In this post, we’d look at Blockchain 3.0 the final developmental stage and how It works. Interoperability in blockchain 3.0, privacy in blockchain 3.0, fixing the flaws in blockchain 3.0, and lots more.
Blockchain 3.0 is the technology’s last stage of development, predicting global, institutional, and enterprise adoption.
What Is Blockchain 3.0 and How Does It Work?
Since the publication of the Bitcoin whitepaper in 2008, blockchain technology has become a global phenomenon. Initially, the technology was solely on the generation of several cryptocurrencies. However, as software developers and engineers began to investigate blockchain technology’s capabilities, a slew of new uses arose. With Blockchain 3.0, developers are looking for ways to integrate the technology seamlessly, across several businesses in order to improve performance.
Blockchain technology has the ability to dramatically transform the way businesses handle crucial data. The possibilities for distributed ledgers and blockchains are essentially endless. However, Blockchain 3.0 will be the generation in which this technology is extensively adopted. There are various areas where blockchain technology has already made dramatic breakthroughs in terms of applications.
Consider the following scenario:
• Healthcare – Blockchain technology has the ability to dramatically transform how patient data and private details are managed and stored. Furthermore, blockchain optimizations can increase worldwide collaboration by improving communication between different healthcare services.
• Transportation – the use of distributed ledger technology can greatly improve transportation and delivery services (DLT).
Goods traceability and accountability can be improved with blockchain data.
• Voting – the procedure becomes more accessible and secure when verifiable, public ledgers are integrated into voting technologies.
More Applications of Blockchain Technology
These are only a few instances of blockchain technology’s transformative applications outside of bitcoin and financial systems. Outside of the realm of economics, Blockchain 3.0 focuses on developing solutions for services and sectors. This third stage of the technology’s advancement is devoted to moving beyond DLT’s strictly financial application . Therefore, bringing new approaches to data management.
As more private parties begin developing tailored blockchain solutions for various industries, global adoption of blockchain technology will happen gradually. Even so, Blockchain 3.0 is already demonstrating its revolutionary potential. The advent of bitcoin paved the way for global adoption,followed by smart contracts and DApps. So,now blockchain is taking over operations in a variety of industries.
Of course, blockchain technology isn’t perfect, and one of the key goals of Blockchain 3.0 projects is to develop and polish the technology.
Questions about the energy demand of proof-of-work (PoW) systems have risen to the fore, prompting developers to seek alternate consensus techniques. All to improve blockchain scalability and effectiveness.
More Details on Block 3.0
With a redesigned foundation, blockchain 3.0 aims to address the scalability, sustainability, cost, interoperability. And security issues that plagued blockchain 1.0 and 2.0, promising improved solutions.
Before we get into the specifics of blockchain 3.0, it’s important to understand what prompted blockchain specialists to consider a version upgrade. To understand why, we must go back to the year 2009, when Satoshi Nakamoto published a whitepaper on bitcoin. This is when the first version of the blockchain was created. The interest in bitcoins skyrocketed at that time. The fact that, unlike fiat currencies, there are no middlemen backing this digital currency (read: government) drew everyone’s attention.
Furthermore, everyone was grateful for the underlying technology. Such as blockchain, which provided a secure, efficient, and transparent environment for conducting transactions, eliminating middlemen as well as double. However, a popular question arose: where did this remarkable cryptocurrency originate? Miners must solve a tremendously sophisticated arithmetic problem in order to mine bitcoins, which is impossible for us to solve. As a result, miners had to employ powerful computers, and the chances of solving the challenge were 1 in 7 trillion.
Aside from resource waste, bitcoins have scalability concerns, with transaction processing speeds ranging from 3.3 to 7 transactions per second.
The limits were soon recognized, prompting the introduction of blockchain 2.0 by experts. Ethereum boasted about its transaction processing speed in this version. The speed which was around 15 transactions per second (double of bitcoins TPS).
Smart contracts, the computer programs that execute autonomously when a predetermined condition is met . Therefore, persist on the blockchain network, were introduced with Blockchain 2.0. Despite the fact that the second version was significantly better and faster than the first. It still fell well short of the speed of centralized payment systems such as Visa and PayPal (as discussed later). Both versions were unworkable, insecure (remember the 51 percent attack? ), and costly. And, as a result of this catastrophic scenario, blockchain 3.0 has become a viable option.
Let’s have a look at Blockchain 3.0.
Newcomers Welcomed in Blockchain 3.0
Whereas the second edition was superior to the first, the success stories of centralized entities such as Visa and PayPal cannot be ignored by blockchain communities. Visa can process about 1,700 transactions per second on average. Whereas PayPal can process about 10 million transactions each day.” As a result, it was necessary to make blockchain a viable technology for financial companies. And, in order for this to happen, scalability issues had to be explored and resolved first. Blockchain 3.0 is an improved version of blockchain 2.0, designed to enhance the technology’s capabilities and address existing issues while allowing for faster, more cost-effective, and efficient transactions. DAG is one of the features that distinguishes blockchain 3.0 and makes it feasible (Directed Acyclic Graph).
DAG Data structure
Let’s start with the logic that underpins the DAG data structure.
The content on a DAG-based network flows acyclically, as the title suggests. As a result, the information cannot be returned to the sender. The data will only flow in one direction. It ensures that nodes are not connected to those that came before them. Block times, which are 10 minutes for bitcoins and 20 seconds for Ethereum, are eliminated with this structure, allowing transactions to be executed practically instantly. IoT chain (ITC) uses DAG to execute 10,000 operations per second, which is significantly more than Visa can.
We have such a new era of technology waiting for us to embrace – BLOCKCHAIN 3.0 – after Blockchain 1.0 and 2.0 failed miserably in their attempts to garner widespread acceptance.
Cardano is a cryptocurrency. An enhanced blockchain platform developed out of scientific philosophy and high-level research, overseen by Charles Hoskinson (one of Ethereum’s co-founders). It includes smart contracts, transaction systems, and Dapps. Cardano is leading the charge of Blockchain 3.0. Pioneering an entirely different approach to digital currency.
Let’s look at how Cardano differs from Ethereum.
• Cardano is written in Haskell, whereas Ethereum is written in Solidity.
Solidity is a contact-oriented paradigm specifically created for constructing smart contracts. Whereas Haskell is a globally accepted programming language with non-strict semantics. Haskell allows programmers to write exact code, allowing them to create efficient and secure protocols. Solidity, on the other hand, has significant security concerns.
• Its consensus technique is proof of stake, whilst Ethereum’s is proof of work. Instead of miners wasting energy on solving the math issue, the POS system takes into account such as the creator’s wealth and the network’s sophistication at the time. The POS consensus protocol not only conserves energy. But also minimizes the possibility of a 51 percent assault (since an attacker attempting to buy 51 percent of the coins will instantly see the coin’s value increase).
EOS – EOS is a blockchain platform that functions similarly to the second generation of blockchain platforms.
Ethereum, blockchain. Its goal is to create a fully decentralized operating system that will allow Dapps and smart contracts to evolve. EOS blockchain appears to fully comprehend what the public really wants. It was designed particularly to eliminate transaction fees and process millions of transactions per second. In order to conduct more transactions, they
The EOS blockchain employs a distributed Proof of Stake consensus mechanism, which solves the scalability problem.
Let’s have a look at how EOS visions operate in practice.
When you arrive at your location, you pay the cab driver in fiat currency. However, with EOS, the situation will be different. Prior to boarding, you must pay in cash. When you get at your destination, the driver will return your money.
Blockchain, although being a really revolutionary and disruptive technology, has failed to acquire widespread acceptance. The statement made is supported by Gartner’s report. Wait till this next version of the technology, Blockchain 3.0, reaches the mainstream for those who believe the technology is simply a fad. Despite growing criticism, blockchain technology has been swiftly expanding through various incarnations since its creation. In terms of practicality, technological progress does not happen overnight.
Blockchain developers will have to climb the stairs of struggle to open the door to success.
They must pursue a continuous cycle in this endeavor:
- undergo dilligent search (new ways or approaches to solving pain points).
- research (to learn whether the identified approach will work or not).
- making a plan (building a strategy for implementation).
- putting into action and exploring (experimenting with the new methods).
- evaluating, and
- comparing and contrasting (setting realistic and challenging goals).
That will guide them down the path to success. Looking at the speed at which professionals are working to perfect technology. We can see that we are getting closer to a brighter future.
The future is decentralized.
Scalability of Blockchain 3.0
The present scaling concerns with blockchain are well-known. Aside from having a low throughput (Bitcoin has seven transactions per second compared to Visa’s 2,000), blockchains that use Proof-of-Work consensus face additional scaling challenges due to mining’s energy requirements. Fortunately, many blockchain 3.0 alternatives are in the works to address these scaling issues.
The Second Layer
Several layer two patches, in particular, are being developed to work with existing blockchain protocols. To reduce bloat and boost throughput, these technologies effectively unload transactions from a blockchain onto a peer-to-peer network.
Many bitcoin transactions, for example, are presently routed through the Lightning Network, which is still in its infancy. In addition, Ethereum is implementing Plasma, a blockchain 3.0 solution.
Mechanisms of Consensus
On the other side, other companies are re-inventing the wheel, so to speak, by building blockchains from the ground up with scalability in mind. Sharding and a novel consensus process (Byzantine Fault Tolerance, or BFT) are used by Zilliqa. A nascent smart contract platform, to deliver capacity that is far higher than typical blockchains.
Zilliqa, on the other hand, isn’t alone. Countless new blockchains are experimenting with different consensus mechanisms. A variant of BFT is used by Facebook’s Libra, Ethereum is transitioning to Proof-of-Stake (PoS). And several others use delegated Proof-of-Stake (dPoS). The bulk of blockchain 3.0 startups are merely attempting to sidestep Proof-of-drawbacks Work’s.
Acyclic Graphs with Directions (DAGs)
In fact, a few projects are completely avoiding blockchains. IOTA and Nano, for example, are built on a Directed Acyclic Graphs (DAG). Rather than a blockchain.
DAGs need you to confirm numerous previous transactions when you generate a transaction oneself, without getting into too much detail. As the network increases, this allows DAGs to become more effective.
Another DAG initiative is Hereda Hashgraph, which is led by IBM, Deutsche Telekom, and Tata Communications, among others.
Interoperability in Blockchain 3.0.
The capacity to communicate between the hundreds, if not thousands, of different blockchains is critical. Regrettably, the industry lacks an interoperability mechanism to make this connection possible. Once again, a slew of firms and programs are tackling the problem from all sides.
Aion, Wanchain, and, most recently, Polkadot are three blockchain 3.0 projects that focus on interoperability. The purpose of these projects is to create a way for data and assets to be . And o get transferred across blockchains without the use of a centralized third-party. So, for example, you could exchange bitcoin for ether directly from one blockchain to the next.
Interoperability isn’t just restricted to communication across blockchains. Blockchains must also link to existing infrastructure. Companies like Chainlink are attempting to accomplish this by building an ecosystem of oracles that feed real-world data into blockchain networks. Chainlink has already worked with Google, Oracle, and SWIFT to get oracle data and more easily incorporate blockchain networks into their systems.
Santander, Barclays, and other major financial firms are developing their own interoperability standards as well.
Privacy in Blockchain 3.0
Most blockchains are designed to be open. This means that wallets and transactions are visible to anybody who cares to look. Even if you don’t think privacy is a big matter, many businesses and individuals regard it as a deal-breaker when it comes to utilizing blockchain technology.
Several coins already have privacy built into their systems. At their core, Monero, Dash, and Zcash all have different levels of anonymity. In the near future, Ethereum may even implement zk-SNARKs, the privacy protocol that underpins Zcash. However, it’s difficult to claim that those coins are part of the blockchain 3.0 revolution.
With Grin and Beam as two of its first deployments, MimbleWimble appears to be leading the way in blockchain 3.0 privacy. MimbleWimble is a blockchain protocol that substitutes blocks containing only inputs, outputs, and signature data for addresses and a programming language. As a result, transactions are more difficult to detect and trace. And blockchain scalability is better. Bitcoin and Litecoin developers are also experimenting with MimbleWimble integrations, in addition to Grin and Beam.
We need to bring up Aion and Wanchain again in terms of smart contracts.
Both platforms have a privacy layer into their smart contract functionality, allowing you to govern the information you share.
Blockchain 3.0: What Does the Future Hold?
Many of the blockchain 3.0 projects we mentioned above are still in their early stages, and we didn’t have time to cover a few others. However, it’s difficult to determine which ones will succeed over others at this time. The sheer amount of creative minds working on these blockchain 3.0 solutions, on the other hand, should give you reason to be optimistic about the future of blockchain and the decentralized world.
FIXING THE FLAWS IN BLOCKCHAIN 3.0
Cryptocurrencies, without a question, have boosted the appeal of blockchain and distributed ledger technology in general. Since the creation of Bitcoin in 2009, blockchain developers have been investigating other applications of the technology outside of the financial sector. They’ve had a lot of success in this endeavor. Blockchain and distributed ledger technology (DLT) are now being used in the healthcare, logistics, and transportation industries. Also for record-keeping, as well as voting systems to establish transparent governance models.
Blockchain 1.0 Challenge
The first application of Blockchain 1.0 was Bitcoin, which attempted to challenge the existing monetary/financial system by presenting a decentralized payment mechanism. However, the digital currency’s scalability concerns became apparent when transactions took up to 10 minutes to be validated owing to the bitcoin blockchain’s consensus algorithm.
Blockchain 2.0 Challenge
With the addition of smart contracts and decentralized applications, Blockchain 2.0 aimed to improve the use-case of blockchain technology as a payment solution. With the Ethereum blockchain being the most well-known of these initiatives, blockchain 2.0 continues to focus on the financial industry, despite its faults.
Blockchain 3.0, on the other hand, takes a more holistic approach to DLT use cases, with the goal of promoting blockchain adoption across a wide range of business sectors and industries.
The developers want to create a project that improves privacy and security from the bottom up. While also addressing recognized scalability, cost, and interoperability challenges.
SO, WHAT IS THE GOAL OF THE FOURTH GENERATION OF BLOCKCHAIN?
Blockchain 4.0 is the internet’s equivalent of web 2.0. It intends to improve on all of the previous generations’ characteristics while also bringing blockchain to consumers and businesses. Without the need for a lot of blockchain programming skills, businesses can create secure, decentralized, and tamper-proof blockchain-based applications.
Stable coins (such as Tether, Havven, MakerDao, and Basecoin) are now in their early phases.
A “stable coin” is a cryptocurrency linked to a stable asset such as gold or the US dollar. It is a worldwide currency with low volatility that is not tied to a central bank.
This makes it possible to use cryptocurrencies in everyday situations, such as paying for groceries.
Initial Coin Offering
The initial coin offering (ICO) is upending the VC fundraising model.
An initial coin offering (ICO) is a method of acquiring funds by exchanging future cryptocoins for current, liquid cryptocurrencies.
There were 50 ICOs in 2016, which grew to 250 in 2017. Over 500 initial coin offerings (ICOs) have been launched or announced in the first three months of 2018.
The initial coin offering (ICO) is quickly becoming a popular way for start-ups to raise funds. ICO money generated greatly outstripped venture capital funding for cryptocurrency and blockchain-based startups in 2017.
To make blockchain a functional platform, layers of protocols must be added on top of it.
According to Crunchbase data, venture capitalists invested $1.2 billion in blockchain-based firms in 2017. While over $4 billion was raised through initial coin offerings (ICOs).
The investor profile for start-ups is also evolving as a result of ICOs. While in the venture capital model, partners and fund managers make a “yes/no” decision on a start-future up’s based on a set of criteria, in an ICO, the investor is typically a 20- to 30-year-old computer specialist who was an early supporter of cryptocurrency mining—and is therefore more open to new and risky ideas.
3.0 version of the blockchain
“On the blockchain” is the new “Uber” in the technology startup industry.
In 36 industries, there are approximately 1,000 DApps (decentralized apps—apps built utilizing blockchain technologies).
Blockchain is now being used to construct a variety of web and mobile-based solutions.
The blockchain technology that underpins bitcoin is a fairly basic system that requires layers of protocols to be placed on top of it. In order to make it usable as a platform for smart contracts and other services.
Ethereum, on the other hand, came with its own scripting language built in, making it very simple to create complicated smart contracts. And also decentralized autonomous organizations, decentralized applications, and even new cryptocurrencies.
Because of Bitcoin’s prominence, it now supports blockchain technology, which is referred to as Blockchain 1.0.
Ethereum was dubbed Blockchain 2.0 due to its widespread adoption as a decentralized platform. For programs to function exactly as planned.
Direct Acyclic Graph
A new set of blockchain systems and networks based on DAG (direct acyclic graph) technology is now being developed. There are several DAG-based blockchains, such as Hashgraph, IOTA, Stellar, NEO, RaiBlocks, and others. They were created to solve specific real-world challenges.
These platforms are part of the third generation, or Blockchain 3.0. They were created to address the major flaws in the original blockchain. (Blockchain 1.0) and Ethereum (Blockchain 2.0). Also, they are based on the FFM principle (fast, feeless, minerless).
DAG-based blockchain technologies eliminate the “miner” from the equation by employing “Gossip about Gossip” protocols. In which network machines spread transaction records and confirm and authenticate. Other than the Gossip protocol used by (first-gen) blockchain and Ethereum. In which the miner is required to solve the puzzle and verify and authenticate the transaction.
While these technologies potentially have the capacity to handle hundreds of thousands of transactions (per second) compared to Blockchain 1.0’s six-seven transactions per second. We have seen DAG-based platforms accomplish over 10,000 transactions per second in real-world circumstances.
Hashgraph is a prominent and widely used DAG-based blockchain technology. Instead of establishing another crypto-token for public sale, the company that created it, Swirlds, is taking the proper approach by building and presenting it as a “white-labelled, private chain,”. Aimed at large organizations across industries to solve real-world problems.
These third-generation, DAG-based blockchains are unquestionably a step forward. But the question of whether they’ll be the definitive platform of the future and the end of all things remains unanswered.
We are currently in the mid-1990s of the internet era in terms of the blockchain ecosystem’s evolution. It’s impossible to tell the difference between the blockchain’s Amazons and Googles and Pets.com and eToys.
Existing technologies and approaches in the field have limitations that prevent them from taking on centralized incumbents seriously. Performance and scalability are the most serious drawbacks.
Improvements on Blockchain 3.0
The next several years will dwell on addressing these issues. And also constructing networks that will serve as the crypto-infrastructure stack’s layer. Following that, the majority of the effort will be on developing applications. Apps to run on top of the infrastructure.