Blockchain Tech

Brief Primer on the State of Blockchain Technology

Arriving in the form of Bitcoin in Q4 of 2008, blockchain technology is, at its core, a distributed state machine run by code that is not owned by a single entity; an autonomous accounting system that has transformed how data is structured, owned, and operated on.

Historically the operations of data were limited to being formatted as CRUD (Create, Read, Update, Delete); by removing the D (Delete) capability, a more persistent, traceable structure of data that is capable of materializing the esoteric existential underlying principles of trust in society including auditability, verifiability, transparency, immutability, and permissionlessness in a digitized format becomes possible. A format capable of displacing (or supplementing) private-centralized databases with a public-decentralized one.

Radically transforming how humans ascribe value, conduct commercial activity, denominate their services, and generally interact online, this still nascent technology has experienced a Cambrian explosion of innovation, cycling through 4 generations in roughly 15 years.

Generation 1

Bitcoin

Crypto’s 0-to-1 moment. Primarily based on experimentation with Proof-Of-Work and scripting systems, the first generation of blockchain was the era of non-turing complete networks like Bitcoin. Amalgamating 40 years of cryptographic breakthroughs, the technology of this era included a novel synthesis of ECDSA (key management), UTXOs (transaction model), POW (sybil protection and transaction ordering) alongside others. Facilitating the discovery of applications and limitations on distributed ledgers, Gen One highlighted the feasibility of instantiating sovereign monetary network systems.

Generation 2

Smart Contracts & Ethereum

Marked by the arrival of Ethereum, Generation Two blockchain technology introduced Turing completeness through the implementation of a virtual machine (the EVM). Unlocking a radical new design space for developers with the ability to execute arbitrary logic for state transitions via smart contracts, gen two refers to the class of blockchain networks hosting decentralized applications.

Generation 3

Scalability, Interoperability, and Killing Ethereum

Arriving after the 2017-2018 ICO craze (riding on the back of innovations enabled by the previous generation), Gen three blockchains were rooted in the narrative of “scalability and interoperability” of smart contract platforms. Colloquially referred to as the era of “Eth Killers” this era introduced alternative smart contract platforms, including the likes of Cardano and EOS, that sought to reduce the friction of user experience that became apparent in Ethereum’s heydays (namely fees and throughput) and advance blockchain as a whole further into the fabric of society.

Generation 4

Modularity, Alternative VMs, and Scaling Tradeoffs

Building on the shortcomings in scalability and interoperability of prior generations, gen four blockchain relates to advancements at the physical infrastructure level, VM level, and interoperability between them all. Categorized into two buckets; the alternative monolithic networks backed by a new caliber of market participants that are Non-compatible but orders of magnitude more performant such as Solana, SUI, Aptos, et al., and the Rollup networks that arbitrate out costs by bringing execution offchain, such as Optimism, Arbitrum, and zkSync.

In spite of all the innovations and iterations, web3 is still in an early experimental phase. As the industry evolves into the next version of itself, few things are as certain as the need for universal standards, developer tooling, and infrastructure to support the inevitability of a multichain future.