Four Generations of DLT Explained

Let’s talk about ledgers in general So, distributed ledgers have been around for a while You can say they go back 30 years So let’s just start, say, with Bitcoin as our history here You can say Bitcoin came along and said “You know what, we can do money without any government" ”We’ll do it by making people do Proof of Work So you buy a supercomputer, feed lots of electricity to it And then you too can help be part of the system And that is the first of the four generations I’m going to talk about But nothing stands still It’s continuing to improve So, what does it let us do? It lets us use cryptocurrencies, like you would use money You can just save some of your money in your cryptocurrency wallet You can use it as a store of value You can use it to transfer money to other people Just like you would PayPal the money, and send them your cryptocurrency You can use as utility tokens to pay for services So there can be services online that you can pay for with these tokens Strong anonymity Where you don’t know who has the given wallet Or strong transparency So the banks can do know your customer things Or microtransactions But wait a second It’s a computer It’s 1’s and 0's We don’t have to limit ourselves To remembering things about coins We could put other stuff in that ledger And so we got the second generation of DLTs Which was: Well, let’s not just Have money, Let’s have a file system Nobody could change it When they shouldn't And if I think there’s a piece of information there And you look at it, you are guaranteed to see the same thing Then we have the third generation Which was Well if I’m going to be able to store my land in the ledger And you’re able to store your money in the ledger Maybe we can do a swap Maybe I can give you my land in exchange for your money But with a smart contract You can actually have a computer program Being run by the entire community And they can all agree On whether or not the swap happens And you can prevent cheating But if we can do that That raises the question: "Should we do a fourth generation?" If we have money, and we have assets And we’re able to swap money for assets with sales Then how do we get matched up? We need markets And so with the markets You have to have fairness We need to know that we’re going to have fairness, And how we match them up If you have the fairness, then you can have markets I’m calling it the fourth generation But it’s more than what you think of as markets You can do games, you can do auctions You can do something like an eBay, Or an Amazon You can do something where first to file matters You can set up a patent office You can set up an office selling domain names Anything like that where it matters who was there first The four generations happen in that order But all four of them continue to evolve

You May Also Like