It is paradoxical, yet true, to say, that the more we know, the more ignorant we become in the absolute sense, for it is only through enlightenment that we become conscious of our limitations. Precisely one of the most gratifying results of intellectual evolution is the continuous opening up of new and greater prospects. — Nikola Tesla.
Perhaps, there’s no better way to summarize the overall state of development of the fairly nascent technology that is blockchain, than with the words of the oft-overlooked innovator Nikola Tesla. As we discussed last time, Blockchain’s first foray into the mainstream was with the introduction of Satoshi Nakamoto’s Bitcoin whitepaper and its intended purpose was to enable users to transact directly with each other without the need for a trusted third party.
The original use of blockchain-based technology to transfer cryptocurrency peer-to-peer already demonstrates its tremendous potential, but as Tesla puts it, “the more we know, the more ignorant we become in the absolute sense.”
Blockchain 2.0: Unchained
The concept of Blockchain 2.0, or the next step of the distributed-ledger evolution, is best represented by Ethereum — a platform which manages to extend the foundation set forth by Bitcoin beyond just cryptocurrency.
Vitalik Buterin, one of Ethereum’s co-founders and a prolific speaker and advocate for crypto, proposed the platform for the developer community to build distributed applications (dApps), referring to this concept of trust beyond currency as “smart contracts.” He also took it a step further, proposing the so-called Decentralized Autonomous Organizations (DAOs).
Not long after it was introduced, Ethereum succeeded in gathering a very strong community of developers and further enterprise support through the Enterprise Ethereum Alliance (EEA). Ethereum’s ecosystem quickly began to operate at full force, still remaining the most widely used public network available. Up until this day, Ethereum remains the network which processes the largest number of daily transactions.
The Smart Contract
It’s probably one of the most commonly used terms in the blockchain field, and you’ve certainly heard it used here and there. Smart contracts represent a covenant between two parties, written and secured using a programming language, which is automatically executed as soon as the specified triggers are pulled.
An easy, real-world example to help explain this is the vending machine. Like a smart contract, it operates based on a fixed, pre-determined set of rules — you put in your money, you make your choice, and you get the product.
With Ethereum, people came to realize that the blockchain technology first introduced by Bitcoin could be so much more than just a means of transferring money from one party to another without the confirmation of an intermediary.
The concept of decentralization started rapidly gaining speed and soon after that, we saw the first use cases in fields as varied as record-keeping, legal, financial, and logistics. All of these cases relied on the new smart contract platform.
Another simple example of the need for blockchain technology to improve upon existing situations was VISA’s latest crash. One of the world’s largest financial services companies handling the money of millions of people across the world, VISA’s network crashed on June 2, 2018, leaving countless people without access to their money. This event was caused by a simple “system failure.”
In a centralized system like VISA and pretty much every other payment platform currently available, this is catastrophic, as we saw. However, happenings of the kind are theoretically impossible or, at the very least, incredibly unlikely to take place in a decentralized, blockchain based ecosystem.
Not Without Its Issues
Despite representing a step forward in Blockchain’s evolution, Ethereum and other similar networks face their own roadblocks to unlocking the technology’s true potential. One of the most pressing problems is failure to scale.
Ethereum’s blockchain can currently carry out only about 20 transactions per second, which is a far cry from VISA’s network which can handle tens of thousands. Because the processing time is so slow, it means that Ethereum is not really usable as a practical everyday payment system. To put it in real terms, if you tried to pay for your morning espresso with Bitcoin or ETH, it would be stone cold by the time the transaction finalized.
However, it should be stressed that this is still a young technology which, despite its youth, is already displaying its tremendous potential, as can be seen from projects that are constantly building on it and improving it vastly.
The Next Generation
Blockchain 2.0 represented a huge evolution over its first generation. 2.0 truly unlocked and unchained (pun intended) blockchain, and helped the world to see the vast potential of the technology. But there was still work to be done, and it would take yet another generation before we could see that potential turned into practical, everyday solutions to problems, from everyday finances to questions of global development.
AERUM is part of this 3rd generation, building a fast, scaleable blockchain infrastructure to empower dApps and P2P transfers. You can read more about the AERUM project on its official website.