The Evolution Of Crypto
The First generation of crypto was birthed from the broadest corruption in American history. Banks ran amuck on the American economy leading to an era known as the “Great Recession”.
During that period people lost their jobs, homes, and for a lot of people, their dignity. In response to the crisis, the government turned around and gave the same people who caused the crisis $1.2T. The printing presses at the FED were probably overheated. Nevertheless, the economic carnage gave birth to Bitcoin.
The mystery man or Group Satoshi Nakamoto invented the concept of Bitcoin because of the great recession and the inflationary response to it. Millions were in despair because of the decisions of a few people. The economic destruction coupled with an inflationary response of the government lead to a fixed supply of Bitcoin being dispersed to the world.
Bitcoin was designed to have a fixed amount and eventually be distributed around the world. Bitcoin is an excellent store of value. I call it the “Global Savings Account”. Nevertheless, with all its greatness it still has its flaws.
For starters, Bitcoin transactions are slow and costly at least in the beginning anyway. Other criticisms are consumption, taking up way too much energy. Bitcoins’ energy usage is comparable to the energy consumption of the Netherlands. It also has some economic effect on the computer chip industry because of the chips used to mine it. The demands for the ASCII Miners have more than doubled. Creating chip shortages amongst other problems.
These constraints lead to the creation of 2nd Generation crypto.
2nd Generation Cryptocurrency
In 2013 Ethereum(ETH) was the beginning of second-generation cryptocurrency; it’s considered the second generation because Ethereum introduced smart contracts.
ETH is a decentralized network that allows decentralized apps known as Dapps to work on top of the network.
What are smart contracts you might ask? Simply put, the best thing ever. They are trustless and immutable contracts that self execute; there is no need for a third party.
ETH also has its problems and they are becoming more problematic the more it’s used and adopted. The gas fee system it uses for token transfer isn’t scalable(that’s a topic for another article). Currently, because of the gas fees, minimal transaction costs are upwards of $50. The other major issue like Bitcoin is energy consumption.
ETH is trying to solve these issues with ETH2 but who knows when it will be live.
3rd Generation Cryptocurrency
Cardano is considered the first 3rd generation cryptocurrency for solving the problem of scalability. It’s also introduced a staking system to help with consensus.
Staking is an alternative to proof of work in which you delegate your tokens to a validator and receive a percentage for helping the network. It’s environmentally friendly by using less electricity; miners are not used in staking.
Since its release, there have been various cryptocurrencies developed. All of them have different transaction speeds, transaction fees, utility, and uniqueness. Some of the top protocols are:
I thought I’d give a little history on cryptocurrency to help new adopters understand the cryptocurrency market and industry.