Versions of Blockchain

The digital record of a transaction that is stored in a chain of blocks is defined as a “blockchain.” A buzzword in today’s technology is “blockchain.” When we talk about blockchain technology, it is a secure one without a third-party intermediary. Having said that, in any kind of money transaction, bank interference is not allowed. Today, blockchain technology is used in huge segments like banking, insurance, healthcare, government, and finance.

Cryptocurrency is the world’s first widely adopted currency. With Bitcoin, it has become a more secure and direct means of exchanging digital money on the internet. Satoshi Nakamoto created Bitcoin, a pseudonymous person who was successful in outlining the technology in a 2008 white paper. Having said that, Bitcoin is a digital currency that facilitates secure peer-to-peer internet transactions. Bitcoin provides the lowest transaction fees as compared to traditional online payment mechanisms, and unlike currencies issued by the government, a completely decentralised operation.

As mentioned earlier, the principle behind Bitcoin first appeared in a white paper published in late 2008. As mentioned earlier, this paper was the first digital money idea drawing on the fields of computer science and cryptography. In fact, the earlier concept of white paper referred to was nothing less than a unique and elegant solution to the problem of reserving trust between all the online entities, hidden folks (like the creators of Bitcoin)

Nakamoto, a pair of concepts intertwined: When we hold a bitcoin, we control it with a private key—a string of random numbers and letters that will unlock your purchase vault. private key tracking is done on a virtual ledger known as a “blockchain.”

1. Blockchain v1.0

The first blockchain was Bitcoin, a peer-to-peer digital currency in 2008 that used a consensus mechanism known as Proof-Of-Work (PoW).

The entire Bitcoin software architecture was monolithic in nature, which means there was no flexibility and everything was combined.

Its application layer was only responsible for processing transactions.

1. Blockchain v2.0

What is ethereum?

The second-biggest cryptocurrency by market cap, after Bitcoin, is Ethereum. It happens to be a decentralised computing platform that can run a variety of applications widely, which includes the entire DeFi.

Ethereum is the second biggest cryptocurrency by market cap after Bitcoin. Ethereum was launched in 2015. Ethereum was not designed to be a digital currency.Rather, the Ethereum founders set out to create a new global, decentralised platform that aids in the computation of blockchain security and transparency and extends the attributes to a wide range of applications.

The Ethereum Blockchain already runs everything from financial tools and games to complex databases. Talking about their future potential is limited to developers. Ethereum can be used to decentralize, secure, codify, and trade about anything.

Ethereum’s History

The Ethereum blockchain is responsible for securing ETH in the same way that Bitcoin is secured by its blockchain. Every transaction is verified and secure, making it nearly impossible for a third party to intervene.

2013 

  • A 19-year-old computer programmer (and Bitcoin Magazine cofounder) named Vitalik Buterin releases a whitepaper that outlines a highly flexible blockchain that could support any type of transaction virtually.

2014 

  • A teenager based out of Toronto, with a team of co-founders including Gavin Wood, crowdfunded the creation of the Ethereum protocol with the sale of $18 million in pre-launch tokens. 

2015 

  • Smart contract functionality is beginning to roll out on the Ethereum blockchain. The Ethereum blockchain was launched in July. It was the first public version.

2016 

  • Hackers stole around $50 million from a smart-contract-powered venture fund called the DAO (short for Decentralized Autonomous Organization) by exploiting a software bug. 

2020 

  • The Ethereum 2.0 upgrade begins in December. The complete transition from Ethereum 1.0 to Ethereum 2.0 is scheduled to take around two years to complete.
  • As part of Ethereum 2.0’s first phase, Proof of Stake is introduced. ETH 1.0 continues to use Proof of Work as its consensus mechanism.

2021

  • ETH hit a new all-time high above $1,700 in February.
  • The current price can be found at https://www.coinbase.com/price/ethereum.

What are smart contracts?

Smart contracts were first proposed in the 1990s by a computer scientist and lawyer named Nick Szabo. Szabo famously compared a smart contract to a vending machine. Imagine a machine that sells cans of soda for a quarter. If you put a dollar into the machine and select a soda, the machine is hardwired to either produce your drink and 75 cents in change or (if your choice is sold out), to prompt you to make another selection or get your money back. This is an example of a simple smart contract. Just like a soda machine can automate a sale without a human intermediary, smart contracts can automate virtually any kind of exchange.

What is Ethereum 2.0?

Ethereum 2.0 (referred to as ETH2) is an upgrade to the major Ethereum network. The Ethereum network is designed to grow while increasing speed, security and efficiency. As we discussed in early 2021, Ethereum 2.0 and Ethereum 1.0 coexist, but that blockchain will eventually merge with blockchain ETH2.(For example, if you are an ETH holder and do nothing, your ETH 1.0 holdings will automatically migrate to blockchain ETH2.The transition to ETH2 began in December 2020, and it is scheduled to take 2 years.

Let’s take a look at why Ethereum 2.0 is necessary.

Moving to the new platform is a complex endeavor, and moving a popular crypto asset to a new one is difficult, but for Ethereum to scale and evolve, it needs to happen. The method used by the ETH 1.0 blockchain is “proof of work” to verify transactions, which causes bottlenecks, fee increases, and consumes substantial resources (majorly electricity).

What is proof of work? How do cryptocurrency networks make it possible that no one spends the same money twice without a central authority like PayPal or Visa in the middle? They use a mechanism called consensus. When ETH 1.0 launched, it adopted the mechanism pioneered by Bitcoin: Proof of Work.

Proof of Work needs a huge amount of power to process with the contribution of virtual “miners” across the world who are competing to be the first one to resolve a time-consuming math puzzle. Having said that, the winner will be able to update the blockchain with the most recent verified transactions and will receive a predetermined amount of ETH as a prize.

The process happens to be in 30 seconds, as compared to Bitcoin’s approximately 10-minute cadence. As the traffic on the network increases, the limitations of proof of work have caused bottlenecks during which the fees spike unpredictably.

What is a dApp?

The introduction of Bitcoin nearly a decade ago ushered in a new era of massive blockchain protocol development.some new exciting functionalities to blockchain protocols, developers have been trying to refine them and create various use cases. Let’s have a look at a wide range of applications of blockchain in finance, gaming, Web browsing, and also collecting art.

Let’s take a look at this: Have you ever thought about it?How is it possible for blockchain implementation in so many different use cases? The answer directly leads you to the dApp blockchain relationship. dApps are similar to traditional software programmes in that they run on blockchain networks rather than central servers.As compared to the 25 dApps in 2015, there are more than 3600 dApps scanning different areas like games, social media platforms, decentralised finance services, and many more. Decentralized apps are responsible annually for almost $1.8 trillion worth of user transactions. Hence, we can say that dApps are clearly a significant topic in the world of blockchain.

Challenges with Ethereum (Scalability Challenges)

Bitcoin is the major reason for Ethereum’s scalability. The issue is mostly in the network protocol that each of the nodes in the network has to go through the process transaction.

Buterin first used the scalability trilemma; now this concept in blockchain, within its capacity, addresses its scalability, security, and decentralization without any of them getting compromised. The trilemma claims that it is impossible to achieve all three properties in a blockchain system:

Decentralization: This is the primary foundation upon which Bitcoin and blockchain were built.

It enables permits and censorship-resistance and allows anyone to participate in a decentralized ecosystem without an intermediary and central authority.

Security: This one refers to the immutability and integrity of the public ledger and the accountability to resist 51% attacks, or DDoS-type network attacks.

Scalability: This one concerns the ability to handle a growing number of blockchain transactions in the network. For the Ethereum blockchain to be the world computer as investors envisioned, it has to match the throughput of many centralised systems, such as Visa, Amazon, or Mastercard.

The major challenge of scalability is to find a way to grab all three layers. Bitcoin and Etherum’s design choices favour decentralisation and security, resulting in a decrease in scalability.

Blockchain v3.0

What exactly is Cosmos?

Focusing on two key aspects: interoperability and customisation, Cosmos sets itself apart from the rest of the crypto blockchains. Its end goal is to evolve an optimised ecosystem that is a decentralised “network of networks”. Now you must be thinking, what does that mean? Cosmos makes independent blockchains named “Zones” which connect to the main blockchain named “Cosmos Hub.” The hub is the one that focuses on monitoring the state of each and every zone and maintaining a record of the same. Now the zone needs to do the same for the hub. The Cosmos Hub is powered by a proof-of-stake consensus mechanism and also uses ATOM as its cryptocurrency native. Which means that validators of transactions across the network are decided based on the amount of ATOM they pledge to the Cosmos network operation. This process of dedicating currency to the operation of the blockchain is known as “staking.”

What is a polkadot?

Polkadot (DOT) is a blockchain with a core network—this is a chain that relays where all other blockchains communicate and connect with each other. This relay chain by hosting blockchains also handles their transactions and security, letting in cross-chain interoperability, i.e., communication between different blockchains for seamless functioning. Sending DOT tokens across blockchains, Polkadot also allows them to communicate and exchange actual data.Hence, interoperability is the big challenge that Polkadot tries to resolve. Otherwise, for separate entities that work independently, blockchain should become a part of the same ecosystem where all information and money can be exchanged securely in a scalable manner.

Having said that, private blockchains have somewhat different types of technical protocols than public blockchains. Polkasoalso resolves the gap between communication within these two distinct types of networks. When we talk about how polkadot’s flexible and adaptive network architecture facilitates creating new technology on top, enabling developers to take advantage of the interoperability, scalability, and security offered. Hence, polkadot’s networks also present a particular breakthrough for developers and entrepreneurs who want to build a new blockchain from scratch.

Blockchain technology has made a lot of progress since its invention. Understanding its potential already goes beyond the paradigm of a central system for anything and everything. Because of its decentralised nature, this technology can easily be in a position to resist malicious attacks and can execute transactions instantly. The latest version is 4.0, which leads us towards faster processing and sustainable technology in immutability terms, and also anonymity, secure transactions, privacy, and cost-efficiency. But having said that, there is still scope for a more robust and safer blockchain.

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