In today’s article let’s recall the incredible technology evolution that helped to make so many innovative projects into reality.
Pre-Bitcoin Blockchain
Not many people know that there were numerous implementations of digital currencies based on cryptography algorithms years and even decades before Bitcoin. Some of them were just academic examples but some were actually practically implemented for broad use and even adopted on a city-wide scale. For different reasons they all failed, sooner or later.
Hal Finney’s concept of reusable “proof of work” deserves the right to be called the closest implementation to what Bitcoin’s blockchain is. Combined with other cryptocurrency ideas, it used a puzzle solving algorithm to confirm transactions. There was a critical difference though – it was centralized.
Bitcoin Blokchain
Concepts of Bitcoin blockchain were described in 2008 by anonymous person who called himself Satoshi Nakomoto in his widely known whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System”. In 2009 the implementation were made by a group of cryptography enthusiasts. It became the first decentralized digital ledger which did not require trusted authority to function. Shortly – Bitcoin.
Bitcoin blockchain made it possible to solve the problem of transactions record keeping effectively enough to become the first world known cryptocurrency.
Functioning as a great store of value and not-so-bad payment method, Bitcoin blockchain, nonetheless, lacks several mandatory properties to be used for mass payments or for business integration. Couple fundamental problems are very low TPS (transactions per second) and extremely cost ineffective prove-of-work consensus method.
Ethereum Blockchain
Ethereum was initially described in a white paper by Vitalik Buterin, in late 2013 with a goal of solving some of Bitcoin’s problems and emphasis on building distributed applications. The system went live on July 2015 and quickly gathered dedicated community around it. Before this, in 2014, Ethereum raised 3700 BTC via one of the first ICO in history.
They key difference of Ethereum blockchain is smart-contracts – automatically executed distributed and verifiable business logic. Ethereum represents the first generation of blockchains that can actually be cost-effectively adopted by enterprises worldwide, though private Ethereum fork is often used instead of public version.
Being consistently developed and improved, Ethereum blockchain may slowly evolve to stay in the top group of competitors. Nevertheless, it still has unsolved problems like low TPS and high (relatively) transaction costs due to proof-of-work consensus.
Next Generation
Next gen blockchains should really bring cryptocurrecnies to masses and decentralization to businesses. Many so called “blockchains 3.0” are under development and they are expected to solve the following problems in one form or another:
- Implement fast cost-effective consensus to drastically increase TPS and lower transaction costs.
- Implement side chains to allow businesses to use private data and to fence off that huge information dumps of current blockchains.
- Provide out-of-the-box solution for businesses to set up private blockchain or side chain without hiring team of coders.
When the problems above are solved, the most exciting times will come as blockchain technology will be unstoppable on its way to conquering the world.
About BCShop.io
BCShop.io project aims to reinvent the way digital commerce and payments work today. Focusing on digital goods and services area project’s goal is to enhance it with fast-growing opportunities blockchain technologies and cryptocurrencies have to offer. In January 2018 BCShop.io hit hard cap of 2000 ETH at its token sale.
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