Blockchain technology introduced a real paradigm shift in 2009 with the emergence of Bitcoin.
Since then, developers and the community have continued to innovate, transforming blockchain from a technology that allows relatively simple transactions to be carried out at high energy cost, to a powerful technology that enables programmable transactions at low energy cost.
The so-called “1st-generation” protocols:
Like Bitcoin, the 1st generation protocols use proof-of-work (PoW) consensus. This first-generation protocol enabled the technology to be dematerialised, but suffers from a number of shortcomings:
- With ≈ 8 transactions per second and an average wait of 30 minutes (1 block + 2 blocks to limit the risk of forks or “stale blocks”) for validating a transaction, the Bitcoin network may have its limitations for some use cases,
- With limited smart contract technology, Bitcoin does not permit the development of highly advanced use cases,
- The proof-of-work consensus mechanism provides strong security but is very energy-intensive, and therefore difficult to reconcile with environmental issues.
The so-called “2nd-generation” protocols:
Like Ethereum, 2nd generation protocols provide a stable development environment (the Ethereum Virtual Machine) that permits the development of extended use cases. However, these protocols do not resolve the following issues:
- Interoperability between blockchains
- The carbon footprint of the network, which is still a consensus based on proof of work
- Scalability of the protocol
The so-called “3rd-generation” protocols:
Like Tezos, 3rd-generation protocols seek to address all the issues raised by 1st and 2nd-generation protocols.
For example, the problem of energy consumption is solved through the use of a proof-of-stake (PoS) consensus. This reduces the calculations required to validate a block: network security is now based on the possession of tokens, instead of on computing power. To validate a block and secure the network, participants must pledge part of their tokens and, in the case of Tezos for example, they can lose them (“slashing”) if they engage in hostile behaviour towards the network.
With its Liquid Proof-of-Stake protocol and its system of adding and validating blocks referred to as “baking” (see “What is baking?”), the Tezos blockchain significantly reduces the energy required to deliver a high-performance service.
The resources required to operate a Tezos node are modest, and the challenge lies no longer in computing power (CPU, GPU or specialised chip) but in the stability of the infrastructure.