Evolution of blockchain technology
2nd generation – Ethereum
The blockchain that has been accepted as a generation 2 is Ethereum. This is because Ethereum was the first network to introduce the use of smart contracts in the blockchain.
The idea of a smart contract is an agreement that can be executed automatically if the conditions are met.
Smart Contract is similar to programming on the blockchain, but more transparent as anyone can examine the work process. This is why blockchain can do more than just transfer money.
Once they have a smart contract, developers can create applications on the blockchain, leading to new use cases such as the decentralized exchange used in Uniswap or the decentralized lending service used in AAVE.
In addition, for NFT, a resource that has a unique feature that cannot be confused, when people hear this word, they probably think of digital art like Bored Ape Yacht club or CryptoPucks. However, NFTs can be used in various specific assets such as real estate, collectibles, vehicles or even game items.
With smart contracts and NFTs, the blockchain has been expanded beyond just transferring money like in the Bitcoin era. However, a problem still exists in this generation, such as scalability, which is an expansion of the network to be suitable for a large number of users. Therefore, such a problem leads to the development of new blockchain generation.
3rd generation
A major weakness of both Bitcoin and Ethereum is the problem of scalability, or expanding the network to handle higher transaction volumes, which causes a bottleneck that leads to transaction delays and higher gas fees.
To fix this problem, third-generation blockchains have been developed such as Cardano, Avalanche, TRON, etc. Each network uses a unique set of technologies, such as sharding or sidechain. Some networks have been overhauled by switching from blockchain to a DAG (Directed Acyclic Graph) data structure.
The Ethereum side didn’t just sit still, as Ethereum 2.0 is being developed to improve speed, smart contract features, along with other features, which were partially completed in the September 2022 update of The Merge. This is an update that changed the consensus algorithm from Proof-of-Work to Proof-of-Stake. However, the date of the next update has not been announced, so we will have to keep an eye on it.
Nevertheless, the majority of third-generation blockchains are still very new and are not as well known or used as Bitcoin and Ethereum. Thus, it remains to be seen whether these networks will prove capable of handling massive transactions efficiently in the future.
4th generation
For now, it is still uncertain how fourth-generation blockchains will evolve since third-generation blockchains are still relatively new, and most are trying to fix the problems that arose in the second generation.
Some believe that the fourth generation will integrate blockchain with AI (artificial intelligence) technology, while others believe it will focus on mass adoption, making blockchain more accessible to the general public, educational institutions or small businesses.
However, it is highly likely that the fourth generation blockchain may come sooner than expected due to the leap forward in technological development today. In particular, the emergence of the metaverse has caused all industries to turn their attention to key infrastructure such as blockchain technology.
Conclusion
Blockchain is constantly evolving like any other technology. Currently, blockchain can be divided into 3 generations:
First generation: solves the problem of making transactions through an intermediary (Bitcoin)
Second generation: smart contracts were added to support new use cases (Ethereum)
Third generation: solves scalability problems and enables massive transactions in blockchain (Cardano, Avalanche, TRON)
Fourth generation: expected to be about integrating AI technologies or perhaps focusing on mass adoption that will allow blockchain to better infiltrate everyday life.
Reference
What will the fourth generation Blockchain look like? – HackerNoon,
The Blockchain Generations – Ledger,
What are the Different Blockchain Scalability Solutions – LeewayHertz
