Introduction

Satoshi Nakamoto

Blockchain technology was proposed by the pseudonymous Nakamoto (2008) with his well-known Bitcoin paperSatoshi Nakamoto. Bitcoin: A peer-to-peer electronic cash system. https://bitcoin. org/bitcoin.pdf, Dec 2008. Accessed: 2015-07-01., which introduced the possibility of online payments in a decentralized manner without the use of an authoritative entity based on a purely peer-to-peer digital cash system. Since any solution to prevent double-spending made use of a trusted third party, the blockchain algorithm acts as a consensus mechanism that allows the network to decide on a single, unambiguous version of a history of transactions, even in the presence of untrustworthy users.

Thereby, the most important improvement is the so-called Proof-of-Work (PoW) algorithm that provides a mechanism to achieve anonymous consensus in a permissionless environment. This is the first approach where the consensus problem isn’t solved by linking the voting power to the number of election votes, but rather on the computational power a participant obtains. The underlying mechanism which allows a system to reach an eventual agreement upon the blockchain data structure is widely known as the Nakamoto consensus.