The Bitcoin blockchain has been getting a lot of attention now that the world has seen what it’s capable of. Blockchain technology changed the way we interact online, ensuring trust within the network while providing a wider range of options for people transacting online.
This leads us to the question—how can we tell if a blockchain is successful or not? Let’s take a look at what makes a blockchain and how we can tell if it’s functioning as it should.
What makes a blockchain
Blockchains work on distributed ledger technology. What this means is that the record of all the transactions in the network are publicly available and distributed among the users of the blockchain network. This allows anyone to take a peek and verify if the transaction was legitimate or not.
Each blockchain will differ in its features and functionality. Ethereum, for example, introduced us to smart contracts—digital contracts that automatically execute once the conditions of the transaction have been met.
Blockchain speed is a big factor in blockchain efficiency as well. Bitcoin, as an example, used to take some time to transact with owing to the fact that the infrastructure wasn’t ready to support it yet. At the time, the priority was providing a way for users to securely buy Bitcoin.
Provided By Tax Software Company, SovosWhat blockchains are for
Once the world figured out what blockchain technology could do, we saw a rapid rate of development with the different applications and products made available to the market.
These days, we can see blockchain technology applied to different industries like shipping and a wide variety of digital products including the likes of non fungible tokens (NFTs) and decentralized autonomous organizations (DAOs).
What successful blockchains look like
Now that we’ve talked about what blockchains are and what they are for, let’s take a look at a few examples of blockchains that have found their way to the top.
Bitcoin
The first of its kind, the Bitcoin blockchain acted as a sort of a proving ground where enthusiasts first saw the potential of decentralized finance. First seen in 2009, the blockchain and the BTC currency would go on to become the gold standard of cryptocurrencies with everyone scrambling to be able to find a way to make money with Bitcoin.
Recently, Bitcoin would gain the advantage of the Lightning Network. This eliminates the earlier transaction speed issues and now allows Bitcoin to be used for microtransactions like groceries or even smaller things like a cup of coffee, increasing the blockchain’s adoption rate and accessibility.
Litecoin
An offshoot of Bitcoin, Litecoin would become the silver to BTC’s gold. The Litecoin blockchain focuses on smaller, faster transactions. It fit in nicely with the gaps originally left by Bitcoin with both blockchains now two of the most popular in the market.
Ethereum
If you’ve heard of NFTs before then odds are you’ve heard of Ethereum as well. The Ethereum blockchain is known for its smart contracts—which are what allow DAOs and NFTs to function. These innovations have allowed ETH, the blockchain’s native currency, to be one of the most valuable cryptocurrencies available.
A popular example of an application of Ethereum’s blockchain is with the crypto game Axie Infinity, a video game that allowed users to make money on the side by playing and receiving tokens as in-game items. These tokens could then be sold on the public market for ETH which users could either hold or convert into fiat currency.
Cardano
The Cardano blockchain was founded by the co-founder of Ethereum and has gained prominence in recent years. The goal of the Cardano blockchain is to provide the most stable blockchain and coin.
To achieve this, the blockchain has itself peer-reviewed by scientists and programmers to ensure that everything they do is backed by research. Initially released in 2017, the value of Cardano’s currency ADA became the 9th most valuable cryptocurrency as of writing.
Polkadot
Founded by the Web3 Foundation, the Polkadot blockchain focuses on providing a truly anonymous, decentralized, and trustless network that allows users to trade securely. With their Polkadot relay chain, the intention is to allow individual blockchains to exchange information, further developing the idea of decentralized finance.
Dogecoin
Dogecoin and its blockchain were first conceptualized as a joke or meme coin. Despite that, they’ve been included as part of the more popular blockchains and valuable coins thanks to the public support given by celebrities and influential individuals like Elon Musk.
Understanding blockchains
Blockchains are leading the way into a future where decentralized finance is more the norm than the minority. At its core, a successful blockchain is one that is able to pride itself on serving a purpose. Blockchain developers can think of as many innovations as they want, what matters most is that they’re able to keep providing that service.
It might take a while to fully understand the complexities of blockchains—it can get very technical, after all. The trick is to start small. Doing your own research can be done at any pace. What’s important is that you make informed decisions that you can be confident about.
