This blog is the third and final instalment of a three-part series of guest posts by Eddie Mitchell titled ‘Blockchain Generations’. Eddie is a seasoned writer on all things Blockchain and crypto and we’re delighted that he has agreed to become a regular contributor to Rhetoriq.
This final instalment of Blockchain Generations will take a look at the desirable features that Gen 3.0 needs to possess in order to the deliver breakout moment for blockchain technology and explore what the implications of this may be for industries, governments, and individuals.
The Magic Number
As mentioned in “Blockchain Generations Part 2.0”, the ‘smart’ era of distributed ledger technology (DLT) supposedly came to fruition with the advent of the Ethereum network. But naturally, it wasn’t before long that the shortcomings of the tech would be analyzed, understood and tackled.
The third generation is said to remedy issues related to scaling, energy inefficiencies, governance and interoperability between blockchains amongst others. In an article published January 4th by Don Tapscott, the Blockchain Research Institute co-founder laid out his predictions for cryptocurrencies in 2018 and named companies that are tackling these areas.
He also writes that these platforms differ from Gen 2.0 and 1.0 technologies as they are “designed from the outset” to push past the loathed bottlenecks that prevent the coveted mass-adoption phase of the technology, adding that third generation blockchain projects are also seeking to be multi-asset and multi-industry.
Are we there yet?
Blockchain 3.0 is burdened with high expectations and endless speculation, though this is not without reason. 2.0 bolstered blockchains legitimacy, and propelled the technology into significant use-cases as well as potential projects, turning blockchain into a hot topic in global discourse, leaving 3.0 with some pretty big boots to fill.
So what innovations and solutions would newer technologies need in order to achieve such heights? As mentioned in previous instalments of this series, it is difficult to determine just where 2.0 ends and 3.0 begins, and much like the previous generation, the technology has been around prior to discussing whether or not the new era is upon.
The issue with finding a solid example of 3.0 technologies is the lack of consensus when it comes to the ‘wish list’ of features that the latest generation should wield. When researching for this article, two projects that fell within Tapscott’s list of desirables appeared more than others, these were Cardano and EOS.
The Cardano project began in 2015 and was officially launched in September 2017, it is an open source decentralized public blockchain with its own cryptocurrency, ADA.
It claims to be the first peer-reviewed blockchain in the world, having its protocols assessed by a network of researchers, academics and scientist from universities across the world including the Tokyo Institute of Technology and the University of Edinburgh.
Co-founder Charles Hoskinson describes the project, and more specifically the Cardano Proof-of-Stake (PoS) system to that of a third-generation blockchain, though still in development, Cardano is a great example of a Gen 3.0 blockchain as it claims to be addressing four critical areas that feature on the third generation requirements checkbox: Scalability, Interoperability, Sustainability, and Governance.
Cardano aims to create a more robust smart contracts platform, though this does not mean it is built on the Ethereum network by any means, it’s actually a completely new technology
PoS reduces the energy inefficiencies that Proof-of-Work (PoW) consensus protocols were originally criticized for; Cardano has developed its own PoS model called Ouroborous, which apparently by design is modular and future-proof.
This PoS system comes with the intention of creating a “trusted commons” where financial incentives to pick winners and losers are a thing of the past, explained Hoskinson. Anticipating a future rife with cryptocurrencies, he also believes that interoperability between these numerous blockchains is necessary and will better facilitate a true Internet of Value.
In regards to governance there are several areas that Cardano hopes to fix by granting holders of the platforms’ native crypto, ADA, the right to vote for upgrades and modifications on the network, or more specifically, delegate votes to trusted parties that have a wealth of knowledge and experience, making them perfect candidates to make well-informed voting choices.
Cardano ambitiously sets out to have its PoS system be reliable enough so that it can maintain at a scale of millions of users, though for some, a third generation blockchain is infinitely scalable. That said, Cardano doesn’t have an official whitepaper defining the numbers and furthermore, this type of information is often delivered through interviews or press releases.
One of the best-known contenders in the 3.0 race is EOS, meeting the requirements for governance and interoperability, it is also a platform that intended to be highly scalable, upon which smart contracts and distributed applications (DApps) can be easily developed and deployed with minimal effort. EOS is also aiming to create a platform where decentralized autonomous communities can form and support their own blockchain projects.
Some consider it to be the answer to Ethereum as it further facilitates ease-of-access into blockchain technology for developers, entrepreneurs, and users.
EOS utilizes a Delegated Proof-of-Stake (DPoS) consensus mechanism, meaning that only 21 entities are allowed at one time to create new blocks, which knocks down the chances of mining pools forming around the crypto, which EOS creator Dan Larimer considers to be a security threat to a blockchain, due to the centralization of resources.
Boosting its mass-appeal, it is designed to function without the use of cryptocurrency, meaning users can interact with the EOS blockchain freely without having to deal with certain entry barriers; the EOS platform is also intending to be capable of handling millions of transactions a second with zero transaction fees.
Once platforms such as Cardano and EOS break from development stages and begin to flourish as fully-fledged products, what happens to the industry as a whole? The 2.0 era was most certainly defined by smart contracts and initial coin offerings (ICOs), both made possible by the Ethereum network, and it was a significant leap from 1.0 protocols.
It is quite hard to imagine how the nascent sector will look when these technologies are properly established due to the exponential nature of the industry, and furthermore, there is still the question as to which technology will prevail as the de facto standard for 3.0.
Regardless, in order for the mainstream to adopt the technology, it needs to be easy to use, comprehend and simply work for the masses who don’t really care about the underpinning technology. With the promise of 3.0 technology being around the corner, or already upon us, there is much to be said of earlier generations still penetrating social and political discourse.