Bitcoin, Ethereum and Blockchain 3.0, explained to my dog
In my article “The blockchain, explained to my dog” we saw the fundamentals of this technology and we went so far as to associate it with the following definition.
The blockchain is nothing more than a distributed transaction log. Within it, transactions are grouped into blocks that are in turn linked to each other to form a chain.
Let’s now see, again in earth-to-ground terms, the evolution that this technology has had over the years. As for the first part, here too we will proceed in steps starting from the beginning.
The Blockchain 1.0 — Bitcoin
The year 2008 runs by and on the web appears a paper with the title “Bitcoin: A Peer-to-Peer Electronic Cash System”. Inside it there is the definition of what will be the best known blockchain from that moment until now: “a peer-to-peer electronic money system”. But what does it mean exactly?
Very simple actually. Within this system the blockchain is used to record the monetary exchanges between the various users who use it. In particular, they have the possibility to exchange among themselves a new currency, called Bitcoin. These exchanges are public, irreversible and immutable, that is, they have the characteristics that the distributed and immutable register of any blockchain allows to obtain.
You’re probably wondering now “That’s all?!”. Well…yes. Bitcoin only does this: it allows you to exchange a virtual currency. But then how is it possible that it has been so successful? It was simply the first blockchain to be recognized for its value. In particular, thanks to the property that allows users to “hide” behind an alphanumeric address and the feature of not being controllable, Bitcoin was immediately adopted by all those people who wanted to be able to send and receive money to and from those parts of the world strictly controlled by the state. Moreover, being very difficult to obtain new Bitcoins because of the technical functioning on which they are based, by the law of supply and demand, if many people want a limited good, its value can only increase. It was precisely this that caused the price of a single Bitcoin to rise to $20,000 in 2017: the sudden desire of everyone to own at least a part of it. After that desire, its value could only go down again (currently it is around $ 9,500).
After this little digression, another question that comes naturally to mind is probably the following: “Is it possible to use the blockchain for other things as well as for the exchange of money?”
Well, the answer is very simple: yes.
Ethereum and Blockchain 2.0
After 5 years from the birth of Bitcoin, in 2013 many companies had already started to make ad-hoc blockchain to meet the various demands of their customers. To do this, what was done was to create forks (modified copies) of Bitcoin, which implemented the ability to perform specific transactions. And so were born the so-called “Swiss Army Knife” blockchain, i.e. blockchain able to support about twenty customized transactions to satisfy the customers of the moment. But what if the customer suddenly found another system that could support 21 transactions? Well, he moved on to the latter. A blockchain, in fact, can no longer be modified once created and therefore there is no way to add types of transactions supported “in progress”. If a different need arose, the only way to meet it was to create a new blockchain or move to another system that already implemented that possibility.
This is a bit like what happened before the invention of computers: machines were created to solve specific problems and if it was necessary to solve other problems it was necessary to create new machines. The advent of computers has completely revolutionized this system. Thanks to the possibility of installing several specific programs for each occasion within the same machine, now we would never dream of completely changing our PC in case we wanted to add a feature. What we would do is simply install a new program and you’re done.
The idea of Ethereum is exactly the same, but applied to the technology of the blockchain.
Ethereum allows you to create so-called smart contracts, or programs that can run within the blockchain in order to allow the addition of new features to the blockchain of Ethereum itself.
In this way the blockchain no longer remains immutable once created, but opens to the possibility of implementing new functions over time. In essence, thanks to this possibility, the blockchain goes from being a decentralized and immutable registry to being a decentralized computer whose operations are public and executed in an immutable order.
Cosmos.network and the internet of blockchains
If the birth of Ethereum is comparable to the invention of computers but on a decentralized level, the next step that is natural is the birth of a “decentralized internet”. Although individually powerful, computers are in fact much more powerful when connected together. Just as it applies to them, it is logical to think that it also applies to blockchains.
This is the thought that motivated the birth of projects like Cosmos.network.
Through Cosmos.network it will be possible to create the internet of blockchains, allowing several different blockchains to connect with each other.
What does this mean for normal users? A practical example could be the use of various cryptocurrencies within the blockchain that natively do not support them.
For example, suppose you own 100 Bitcoins. At the moment you can’t do much other than exchange them with other users. If now, however, a new blockchain was created that would allow you to buy electricity with any token (as it is connected to all the other blockchain), here is that your Bitcoins could suddenly be useful to you to pay the bills of your home. A nice advantage, isn’t it?!
In reality, the applications of this type of technology are very large and over time they will be better defined. For now this system remains in a very premature phase (the first version should be released by the end of 2019) and it is not yet clear what are all the opportunities it could unlock. Surely, as it was for the internet and computers, even for the blockchain the ability to connect them together will lead to change in the technological world as we know it now.
Conclusion
Within this article we have seen in a very summarizing way what were the three steps that led from the birth of the blockchain to the present day and what could be the very near future of this technology. I hope I’ve made you understand, even if only very superficially, what could be expected in the coming years (or decades) and what could be the effects that this new technology such as the blockchain could have on our lives.
As always, if something is not clear or you think I can do better by adding parts to this article or its first part I invite you to write to me on Twitter. In any case, thank you for reading this and I hope to have shed some light on this topic still too dark for many. If you liked this article, share it with your friends so that they too can see the light at the end of the tunnel of this technology still unknown to many.
