With the release of Satoshi Nakamoto’s white paper “Bitcoin: A Peer-to-Peer Electronic Cash System”, the major deployment of blockchain technology was launched. The Bitcoin network was finally introduced in January 2009. Despite all the hype and attention around cryptocurrencies in the media, the technology behind the blockchain is the foundation for all of them.
Since this major breakthrough, blockchain technology has developed in many ways, offering a variety of practical applications. The introduction of smart contracts was one of the most important. In essence, it is computer software that automatically executes the provisions of a contract when certain criteria are met. The development of decentralized applications (dApps) and the automation of financial transactions are two examples of the additional possibilities that blockchain technology has provided.
Then there is the issue of the use of consensus techniques by various crypto projects. The Proof-of-Work (PoW) algorithm, which Bitcoin uses, is the best known. In order for this consensus method to add new blocks to the blockchain, miners must solve challenging math puzzles. But as more transactions have taken place on the blockchain, the PoW consensus process has become more inefficient and consumes more power.
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 higher volume of transactions and use less energy. Ethereum is almost done with moving to ETH 2.0, which is a migration to the PoS mechanism that basically ends mining and reduces power usage by 99.95%. Meanwhile, new scaling technologies such as Ethereum, TRON, and EOS have been introduced to support Layer 1 networks. Supply chain, banking, healthcare, and many other industries have embraced blockchain technology. One industry that has adopted blockchain technology the fastest is finance.
More about Blockchain technology
Blockchain technology has been proven by banks, payment processors, and other financial institutions to increase the speed and security of financial transactions. The use of blockchain technology is quite common; 77 of the top 100 public corporations are doing it.
Blockchain 1.0 refers to Bitcoin’s use of blockchain technology in its first form. Blockchain 1.0 is essentially a platform for digital currencies, with the transfer of value as its main use case. The use of a decentralized digital ledger that is updated by a computer network is the core feature of Blockchain 1.0. Proof of Work (PoW), the consensus method employed by Blockchain 1.0, requires miners to solve challenging math puzzles to add new blocks to the blockchain.
By incorporating the idea of smart contracts, Blockchain 2.0, sometimes called smart contract platforms, extends the Blockchain 1.0 framework. When specific criteria are met, smart contracts are computer programs that automatically fulfill their terms. As a result, it is possible to develop decentralized applications (dApps) that can automate many activities, including financial ones. The best known Blockchain 2.0 platform is Ethereum.
To serve business use cases, Blockchain 3.0, commonly known as enterprise blockchain. Expands the functionality of Blockchain 1.0 and 2.0. The main goal of Blockchain 3.0 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 such as sharding, off-chain transactions, and zero-knowledge proof, blockchain 3.0 platforms also seek to offer greater scalability and privacy features. Algorand, Solana, and Chainlink are some platforms that use Blockchain 3.0 as an example.
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