As we all know, the blockchain is constantly evolving and now has several generations. What is blockchain, why is it called decentralized, and how do fresh blocks appear? Let’s see what happens!
The “blocks” of data in a blockchain form a continuous and consecutive chain. Computers around the world have a copy of it saved on them. There is no one point of control in this system from which all transactions are carried out or the process is regulated. Decentralization is a term used to describe this type of structure.
A hash code is used to encrypt data in each block. When a new block is added to the chain, it is linked to the preceding one by a mathematically produced string of characters called the hash. The hash of a rectified block will be different from the hash of the next following block, making the chain invalid and denying the validity of any further blocks in the chain. Blockchain technology automatically verifies the legitimacy of the data in previous and new blocks when they are added to the chain. Consequently, the information in the chain cannot be altered.
Miners help add new blocks to the game. First and second-generation blockchains employ the POW algorithm, whereas third-generation blockchains use the POS algorithm. New blocks are added because these machines solve challenging computational problems. The time it takes to solve an issue depends on the computer’s processing power. The owners of the miners earn a reward in the form of bitcoin and transaction fees for each solved block.
The Blockchain system is transparent, safe, and independent because it stores copies of the chain on multiple computers worldwide, connects blocks with a unique code, and controls alterations. As a result, it has gained traction in various non-financial industries.
Blockchain technology is the foundation of all cryptocurrencies. Transparency, definitiveness (i.e., the inability to be falsified or duplicated), and a cap on the maximum amount created are all made feasible by blockchain. This rule has a few exceptions: fake currencies like Ripple (XRP) and OneCoin (ONE), which can simply be created by their founders, unlike fiat currency.
Generations of blockchain:
We are currently in the third generation of the blockchain, a relatively new phenomenon. So, let’s start with the first two and see what we find out!
It is important to note that the PoW algorithm, a particular technique used to verify and confirm transactions, is employed in both the first and second generations of cryptocurrency.
- The first generation
Bitcoin perfectly represents the first generation of cryptocurrencies. In 2009, it was the first cryptocurrency to be introduced to the public. But, it hasn’t altered all that much since its inception in the financial sector.
Individuals can exchange value without needing a third-party governance mechanism like a bank or a financial institution to verify the transaction. Compared to traditional banking institutions, Bitcoin provides instantaneous transactions with cheaper fees. In addition, many people who invest in Bitcoin and then sell it for a profit in a few months have found it to be a tremendous source of income. There are so many platforms in the bitcoin industry that perform trading, but only a few yield good results.One of them is quatum AI.It helps the investors in exceptional ways. Quantum AI is trusted by many traders these days because of the benefits it offers. To get more information about the platform, visit here.
· The second generation
Paying using bitcoin for a simple task like grocery shopping is risky since you never know what will happen once you transmit the bitcoin. Creating a digital contract may be necessary to complete this transaction. Second-generation digital currency is all about this.
Most people are familiar with Ethereum, one of the second generation’s most well-known cryptocurrencies. It’s a lot more intelligent than Bitcoin and accomplishes many more things at once. It enables you to construct smart contracts and decentralized applications on top of them using a programming language of your choice.
Some criteria and circumstances must be followed for a specific action. Because of these smart contracts, when you pay a person to purchase your groceries, you can be guaranteed that the groceries will be brought to your doorstep.
From complex financial transactions to legal conflicts, smart contracts can be used in various ways. The central authority, on the other hand, is still a problem.
The governance arrangements in place for both Bitcoin and Ethereum are deplorable. You can only make three transactions with Bitcoin and 12 transactions per second with Ether. There is no way to make more transactions by enlarging the block size.
· Third generation
At this time, no specific cryptocurrency belongs to this generation. While many of those currently on the market attempt to break into the elite ranks, some succeed. Cardano and a few other initiatives attempt to develop a governance mechanism that neither Bitcoin nor Ethereum has. This is how the general public makes decisions on the cryptocurrency’s direction. This should be a long-term governance structure that is scalable and allows us to interface with other blockchains and other cryptocurrencies.
- The Fourth Generation
Does this generation exist? Probably not. However, some believe that the fourth generation will emerge due to the third generation meets AI. A new generation of blockchains will emerge if efforts like these and others prove transformative. It’s too early to conclude DeepBrain Chain and SingularityNet, two promising projects. Only time will tell if these initiatives have any lasting impact.
The financial system, whether local or worldwide, can be controlled in a distributed manner using blockchain technology, which eliminates the need for middlemen. This is one of the key reasons why the popularity of cryptocurrencies has skyrocketed. Many people believe that cryptocurrencies are indestructible and unstoppable because of the distributed nature of the blockchain and the millions of users all over the world who serve as “accountants” and validators.
It’s fairly accurate to declare that the generations have major distinctions, and possibly it’s not terrible to know how to discern them. However, still, the essential question is if these ideas are good enough to remove the constraints of intermediate in all or any aspects of our lives or not. Technology affects our lives, and let’s hope that blockchain will keep on improving, but human society will be improving respectively as a result.