Just a few years ago, we didn't know what Bitcoin, cryptocurrencies, and blockchain were. But the world is changing, and it's changing so fast that not all of us can keep up with and understand these changes. Still, most people can't realize how quickly the global financial system is transforming. And tomorrow, in the new world, many of us may not find a place.
In 2008, an anonymous group of developers or one person hiding under the pseudonym Satoshi Nakamoto published a document called the white paper, which described the technology and principles of Bitcoin. The same year, the domain bitcoin.org was registered and the first articles were published. In 2009, followers and Bitcoin evangelists appeared. People who believed in the core idea and technology of Bitcoin - blockchain.
At that time, Bitcoin was seen as a completely secure and anonymous currency of the future, which could be used without intermediaries such as banks and without attracting the attention of regulatory authorities. But the main feature of Bitcoin is that it belongs to no one. In those years, Bitcoin was developed by a small group of people who believed in its prospects and technology. Since 2015, Bitcoin has started to reach the masses, and since 2017 there has been a quantum leap in the popularity and growth not only of Bitcoin, but also of other cryptocurrencies, so-called altcoins.
Bitcoin technology was already outdated in 2014, which, with the growth of popularity, was reflected in the low throughput of the network. Already in December 2017, if you send Bitcoin to another address, the transaction can be confirmed for a whole day or even more. Do we owe Bitcoin for the fact that blockchain technology has begun its multifaceted development and penetration into our everyday life?
n 2015, a multi-functional blockchain called Ethereum was launched, bringing more modern blockchain technologies and the concept of smart contracts. Ethereum is a decentralized platform for creating and executing smart contracts. It uses blockchain technology to provide a decentralized infrastructure that allows applications and other services to work without intermediaries. This allows users to conduct transactions without having to trust other parties. The Ethereum blockchain also provides a platform for developing decentralized applications (DApps). Ethereum was already a more technically advanced blockchain, which can not only be used for cryptocurrency transactions, but also for creating their own cryptocurrency for any third-party projects using smart contracts.
Here is the simplest example of using smart contracts on the blockchain. When selling a house, the buyer transfers the necessary amount in the equivalent of cryptocurrency to the smart contract address. Then the smart contract checks for updates in the state real estate registry every day and as soon as there is a record that your house is registered to the buyer, the smart contract will transfer this amount to your account. If such a record does not appear within a month, the smart contract will return the cryptocurrency to the buyer. This is the simplest example that shows that there is a great future behind the blockchain. This technology will practically eliminate fraud and deception, both from ordinary citizens and from the authorities.
The transition of many government services, private companies and more to the blockchain not only provides transparency but also guarantees protection. Information in the blockchain is practically impossible to change without a trace. For example, someone decided to appropriate your property, say, a plot of land, for this, with the help of bribes and corruption schemes in the registry of real estate and land of your state, your data was changed to a new owner. And your data was deleted without a trace, as if this land had never been yours. In this case, you have almost no chance to prove the opposite. By the time you start legal proceedings and so on, your land will already have been resold several times. And in the end, all your efforts will be in vain.
If this real estate registry is on blockchain technology, where it is impossible to delete or modify the information without leaving a trace, then such an option of assigning ownership will be excluded. If a record of a new owner of the land is entered into the blockchain registry, all the old records remain. There are dozens, even hundreds of such examples. Blockchain is necessary in most daily processes, from taxi services to state companies. Ethereum continues to remain one of the most popular platforms for creating smart contracts and decentralized applications. But there are also new, more advanced blockchains with similar functionality: EOS, NEO, Cardano, IOTA, Qtum, Lisk, Stratis and others.
The development of decentralized finance is also a growing trend. There have been many forks of the Bitcoin blockchain in this area, such as Litecoin (LTC), Dash (DASH), Ripple (XRP), Monero (XMR), Zcash (ZEC), Dogecoin (DOGE), Bitcoin Cash (BCH), Bitcoin Gold (BTG), and Bitcoin SV (BSV). DeFi (Decentralized Finance) is the process of using blockchain technology to create and manage financial products and services that are not dependent on centralized organizations or governments. DeFi allows people to participate in financial transactions without intermediaries, such as banks or payment systems. It also allows people to earn income from investments in digital assets such as cryptocurrencies, and provides tools for risk management.
Decentralized Finance (DeFi) is the process of using blockchain technology to create and manage financial products and services that are not dependent on centralized organizations or governments. DeFi allows people to participate in financial transactions without intermediaries such as banks or payment systems. They also allow people to earn income from investments in digital assets such as cryptocurrencies, and provide tools for risk management.
However, these mechanisms require high transaction speeds, which Proof-of-Work (PoW) cannot provide. Proof-of-Work (PoW) is a blockchain transaction verification protocol that uses computer algorithms to verify and confirm transactions. The PoW protocol allows blockchain participants to verify and confirm transactions using computer algorithms that require significant computing resources.
All the above platforms, including Bitcoin, work on the Proof-of-Work (PoW) block confirmation protocol, which does not meet modern requirements. Proof-of-Work (PoW) is outdated, it has significant drawbacks. Firstly, it consumes a lot of energy, making it inefficient and expensive. Secondly, it can be vulnerable to DDoS attacks, which can lead to security issues. Thirdly, it can be vulnerable to pool attacks, which can lead to an uneven distribution of coins and unfairness. Fourthly, it can be vulnerable to stream attacks, which can lead to performance issues. Finally, it can be vulnerable to double-spending attacks, which can lead to reliability issues.
The Proof-of-Work protocol has been replaced by the Proof-of-Stake protocol. This is a proof of ownership algorithm used to confirm transactions in a blockchain. Unlike the Proof-of-Work algorithm (PoW), where transaction confirmation occurs through block production by consuming a large amount of energy, in PoS, transaction confirmation occurs through coin holders who hold coins as collateral. Coin holders receive rewards for confirming transactions in the form of additional coins.
In the Proof-of-Stake protocol, instead of performing complex calculations to confirm transactions, users hold a certain amount of coins as a deposit. The more coins a user holds, the higher the probability that they will be selected to confirm a transaction. This protocol is less energy-intensive and provides more opportunities for users. The most popular blockchains using the Proof-of-Stake protocol include NEO, Cardano, Tezos, Tron, Cosmos, Polkadot, and Qtum. Ethereum has also recently switched to this protocol.
The further development of technology led to the creation of the Delegated Proof of Stake (DPoS) protocol. This is a consensus algorithm used to confirm transactions in a blockchain. It is based on the principle of delegating the right to vote to confirm transactions and blocks. Unlike other consensus algorithms such as Proof of Work (PoW) or Proof of Stake (PoS), in DPoS, users delegate their voting rights to confirm transactions and blocks to other users called delegates. Delegates are rewarded for confirming transactions and blocks.
A significant milestone in the innovative development of blockchain was the creation of the Graphene technology, which provides a fast, reliable, and scalable infrastructure for applications. It uses a blockchain architecture that allows applications to interact with each other quickly and securely. It also provides tools for creating and using distributed applications and smart contracts. It supports multiple protocols, including protocols for payments, identification, and other applications. Graphene was developed by a group of independent developers: Dan Larimer, Charles Hoskinson, and Stan Larimer.
The Graphene technology on the DPoS protocol is used in projects such as BitShares, Steemit, Golos, Hive, EOS, Peerplays, Crypviser, Whaleshare, Yoyow, PeakD, as well as for creating new projects GXChain and Loom Network. Currently, these are the most technologically advanced projects in the crypto industry. BitShares is an industrial-grade blockchain platform that allows users to create and manage their assets in the form of digital tokens, conduct secure and fast transactions, and provides tools for trading and risk management.
The platform uses a decentralized architecture to provide users with access to their assets and conduct transactions without the need to trust third parties. The platform has a number of specific features, including named accounts, the ability to create decentralized autonomous companies (DACs) for various structures and projects, the ability to issue user assets, and hosting decentralized exchanges (DEXs).
Currently, the following decentralized exchanges are operating on BitShares: EVRAZ, GDEX, XBTS, ioBanker, Delion, PirateCash, as well as a number of other projects with various focuses. A promising project for scaling and rapid development is the global electronic payment network and decentralized exchange EVRAZ, which allows users to exchange cryptocurrencies and other digital assets without intermediaries. It uses blockchain technology to ensure the security and transparency of payments. Payments are made instantly and without fees. The platform provides users with access to markets and tools for trading and analysis.
The possibilities for using blockchain technology are multifaceted. Here is a far from exhaustive list of directions for its use:
