Perhaps cryptocurrency’s greatest attribute beyond its function is its relative infancy in programming compared to its potential for long-term establishment and use.
The cryptocurrency concept is still very much in its experimental phase having only been in production and use for a short period of time compared to other established means of trade and currency, like fiat.
New types of cryptocurrencies, tokens and systems providing all sorts of different possibilities are being experimented with, programmed and used all the time.
This allows the potential blockchain-backed platforms of the future to be conceived and programmed sooner rather than later, further unveiling the seemingly endless possibilities of the technology.
The current period of experimentation is also vital for the blockchain-based concept of cryptocurrency in ironing out issues potentially holding it back from wider adoption.
However, blockchain’s development and wider adoption means it is beginning to work its way into mainstream use.
Blockchain’s global technology market has grown from around $350 million to around $2.4 billion since 2017, small and mid-sized companies are joining governments and corporations in implementing the technology into its systems.
The concept of blockchain remains the same – a decentralised system designed to provide a trustless mode of exchanging digital assets.
However, blockchain has evolved to improve its concept and widen the scope of its already huge potential.
Blockchain existed as a concept for decades before it was first successfully used on a wider scale with the arrival of Bitcoin.
Bitcoin showed blockchain technology’s capabilities, and inspired others to build on the revolutionary concept.
The first true innovators of blockchain after the Bitcoin revolution discovered how the technology could be implemented into systems beyond just cryptocurrency.
As tech companies expanded on the concept, they offered large corporations, governments and even banks an alternative organisational system capable of sorting and storing data in a much more efficient, streamlined and cost-effective way.
Blockchains began for the first time being constructed not for the specific use of exchanging currency.
Developers made the next significant step in blockchain technology evolution with the rise of the smart contract.
While a further departure from its first successful use with the trading of Bitcoin, smart contracts still functions as a cryptocurrency trading system, while offering something in return beyond the value of the transferred coin.
Smart contracts dictate the terms in which information can be sent and received between parties on a blockchain network.
Differs from a regular contract in that it is written in code and stored on a blockchain, so both parties have access and its terms remain permanent.
The smart contract concept is a more complicated system than Bitcoin’s original idea, but its implementation through the introduction of the Ethereum cryptocurrency has proved widely popular and is often regarded as the most innovative evolution of the blockchain since the arrival of Bitcoin.
The next major innovation in blockchain functionality that potentially alters the way in how the technology operates came with Proof Of Stake (PoS) concepts.
PoS is essentially the rules dictating how transactions on a blockchain network are approved.
It details the specifications required of users to complete a transaction successfully.
Blockchain technology has evolved greatly since its implementation as a concept allowing for all digital assets and information to be traded, and the introduction of the smart contract.
However, while not major innovations changing the blockchain concept, Bitcoin made adjustments to its blockchain early in existence out of the need to remedy underlying issues with performance.
As Bitcoin as grown more and more popular during its existence, the pressure on its blockchain to perform has also grown exponentially
Much like a regular computer system, or an internet connection, the more people using a blockchain, the more its performance begins to suffer.
Bitcoin’s original blockchain concept was not designed to have millions of transactions performed through it daily.
This issue is called scaling, and it means Bitcoin users are waiting much longer for transactions to be completed compared to many others using alternative cryptocurrency blockchains, and especially compared to credit card transactions.
This still presents a challenge for Bitcoin, as its popularity grows so does the pressure on its blockchain, even despite making changes to its network algorithms.
Bitcoin’s introduction of segwit was designed to relieve the pressure on its blockchain by altering the size of the information packages uploaded to it, in the hope that the less data being processed by the blockchain, the better it would perform.
Segwit separates the hashes of a transaction from the transaction data itself.
This means removing the complicated and large digital signature data keeping transition requests secure usually attached to every transaction, instead placing a single lock and key on a package of transactions.
This allows more transactions to fit onto a single block on the blockchain, improving transaction speeds.
Lightning network Lightning networkActs as a second layer on top of the Bitcoin network for trading, with a separate set of protocols dictating how transactions are processed. The network allows smaller transactions to be processed off the blockchain between two parties using a lump deposit paid equally between the parties.s have also been useful in alleviating Bitcoin’s scaling issues.
A lightning network acts as a second layer on top of the Bitcoin network for trading, with a separate set of protocols dictating how transactions are processed.
The network allows smaller transactions to be processed off the blockchain between two parties using a lump deposit paid equally between the parties.
It is basically a blockchain, where transactions between two parties can be made, only differing in that the trades completed on it are grouped together and added to the blockchain as a single order, rather than several smaller requests.
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