How Has Blockchain Technology Changed Since Bitcoin’s Introduction?
With the release of Satoshi Nakamoto’s whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System,” the main blockchain technology rollout got underway. The Bitcoin network was eventually introduced in January 2009. Despite all the buzz and attention around cryptocurrencies in the media, the technology behind blockchain underpins all of them.
Since this significant advancement, blockchain technology has developed in numerous ways, offering a variety of practical applications. The introduction of smart contracts was one of the most important ones. In essence, it is a computer software that automatically carries out a contract’s provisions when certain criteria are met. The development of decentralized applications (dApps) and the automation of financial transactions are two examples of the additional possibilities this has given blockchain technology.
Then there is the issue of the various cryptographic projects’ usage of consensus techniques. The proof-of-work (PoW) algorithm, which Bitcoin utilizes, is the most well-known. For this consensus method to add new blocks to the blockchain, miners must solve challenging mathematical puzzles. But as more transactions have been made on the blockchain, the PoW consensus process has grown more inefficient and energy-intensive.
New consensus procedures, including proof-of-stake (PoS) and delegated proof-of-stake (DPoS), have been created to overcome this problem. These mechanisms are made to support a greater volume of transactions and use less energy. Ethereum has almost finished with the switch to ETH 2.0, which is a migration to the PoS mechanism that essentially terminates mining and reduces energy use by 99.95%. In the meantime, new scaling technologies like Ethereum, TRON, and EOS have been introduced to support Layer 1 networks. Supply chain, banking, healthcare, and many other industries have all embraced blockchain technology. One industry that has embraced blockchain technology the fastest is the financial one.
More About Blockchain Technology
Blockchain technology has been tested by banks, payment processors, and other financial institutions to increase the speed and security of financial transactions. The use of blockchain technology is fairly prevalent; 77 of the top 100 public corporations are doing so.
Blockchain 1.0 refers to Bitcoin’s usage of blockchain technology in its first form. Blockchain 1.0 is essentially a platform for digital currencies, with value transfer serving as its primary use case. The use of a decentralized, digital ledger that is updated by a network of computers is the core characteristic of Blockchain 1.0. Proof-of-work (PoW), the consensus method employed by Blockchain 1.0, necessitates miners to solve challenging mathematical puzzles to add new blocks to the blockchain.
By incorporating the idea of smart contracts, Blockchain 2.0, sometimes called smart contract platforms, expands upon the framework of Blockchain 1.0. When specific criteria are met, smart contracts are computer programs that automatically carry out their terms. As a result, it is possible to develop decentralized applications (dApps) that can automate many activities, including financial ones. The most well-known Blockchain 2.0 platform is Ethereum.
In order to serve enterprise use cases, Blockchain 3.0, commonly referred to as enterprise blockchain. It expands on the functionalities of Blockchain 1.0 and 2.0. Blockchain 3.0’s primary goal is to offer a scalable, secure, and private platform for business use cases. Like supply chain management, digital identity, and international payments. Through the use of technologies like sharding, off-chain transactions, and zero-knowledge proof, blockchain 3.0 platforms also seek to offer increased scalability and privacy features. Algorand, Solana, and Chainlink are a few platforms that use Blockchain 3.0 as an example.