Blockchain is rising in popularity as more people come to understand the value proposition of this technology. The first practical use case of blockchain was in Bitcoin’s underlying infrastructure, whose transactions are settled on a public distributed ledger. This pioneer cryptocurrency has since driven the adoption of blockchain within the crypto ecosystem and other industries, including finance, healthcare and logistics.
As it stands, the most prominent use cases of this technology fall within the crypto market. Blockchain has facilitated the development of decentralized applications (dApps) on public blockchain networks, with Ethereum being among the first blockchain networks to host these upcoming developments. However, the industry is now evolving to feature more scalable Layer-1 blockchain environments to support the mainstream adoption of blockchain and crypto.
The Fundamentals of Blockchain Tech
By definition, a blockchain is a list of records formed by many growing blocks linked together through cryptography. The first research proposal on blockchain technology was published back in 1982 by Cryptographer David Chaum, whose dissertation paper discussed the potential of "Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups."
Ideally, the blocks that make up a blockchain contain information including the cryptographic hash of a previous block, transactional data and the timestamp. These technical underpinnings ensure that blockchain networks are immutable and verifiable, given that one cannot tamper with transactional data that has already been recorded on-chain.
It was this fundamental infrastructure that inspired Satoshi Nakamoto to invent the Bitcoin peer-to-peer blockchain. Being the first cryptocurrency, Bitcoin’s network is run by node validators whose role is to verify transactions, making the ecosystem decentralized. Unlike traditional centralized systems, innovations built on blockchain can be run by a larger community, as we can see in the Bitcoin network.
Given its value proposition, it comes as no surprise that retailers and institutions are now considering blockchain technology. Blockchain eases the pains of centralization, which have long crippled the financial market and other industries. Today, anyone in the world can access financial services through crypto niches such as DeFi without going through third-party financial intermediaries.
Building on Blockchain
While Bitcoin led the way, its blockchain infrastructure is not scalable enough to support the building of dApps. This shortcoming has forced crypto innovators to develop other Layer-1 platforms where developers can build all sorts of dApps. The earliest chain to focus on scalability was Ethereum, although it is yet to live to the scalability expectations.
Meanwhile, we have upcoming Layer-1 blockchain ecosystems such as Minima, an ultra-lean blockchain protocol that allows users to run a full contracting and validating node from mobile or IoT devices. This protocol is one of the blockchain environments that supports dApps while creating the possibility of a totally decentralized ecosystem.
Minima blockchain enables the scalability of dApps through its Layer-1 and Layer-2 distinct protocol layers. The former layer acts as the base verification layer, while the latter serves as a transactional lawyer. In essence, Minima reduces the workload on the base layer by settling transactions on Layer-2 hence creating more room to build on the verification layer.
Notably, the Minima blockchain protocol also provides an anti-censorship environment through its decentralized node network. The ease of setting up a node makes this blockchain protocol closer to achieving complete decentralization, building more security as the number of node validators grows.
The Future is Decentralized
While centralized financial institutions may beg to differ, the trends seem to be shifting towards a decentralized financial market. Currently, the total market cap of cryptocurrencies stands at $1.4 trillion and continues to show promising prospects, with wall street taking a keen interest in recent years.
Prominent billionaires like Mavericks owner Mark Cuban are among those at the forefront in spurring crypto adoption. The billionaire has previously commented on the potential of DeFi and subsequent innovations, including Non-fungible Tokens (NFTs), comparing them to the early internet days.
"You’re starting to see NFT (non-fungible tokens), and it’s not so much about just about how much is sold, market value, but more just that people are becoming more comfortable with it and so we’re starting to see these applications that are just popping up left and right."
This is just one example of the prominent figures that seem to be getting the crypto gist. Even anti-crypto jurisdictions like China are working on blockchain-based innovations, including the country’s Central Bank Digital Currency (CBDC), which is currently in its pilot phase.
Summary
Blockchain technology is one of the revolutionary innovations of the 21st century and features in the 4th Industrial Revolution (4IR) age. An era that is expected to mark the shift to smart technologies and web3 applications. That said, innovators in the blockchain space still face the uphill task of making it sustainable and adoptable by larger ecosystems. It may take a while before we see a fully decentralized financial market, but it only appears to be a question of when given the current rate of development.