Blockchain chronicle: with increasing media coverage and use, blockchain is becoming protean.
The storytelling of the Blockchain usually begins with the famous mention of Satoshi Nakamoto, the pseudonym of the inventor, or inventors, of Bitcoin. But the launch of the Blockchain, underlying the Bitcoin protocol, and the eponymous crypto-currency in January 2009 is in part derived from much later algorithms and inventions.
In the Whitepaper references describing Bitcoin, Satoshi Nakamoto cites researchers Stuart Haber and Scott Stornetta for their paper “How to time-stamp a digital document”. The latter was published exactly 30 years ago, in 1991. Since then, and even more so since the invention of Bitcoin, which really put the blockchain in the spotlight, the technology has continued to adapt to numerous use cases.
The first major evolution took place when several computer scientists, researchers and entrepreneurs decided not to limit the use of the Blockchain to crypto-currencies only. This is the case, for example, of the Ethereum technology which, although it has also given rise to its own crypto-currency, is above all built around the concept of smart contracts, algorithms that are essential to decentralised applications such as Decentralised Finance (DeFi) for example.
Vitalik Buterin, its famous founder, also wrote a Whitepaper in 2013 to describe his technology, which was intended to launch decentralised applications. One of the best-known examples of this type of application is the decentralised crypto-currency exchange (DEX) Uniswap, which, unlike a centralised exchange such as Coinbase (CEX), does not record transaction orders on a Central Limit Order Book (CLOB) platform, but on a decentralised platform with mechanisms built on the Blockchain.
A veritable library of solutions is gradually being built up, filling its shelves with new alternatives.
Blockchain’s potential today lies more in solutions that use the technology in projects that are not related to crypto-currencies. This is the case, for example, with the Wecan Comply compliance platform, which enables the exchange of information between financial players, or the Danish shipping company A.P. Møller Maersk’s sea freight solution for container traceability.
The second major development has been to modify the characteristics of Bitcoin technology, such as the speed of transactions, energy consumption, security and data confidentiality. To do this, technologies have been built that modify the algorithms underlying Bitcoin while keeping the same target application: crypto-currency exchange and payment systems.
Technologies such as Ripple have focused on transaction speed, replacing proof-of-work algorithms with others specific to their priorities. Other examples of Blockchain technology that have developed algorithms other than proof-of-work include Peercoin, Polkadot or EOSIO based on proof-of-stakes. Proof-of-work algorithms are based on mathematical puzzles that transaction validators, the miners, must solve by providing computing power via their computers or computer servers. Proof-of-stake works on a completely different principle, replacing miners and their power-hungry server farms with validators storing a certain amount of crypto-currency.
Algorithmic solutions are plentiful, some built on the objective of reducing energy consumption, while others are built on the objective of increasing transaction security.
EPFL researchers have demonstrated the surprising result that it is not necessary to solve the notoriously difficult consensus problem to implement a crypto-currency, pointing to far more efficient solutions than the original approaches.
Blockchain is therefore not a one-faced technology, which is a good thing. A veritable library of solutions is gradually taking shape, filling its shelves with new alternatives. A universal algorithm would be too inefficient. The various solutions that have been developed over the last ten years offer an increasingly relevant granularity and variety for a multitude of use cases.
It is now possible to turn to a generic Blockchain technology, i.e. algorithms that are suited to specific objectives or a particular trade. As the library fills up, the choice of the right book becomes crucial.