Blockchain Future 1: Basic Knowledge About Blockchain And The Future

Published April 12, 2023

Blockchain History

Blockchain is a distributed digital ledger maintained and managed on a network that is difficult to hack and falsify, and is also called the second internet. Blockchain technology allows individuals to securely conduct transactions, such as money transfers and payments, directly with each other without the intervention of governments, banks, or other third parties.

In recent years, blockchain has been featured a lot in mass media, so it is no longer a brand new concept, but the number of people who have a correct understanding of its detailed meaning and development procedures is not very big.

So let’s take a look back at the history of blockchain, from the year 1991 when it was first born.

1991

In 1991, two scientists, Stuart Haver and Scott Strnetta, developed a cryptosystem (A cryptographic system or a computer system that employs cryptography) and created blockchain technology.

In this system, time-stamped data records are stored in a chain of blocks, which later became the etymology of blockchain. This makes it possible to prove that any electronic data existed at a specific time and that it has not been tampered with since then.

In the following year, 1992, the system was upgraded and streamlined by incorporating hash trees (Merkle trees) with the ability to store more data and documents in a single block. However, after that, it did not receive much attention and disappeared from the front stage.

2004

In 2004, an electronic currency known as “Reusable Proof of Work” (RPOW) was introduced, and this fact became a game-changer in the history of blockchain and cryptography.

Proof of work (PoW) is a decentralized consensus mechanism in which members of a network prove the correctness of data by mining it to solve a hexadecimal number system, preventing third-party abuse, such as hacking or data tampering. With the birth of this PoW, the world of virtual currencies such as Bitcoin, which will be explained later, will expand.

2008

Satoshi Nakamoto officially announced the idea of a “decentralized blockchain” in his white paper named “Peer-to-Peer Electronic Cash System”.

2009

After that, blockchain steadily evolved, and the need for it in various fields has increased significantly. In 2009, Satoshi Nakamoto published a white paper on Bitcoin. In it, he explained in detail how blockchain technology, with its mechanism of decentralization not managed by anyone, is a sufficient system to strengthen and guarantee trust and security in a digital environment.

A white paper is a research report that explains in detail the uniqueness and characteristics of the issuance of virtual currency and shows the author’s thoughts and the issuer’s principles. The main purpose is to disclose the significance, purpose, sales method, etc. of virtual currency completely and attract investment widely by appealing to its value.

The latest movement

In this rapidly changing world, the use of blockchain technology is diversifying year by year. Next, let’s discuss this trend comprehensively.

Blockchain Versions

Since the birth of blockchain, various types of blockchains have been developed in each era according to social needs and technological standards. Specifically, it can be divided into three versions as follows.

Blockchain 1.0 (The Rise of Blockchain – Cryptocurrency)

Blockchain 1.0 made financial transactions possible through distributed ledger technology (DLT), which became the top technology at this time. Its feature is a fully automated electronic currency remittance system that does not require the intermediation of a centralized administrator for transactions, allowing users to exchange currencies without bank intervention. Moreover, by making a distributed ledger accessible to all individuals participating in a blockchain project, wallets can be used to make anonymous transfers and payments.

Examples of blockchain 1.0 implementations include cryptocurrencies such as Bitcoin, Dogecoin, Litecoin, and Monero, with hundreds of cryptocurrencies already available in this form today.

Blockchain 2.0 (Smart Contract)

In fact, blockchain 1.0 had the problem that bitcoin mining, money transfer, and settlement took much time. This prompted the release of a new version, and blockchain 2.0 not only improved the above problems but also enabled smart contracts. A smart contract is a mechanism that automatically executes pre-programmed agreements.

Blockchain 3.0 (DApps)

Following version 2.0, a brand new version was developed, mainly for decentralized apps called DApps. That is Blockchain 3.0. Dapps are similar to normal apps in the way that they have a frontend written in a programming language, and the code runs on a decentralized peer-to-peer network of backends. It uses decentralized communication and hard drive storage methods such as Ethereum Swarm.

Blockchain Future

Defi (Dramatic Change in the Traditional Financial System）

DeFi platforms are said to have the potential to surpass the role of traditional banks as they allow users to interact directly with each other without intermediaries. DeFi is on the verge of causing a seismic shift by replacing traditional financial products and services with blockchain. DeFi products include savings, fast, cheap, and secure payments, and affordable insurance. In 2021, the number of lending platforms, which earn profits by lending virtual currency, has increased dramatically.

DEX (Prominent Existence in the Financial world)

Decentralized exchanges (DEX) are also expected to increase their recognition and need for it in the financial market in the near future. That’s because DEX allows users to buy and sell cryptocurrencies without a third-party intermediary such as a cryptocurrency exchange.

DEX has many advantages, such as safe management of funds and private keys, high security and privacy protection, and the ability to trade various types of tokens. What’s more, it’s constantly updated, so it’s gaining more and more presence and attention in the financial world.

STO (Rising Bond Tokenization）

The emergence of STOs (Security Token Offerings) is nothing new in terms of cryptography, but 2021 in particular has received a lot of attention in the cryptocurrency market. STO is a fundraising method that uses tokenized securities issued on the blockchain to be officially approved for issuance and sale under laws and regulations, and all transaction processes will be recorded on the blockchain. STs (Security Tokens) specifically refer to cryptographic tokens backed by assets such as bonds, stocks, real estate, and even automobiles.

Real estate is one of the things that is currently attracting a lot of attention in ST. As evidence of that, as of 2021, the market capitalization of tokenized real estate has reached nearly $40 million.

Growing Demand for Consortium Blockchain

Consortium blockchains (or federated blockchains) are one of the hottest trends in blockchain technology in 2020 and are expected to continue growing in the future as well. A consortium blockchain is a renewal of a traditional private blockchain, where a private blockchain is operated by a single entity and new participants require permission to access and add data. Consortium blockchains, on the other hand, have the same mechanism but are characterized by being managed and operated by multiple consortia (community) members, such as peers and union,s for a common purpose.

Overall, consortium blockchains have great potential in supply chain management, such as banking, healthcare, logistics, insurance, and other industries where security and privacy management are important.

Blockchain is Transforming Media and Entertainment

Recently, the affinity between blockchain and entertainment and sports has increased rapidly. Artists, athletes, game players, and influencers from all walks of life are increasing public interest in blockchain by tokenizing various content and NFT-izing their self-confidence. In 2022, in addition to the FIFA World Cup, baseball, basketball, boxing, and other sports other than soccer, fan tokens will be released in collaboration with Binance and YG Entertainment, one of the largest entertainment companies in Asia. Since its release, the existence of blockchain is getting more and more attention. It is safe to assume that this trend will continue to accelerate.

In the next blog of the series “Blockchain Future”, we will explain more about blockchain and the areas in which blockchain can or has the potential to be employed. Follow the series on

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