First Generation Blockchain
Bitcoin was designed with a specific purpose in mind: to be an open source platform which people could tweak and improve. It was meant to decentralize control from the banks and allow people to conduct individual transactions with one another. And it was meant to be secure.
The framework was designed using blocks to contain data which would be stored and verified through a network of public nodes that regular people could access. This not only provided for transparency but also served as a back up in case of attack. With a network spread around the world stored on PCs or dedicaded ASIC computers, the Bitcoin blockchain proves a worthy adversary. The block’s capacity was limited to one megabyte, low enough to prevent a network overload and shutdown by too much traffic or through a hacking attack. Another safety and privacy measure was the addition on the SHA256 encrtption protocol. The blockchain made for a revolutionary innovation but the potential expansion and application into then unforseen fields is truly limited without an update.
Segregated witness is an improvement to solve malleability (the intrusion and alteration of cyphertext) and to expand the storage size of the blocks from one to two megabytes.
GrapheneAnother modification that adds two filters called Bloom Filters and invertible Bloom Look Up Tables. Together they eliminate double entries from being added to a transaction, reducing the amount of data and making the block space usage far more efficient.
Second Generation Blockchain
Ethereum was the second evolutionary step which introduced Smart Contracts and the enhanced ERC20 platform to develop decentralized applications (Daaps).
Unfortunately, these enhancements do not solve the underlying problem of scalability. And however much the true believers of Bitcoin want to preserve the original principles of decentralization, the only evident solution is to abandon or replace the blockchain altogether for something new through Sharding, Channeling, DAG, NEO, Raiden Network
Third Generation Blockchain
Zilliqa is attempting to solve the scalability problem through a concept called Sharding. Sharding is the partition and transportation of blocks through multiple parallel chains which then rejoin the chain at the end of the transaction.
Lightning Network (Off Chain)
Designed specifically for Bitcoin; it relies on SegWit and it works by opening a direct channel between two parties without recording every individual transaction on the main chain (Off chain). Bypassing the nodes verification makes transactions quicker and cheaper.
Also uses channeling but unlike the Lighting Network, it works on all Ethereum’s ERC20 compatible tokens.
Is a similar approach to the Lighting Network in that it improves the current blockchain by creating subordinate “Plasma” Blockchains with independent hash strings. The hashes’ transactions are resolved independently from the main chain, thus speeding up the process. However, once completed, the plasma blocks are copied to the main chain creating more data volume. A proposed scalability application of Plasma Cash is through using unique ID coins tied to the life of transaction. A sort of channeling where pertinent information is only shared between the parties involved and not the entire network.
Fourth Generarion Blockchain
Universa is a fourth generation blockchain projects to the likes of EOS, Multiversum, Universa replaces the conventional blockchain with a new type using a Directed Acyclic Graph. This is a forward directional system where new transactions verify the previous transactions so all transactions are confirmed and unchanged. Think of it as a family tree, where grandparents lead to offsprings, and these in turn continue the chain. The chain does not depend on public nodes but on private companies that act as “trusted nodes” and a Notary Cloud service which verifies transaction records, contracts, and digital signatures. The process does this off chain and in combination with side chains. Universa claims to achieve 20,000 transactions per second. This speed is achieved by each contract having a “Proof of State” on each side chain, this allows each contract to move asynchronously between side chains (cross chain). For example, the contracts move as a monkey jumps from one rope to another while climbing a tree.
5th Generation – Hybrid, Ideal Lattices?
Quantum computing is coming and with it the ability to unravel much of the hash algorithms used to encode Crypto-currencies. This is a major problem if not an outright threat to the existence of the blockchain; in which the whole industrial and economic system has pinned its hopes on. Researches are working on the problem using math theories based on Ideal Lattices.
Crypto security lies in the ability to restrict access to information by dividing a password into a private and a public key. Much like a lock and a key, the system needs both in order to unlock the transaction once it’s been verified. The problem is that quantum computing is powerful enough to solve the encrypting algorithm and link the two keys together.
Ideal Lattice provides a solution by exponentially multiplying the number of keys and possibilities to decode them. In other words , current encryption hash algorithms secure a transaction by diving the keys into multiple keys, if you guess the right key, you have access, but ideal lattices is like a shape shifting key, making it almost infinitely impossible to decode. But this solution is temporary. A better solution lies in using quantum computing to create an even better system using Qbits (a directional, binary system that can uses 1s and 0s to encode private and security keys). QBits encodes data not only using complex calculations but directional position as an extra layer of security. In layman’s terms, the attacker not only have to decipher the digits but which way a Qbit was encoded, vertically or horizontally.
Blockchain technology is evolving at a furious pace and there are numerous projects (not necessarily listed here) under development that have elements that cross in between categories; private sector blockchains like IBM’s Hyper Ledger. Only time will tell what the final evolution of the blockchain will be.