Coming to the forefront after the launch of the premier digital currency in 2008, it has transformed significantly

The major rollout of blockchain technology started off with the publication of a whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” by Satoshi Nakamoto. This eventually culminated in the launch of the Bitcoin network in Jan. 2009. Although cryptos get all the media hype and attention, it is the underlying blockchain tech that powers them all. Interestingly, many people synonymize cryptocurrencies with blockchain & vice versa — which is obviously not the case.

Ever since this major development, blockchain tech has continued to evolve in various ways — providing various real-world use cases. One of the most significant ones was the introduction of smart contracts. It is basically a computer program that automatically executes the terms of a contract when certain conditions are met. This has opened up new possibilities for blockchain technology, such as the creation of decentralized applications (dApps) and the automation of financial transactions.

Then there is the case of consensus mechanisms used by different crypto projects. The most well-known is the one used by Bitcoin — called the proof-of-work (PoW). This consensus mechanism requires miners to solve complex mathematical problems in order to add new blocks to the blockchain. However, as the number of transactions on the blockchain has increased, the PoW consensus mechanism has become less efficient and more energy-intensive.

To address this issue, new consensus mechanisms such as proof-of-stake (PoS) and delegated proof-of-stake (DPoS) have been introduced. These mechanisms are designed to be more energy-efficient and to support a larger number of transactions. Ethereum is in the final stages of completing the transition to ETH 2.0 —a move to the PoS mechanism, which practically ends mining and cuts energy use by 99.95%. Meanwhile, other scaling solutions have launched to augment the Layer 1 networks like Ethereum, TRON & EOS.

Blockchain technology has also been adopted by various industries such as supply chain, finance, healthcare & many more. The financial sector has been one of the most active adopters of blockchain technology. Banks, payment processors & other financial institutions have been experimenting with blockchain technology to improve the efficiency and security of financial transactions. The adoption has been pretty widespread — Of the top 100 public companies, 77 are using blockchain technology.

  Today’s featured infographic by Blockdata (below) highlights the various stages of Blockchain evolution. Let’s break it down for you.

Blockchain 1.0 refers to the original implementation of blockchain technology as used by Bitcoin. Blockchain 1.0 is primarily a digital currency platform, with its main use case being the transfer of value. The key feature of Blockchain 1.0 is the use of a decentralized, digital ledger that is maintained by a network of computers. The consensus mechanism used by Blockchain 1.0 is proof-of-work (PoW), which requires miners to solve complex mathematical problems in order to add new blocks to the blockchain.

Blockchain 2.0, also known as smart contract platforms, builds upon the foundation of Blockchain 1.0 by introducing the concept of smart contracts. Smart contracts are computer programs that automatically execute the terms of a contract when certain conditions are met. This allows for the creation of decentralized applications (dApps) that can automate financial transactions and other processes. Ethereum is the most well-known example of a Blockchain 2.0 platform.

Blockchain 3.0, also known as enterprise blockchain, builds on the features of Blockchain 1.0 and 2.0 to support enterprise use cases. The main focus of Blockchain 3.0 is to provide a scalable, secure & private platform for enterprise use cases, such as supply chain management, digital identity, and cross-border payments. Blockchain 3.0 platforms also aim to provide enhanced privacy features and improved scalability through the use of technologies like sharding, off-chain transactions, and zero-knowledge proof. Examples of Blockchain 3.0 platforms include Algorand, Solana and Chainlink.

Please note that these categories are not mutually exclusive, and some platforms may have features of multiple generations. Also, the evolution of blockchain technology is ongoing, and there is continued research and development in the field, so the line between these generations may not be as well-defined.

As the latest iteration of Blockchain (3.0) continues to evolve rapidly, experts are already talking about Blockchain 4.0. Although it is not entirely clear what specific features or advancements it would include, some experts in the field have proposed this next-gen version of blockchain technology could include the following features:

• Interoperability: The ability for different blockchains to interact with each other and exchange data and assets. This would allow for greater flexibility and scalability in the blockchain ecosystem.
• Advanced privacy: The development of new privacy-enhancing technologies such as zero-knowledge proof and homomorphic encryption, which would allow for secure, private transactions on the blockchain.
• Artificial Intelligence (AI) integration: The integration of AI and machine learning algorithms into blockchain technology to enable self-executing smart contracts and autonomous decision-making.
• Quantum computing compatibility: The integration of quantum computing capabilities into blockchain technology, which would greatly increase the speed and security of transactions.
• Decentralized Finance (DeFi) and Non-Fungible Token (NFT) integration: The integration of DeFi and NFT into blockchain technology to enable new use cases such as decentralized lending, borrowing, and trading of digital assets.

   

   Originally Published on Medium

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