Blockchain Technologies Progress in 2021

The evolution of the blockchain is very similar to the evolution of the Internet.

17:01 09 July 2021

In the early and mid-1990s, there was no understanding of the capabilities of the global network. There were static websites and the most primitive search engines. But we all know what eventually happened to the Internet: it has penetrated all corners of life with social media, instant messengers, and mobile applications. The same is essentially the case with the blockchain.

 

New Revolutions

 

It all started 40 years ago with working on cryptography. In October 2008, the Bitcoin network was launched as the first blockchain protocol and, in fact, the first case of using the cryptocurrency.

 

The next stage in the evolution of the blockchain industry was the launch of the Ethereum network in July 2015. The important smart contracts functionality was added. The second generation of blockchain platforms appears, now they allow users to put business logic into smart contracts: at first - the simplest, but the ecosystem grows and becomes more complex. All of this has resulted in the widespread emergence of blockchain technologies in many industries like bitcoin gaming. In 2021, we are witnessing the signs of the beginning of two technological revolutions at once.

 

In the field of decentralized financial services (DeFi). DeFi is infrastructure and applications that work based on distributed protocols, bypassing the traditional financial system in the form of banks and insurance companies. DeFi is also about decentralized exchanges, crypto-asset lending, prediction markets, synthetic asset, and derivative issuance protocols.

 

In the field of fixing property rights and their further transfer in the form of cryptographic non-fungible tokens (NFT). These tokens are arranged as a kind of digital certificate on the blockchain, which confirms the exclusive ownership of the copyright holder for a particular object (painting, photograph, rare wine) or even an event and action. Such a token not only secures the rights of the author (or issuer) to property, it also makes the further movement of this "digital certificate" absolutely transparent and allows, for example, a musician to receive income from the distribution of his/her music, to which the NFT token is tied.

 

Speed Problem

 

Competition with classical centralized IT architectures is becoming a parallel big stage in the development of the blockchain. The blockchain has several undeniable advantages over them:

 

• decentralization, i.e., lack of a single control center or storage location;
• reliability and impossibility of data substitution;
• transparency of transactions;
• the ability of any person to access this information.

 

However, compared to centralized IT solutions, blockchain historically suffered from the fact that its performance and speed did not allow it to create sufficient scalability for a large number of users. People are used to high data speeds.

 

However, since 2021, protocols have begun to appear, which has significantly reduced the blockchain's lag in performance and speed - Cardano and Polkadot, as well as completely new Solana, NEAR, and TON / Free TON. When decentralized applications use these protocols, users in most cases do not notice the difference compared to applications based on centralized solutions and will not even know that blockchain is being used “under the hood”. In doing so, they get all the benefits of using the blockchain.

 

It is already clear that decentralized solutions are gradually beginning to bite market share from centralized counterparts. This, of course, is happening very slowly, but with the prospect of exponential growth. Realizing this, large IT companies such as IBM, Amazon, Samsung, and Apple have already begun to actively implement this technology in their traditional products and solutions.

 

Agents of Change

 

There is another important consideration. Generations X and Y people grew up in the traditional financial and banking system. But there is a generation of millennials who are now actively entering the market and have a digital mentality and, at the same time, care about digital hygiene.

 

These people are annoyed with the monetization of their data. Most of them prefer decentralized systems and peer-to-peer solutions and are already early adopters of products that eliminate intermediaries, allow them to do everything as simplified as possible and without any central or controlling authority.

 

They will drive the acceleration of decentralized solutions’ adaptation in the world. This is why anyone who wants to stay at the forefront of the accelerating technology race needs to keep this in mind.

 

Thus, crypto-economics based on blockchain technology has set a new format for the interaction of economic agents. The decentralized business model is the contribution of crypto protocols that is currently inaccessible to the vast majority of classical economists.