Since January 2009, the date of Bitcoin’s launch, to the present day, blockchain technology has certainly grown and improved. What was once considered almost as a transitory trend, is now nearly ready to revolutionise numerous industries, to the point that society will probably recognise a pre- and post-blockchain historical period.
Just as the famous game Pong has started the entire video game industry, stimulating the technological advances of the industry, so can the blockchain, as it is changing into something even more relevant than what it was originally born for.
The technology underlying bitcoin
At first, the blockchain was simply the technology behind Bitcoin. It was already a small revolution in itself as it introduced:
- Decentralisation of currency and financial transactions;
- Decentralisation of data and information;
- Elimination of the need for trusted third parties to verify transactions;
- Resistance to censorship, immutability and impossibility of corruption;
- Introduction of the Proof of Work consensus algorithm, which is what makes the blockchain unique in that it uses the computational processing power through the use of nodes connected to the network. These nodes verify all transactions and guarantee the functioning of the entire network.
Some experts later found that the blockchain could have different use cases than just bitcoin.
In addition, Bitcoin’s blockchain was not able to fully meet certain expectations at the time, such as that of being able to create smart contracts.
The birth of Ethereum
That’s where Vitalik Buterin‘s figure comes in. A Russian-Canadian programmer, he noticed that Bitcoin’s blockchain was limited and could not scale enough. Vitalik decided to do it all by himself. In 2014, he put together the Ethereum project.
Ethereum has been an important evolutionary step in blockchain technology, which has introduced some expansions and improvements.
Ethereum and other similar projects such as NEO, EOS, TRON, are known as distributed virtual machines as they can run decentralised applications on their blockchains.
Ethereum also lowers average transaction costs, making it easier to make micro-payments. With the possibility of running applications on the blockchain, the concepts of tokenised digital resources and non-fungible tokens were introduced.
These changes have allowed the blockchain to become a more commercial platform through the concept of a distributed virtual machine.
Vitalik has also created decentralised organisations (DAOs), i.e. decentralised companies based entirely on smart contracts.
The problem of scalability
- Bitcoin can handle about 7 transactions per second;
- Ethereum can handle 15 to 20 transactions per second;
- Litecoin can handle over 50 transactions per second;
- Ripple can handle about 1500 transactions per second.
Visa can support up to 24,000 transactions per second. These numbers are much more significant and, to date, difficult to reach by any reliable blockchain solution.
Sidechains offer another solution. Through these, it is possible to transfer a tokenised asset to a secondary network, so as to keep the main blockchain free, allowing it to manage more transactions.
Today the blockchain is probably very similar to what Atari was in the 80s. We are still in the early stages, but it may not be long before it reaches many aspects of our daily lives.
The adoption and knowledge of this technology are still in its infancy but fortunately, the situation is improving year by year.
Furthermore, the RGB project was born during this past year, and it aims at the possibility to issue generic assets on the Bitcoin blockchain.