Like many others, you’re probably wondering where so many different cryptocurrencies came from. Today, the use of blockchain technology is widespread, solving problems that its innovators probably never even thought possible.
Here’s a quick look at the developments that led to the current state of the industry.
Bitcoin
Bitcoin has the distinction of being at the center of the first instance of blockchain use in the finance industry. Its objective at the time was simple. With traditional payment options, there were delays in international transfers or fees that came from the “middleman” elements of the process.
Additionally, it was created to maintain its value by Having a limit of 21 million coins being imposed on it. Additionally, the number of coins that would be launched every four years would be reduced.
Initially, Bitcoin wasn’t the most popular innovation, but that would change over the years. Other networks, such as Litecoin, would come to the fore, and would aim to improve upon the existing framework.
Ethereum
It’s agreed that Ethereum stands as the second blockchain generation. It’s where the concept of smart contracts first entered the industry. Put simply, certain conditions are established, and when met, an agreement will be automatically executed. This automation is the reason for the use of the word “smart.”
The principle is not too far removed from blockchain programming, but the processes are easier to track, thanks to the improved transparency. That’s one of the reasons why you’ll see blockchain applications going way beyond money transfers.
Suddenly, smart contracts give developers the ability to realize all sorts of use cases. Non-fungible tokens or NFTs also came to the fore, being used for a variety of assets such as game items, collectibles, and more.
With all the second generation managed to achieve, there were still scalability concerns, as the existing network space could see challenges with greater numbers of users.
Third Generation
As indicated before, scalability was one of the major concerns with the second generation, and the same could be said for the first generation in the form of Bitcoin too. The networks are great, but concerns mounted about greater transaction volumes, which would create delays and more gas fees.
Third generation blockchain designs such as TRON, Avalanche, and Cardano came to the market with their unique approaches and technologies, including sidechain or sharding.
Some designs don’t even employ blockchain in the traditional sense, instead using a Directed Acyclic Graph (DAG) structure.
Be that as it may, Ethereum didn’t sit idly by with Ethereum 2.0 being developed to improve smart contract functions, speed, scalability, and more.
While the intentions and innovations behind the third generation blockchains are admirable, their adoption and familiarity factors remain much lower than those of Bitcoin and Ethereum. Therefore, there is no real measure just yet of their capabilities to handle scaled transaction volumes.
Enterprise-level Solutions
Blockchain’s emergence beyond simply financial transaction based functionality is well-documented. Many enterprises have leveraged and continue to leverage the capabilities offered to the industry.
For example, there was the creation of an intelligent vehicle tracking system that relied on blockchain to handle distribution of COVID-19 vaccines around the world. This meant reduced transit time and reduced cost.
There are also DLT technologies that offer consumer protection with tracking features to provide insights on where food comes from, Improving the consumption safety factor.
Webjet from Australia is another example, using blockchain to help consumers reduce the likelihood of lost or inaccurate hotel bookings.
Tools like Immediate Connect allow maximizing trading profits with AI-backed algorithms and machine learning.
Wrapping Up
Back in 1991, Stewart Haber and W Scott Stornetta engineered a cryptographically secured chain of blocks. 1998 would see Nick Szabo working on the decentralized digital currency ‘bit gold.’ In 2009, Satoshi Nakamoto developers would release their Bitcoin based blockchain as a public transaction Ledger.
2014 saw the underlying blockchain technology being separated from the currency as its potential for other applications became apparent. This was the birth of blockchain 2.0. Fast forward to the current state of things, these developments went way beyond transactional potential. It remains to be seen how much further blockchain technology can advance existing processes and create new ones.
