several documents in one data block. In 1998, Nic Szabo made plans for bit gold, a decentralized digital currency. However, he never implemented it.

After two years, Stefan Konst propounded a theory of cryptographically secured chains, and in 2004, Hal Finley introduced the Reusable Proof of Work system for digital cash. Then came 2008, when Satoshi Nakamoto introduced Bitcoin and launched the first modern Blockchain technology in 2009. Though people use Bitcoin and blockchain interchangeably, they aren’t the same.

On 22 May 2010, the first commercial Bitcoin transaction happened when Laszlo Hanyecz paid 10,000 Bitcoins for two Papa John’s pizzas. To date, crypto enthusiasts celebrate this event. Bitcoin remained the sole Bloch gain and cryptocurrency till 2011, when Litecoin and Namecoin sprung up.

Then, in 2014, with the creation of Ethereum by Vitalik Buterin, the utility of blockchain was expanded from cryptocurrency to decentralized applications, NFT marketplaces, and smart contracts. With the expansion of utilities came EVM chains and various tokens on the Ethereum Network. Fast forward to 2020, DeFi, NFTs, and Layer-2 solutions for addressing scalability issues began to emerge. The improvements in the system have continually led to more innovations to date.

Application of Blockchain Technology in Africa

Interestingly, the accessibility of blockchain technology enables its use even in our continent, Africa. There are several successful African blockchain projects simplifying life for Africans today. These projects focus on various industries, including finance, real estate, commerce, etc. Below are a few examples of some web3 blockchain projects in Africa.

Cowrie Exchange

This company is a Nigerian-based cryptocurrency currency exchange that facilitates cryptocurrency trading, buying, and selling. It is built on the Stellar blockchain network. With Cowrie exchange, you can swap fiat for digital money and purchase various goods. Just like USDT is pegged to the US Dollar, this platform offers NGNT, a token pegged to the Nigerian Naira.

Cowrie Exchange also helps businesses to make international payments swiftly and customize payment solutions. Also, with the platform, users can access price charts and real-time market data for analytical purposes. As a Fintech company, Cowrie Exchange is an application of blockchain in finance.

BitPesa

BitPesa is a crypto liquidity and exchange platform that’s native to Kenya. The corporation provides wholesale liquidity of crypto assets to individuals and organizations. It offers swift and secure services, allowing Kenyans and people of other African nationalities to transact seamlessly. With BitPesa, companies can make payments in and outside the African continent. So this opens up trade links for sub-Saharan Africa and other parts of the world, improving market efficiency.

Direct Property Africa Token

DPAT is a revolutionary innovation that merges real estate projects with cryptocurrency and NFTs to fund profitable projects. Therefore, it allows for partnerships and collaboration where prospective investors see the possibility of a Return on Investment. DPAT kills multiple birds with one stone as it helps Africa achieve urbanization, provides affordable housing, improves infrastructure, and finances projects.

Many more scalable blockchain projects are thriving in Africa, which has helped improve the continent’s economy. Despite this, innovators and developers are still developing more ideas for web3 blockchain platforms to drive innovations that will make Africa better for Africans.

So, blockchain technology may be the innovation that will spur Africa’s economic liberation and independence. If so, this will be the fulfillment of pan-Africanist dreams. Our great leaders like Marcus Garvey of Jamaica, Kwame Nkrumah of Ghana, Nnamdi Azikiwe of Nigeria, and many others fought to actualize these dreams, albeit through different means.

But with blockchain technology and web3, you can contribute to the growth of pan-Africanism with the help of NODO. How, you may ask? Well, register for the NODO grant program and share your ideas with a team to stand a chance of earning funding for your web3 project. You can also connect with like-minded enthusiasts on the platform and collaborate to birth next-level projects. Maybe you’ll be the Satoshi Nakamoto of Africa.