Blockchain technology is still relatively new and experimental. Despite this “immaturity”, we are already witnessing the emergence of a third generation of platforms, promising improved performance and scalability. After months of whitepapers, token sales and development promises, projects are finally starting to release working software. After the launch of the EOS main network last months, the VeChain project has now joined the club by mining the first block of its new blockchain.
The first generation of blockchains focused on digital cash. Cryptocurrencies were the original application targeted by these blockchains, starting in 2009 with the launch of the Bitcoin network. This type of blockchain is characterized by a focus on consistency for ensuring correct monetary transactions. Block generation times were typically measured in minutes rather than seconds, leading to long waits for transaction confirmations. Furthermore, instruction sets of the virtual machines were limited, a fact that severely complicates Bitcoin’s scripting language.
The launch of Ethereum in 2015 can be seen as the beginning of an era of second-generation blockchains. These blockchains focus on general-purpose computing and smart contracts, allowing applications beyond cryptocurrencies. In fact, people were already using the blockchain for many interesting use cases, but Ethereum’s Turing-complete instructions set, and easily programmable smart contracts make it much easier to implement decentralized applications for a number of industries. Apart from general-purpose computing and smart contract support, second-generation blockchains also significantly increase the block generation frequency, reducing transaction confirmation time to approximately 15 seconds in Ethereum’s case.
Ethereum still remains the de facto industry standard for smart contract applications, but it did not take long for limitations to become apparent. Cryptokitties and a number of high-profile ICOs have shown that the platform scales badly, generating network congestion and poor performance. Furthermore, concerns created by smart contract security incidents have converted this type of public blockchain into a less preferred option for enterprise applications.
The third generation of platforms has been in the works for a while, focusing on scalability, high-performance and professional enterprise support. Amongst these platforms EOS, Lisk, Cardano, Cosmos and a few others position themselves as alternatives to Ethereum, whereas VeChain focuses on enterprise applications.
With this latest release, VeChain provides a business-focused smart contract platform. The blockchain operates a Delegated Proof of Stake consensus protocol, which uses Proof of Authority for block generation. This model is already used by many enterprise applications in consortium blockchains and private chains. In contrast to other enterprise-focused blockchain projects, VeChain tries to convince businesses to operate on a public network.
Furthermore, the newly released blockchain provides two layers of tokens, trying to decouple operation cost from the blockchain’s cryptocurrency, in order to avoid price increases for users when the currency’s value increases.
It is unclear which platform will eventually dominate the market and Ethereum’s reign is far from over. However, as in any market, competition is a good thing and there are now a number of alternatives available to decentralized application developers.