The Evolution of Blockchain: From Bitcoin to Smart Contracts

Blockchain technology has been making headline news over the past few years. Along with closely connected cryptocurrencies, these digital platforms promise to revolutionise a wide range of different industries, from financial services to ecommerce and from online gambling to video games.

Blockchain has come a long way since its early days. Today, it’s everywhere, with supporters eagerly awaiting the latest development and keeping an eye on the Ethereum and Internet Computer Token Price. Let’s take a look back at the history of blockchain and examine how it has evolved over the years before discussing where it could be heading in the future.

The First Blockchain Platform

The first blockchain was launched in 2009 as the supporting platform for the Bitcoin cryptocurrency. The news was met with excitement among tech circles but made few waves in the wider consciousness. The new technology was touted as the next step for the financial world and was released along with a paper entitled ‘Bitcoin: A Peer-to-Peer Electronic Cash System’.

The key aspect of the Bitcoin blockchain is the fact that it is decentralised. This is what makes it so significant and why so many people see it as the future of the financial industry. Rather than Bitcoin transactions being verified by an overseeing regulatory body, they are instead validated by other users of the blockchain themselves.

They do so through something called a consensus mechanism, where users solve maths puzzles to validate transactions, which are recorded as blocks and added to a long chain of all previous transactions.

Essentially, the blockchain serves as a ledger where all Bitcoin transactions are stored. Transactions are secured cryptographically, while all previous transactions can be viewed, making the technology perfect for tackling financial fraud.

New Consensus Mechanisms

The Bitcoin consensus mechanism is called proof-of-work (POW). While it was indeed a revelation, it does come with some downsides, namely the energy and computational power required to solve the puzzles required when validating blocks.

Bitcoin is the most valuable and most popular cryptocurrency, but it is closely followed by Ethereum. Launched in 2015, the Ethereum blockchain initially used the same POW consensus mechanism as Bitcoin. However, in September 2022, the blockchain was updated in a process called the Ethereum Merge, and the consensus mechanism was upgraded to something called proof-of-stake (POS).

In the POS system, users stake crypto into the blockchain as collateral. Block validators are then chosen from this pool of users and given the responsibility of validating new blocks in the chain. A POS consensus mechanism requires far less power than a POW, and is a more sustainable and environmentally sound approach, a criticism that has been often levied at the Bitcoin blockchain.

We’re also seeing a new type of consensus mechanism, called proof-of-contribution (POC), gaining traction. In a POC system, users, known as nodes, are analysed by an algorithm, and rated according to what they have contributed to the blockchain. The nodes that receive the highest ratings are chosen as validators for the next block in the chain.

Like POS, POC requires less computational might and is a more simplified and streamlined process of block validation.

Modern Features

The very first blockchain platforms served merely as digital ledgers where crypto transactions could be recorded and stored. Today, they offer so much more. The technology has advanced rapidly and opened up a world of new possibilities for modern blockchain networks.

Today’s blockchain platforms can be used to build digital tools, applications, and even websites. They offer a high degree of creative control with open-source capabilities, democratising the software development field and creating a more collaborative and cooperative digital landscape.

Blockchain tech is integral in the shift towards Web 3, where decentralisation will be at the forefront and power will move from social media giants and corporations to the users of the internet themselves.

One particularly useful tool we’ve seen arise from the power of today’s blockchain platform is the smart contract. Smart contracts are contracts written in code and hosted on the blockchain, rather than being written on paper. The key to smart contracts is that they are self-executing, which means all involved parties are guaranteed to withhold their end of the deal.

Think of smart contracts like a vending machine. Once you put money in, it sets off an immutable sequence of events which ends with you getting what you paid for. Smart contracts work in the same way, and they will prove instrumental as businesses shift ever further into the digital space.

What Will Happen in the Future

Blockchain technology is still in its infancy, but advancements have come at a rapid rate. As we head into the future, we can expect to see further integration with other emerging technologies such as artificial intelligence and machine learning. This combination will offer unprecedented levels of automation and convenience and will take blockchain technology to the next level.

Conclusion

From the first Bitcoin blockchain to the incredibly sophisticated Ethereum blockchain network of today, the technology has come on in leaps and bounds since its 2009 launch. Blockchain has already changed so much for the better and looks set to continue improving and offering greater benefits to businesses and industries worldwide.