Here is a blog post from Vitalik Buterin, the founder of Ethereum, on Ethereum pre-
history ↗ . Here ↗ is another blog post with more history.
Bitcoin As A State Transition System
From a technical standpoint, the ledger of a cryptocurrency such as Bitcoin can be
thought of as a state transition system, where there is a "state" consisting of the
ownership status of all existing bitcoins and a "state transition function" that takes a state
and a transaction and outputs a new state which is the result. In a standard banking
system, for example, the state is a balance sheet, a transaction is a request to move $X
from A to B, and the state transition function reduces the value in A's account by $X and
increases the value in B's account by $X. If A's account has less than $X in the first place,
the state transition function returns an error. Hence, one can formally define:
APPLY(S,TX) -> S' or ERROR
In the banking system defined above:
APPLY({ Alice: $50, Bob: $50 },"send $20 from Alice to Bob") = { Alice:
$30, Bob: $70 }
But:
APPLY({ Alice: $50, Bob: $50 },"send $70 from Alice to Bob") = ERROR