Second Generation Applications

Blockchain Framework A blockchain framework provides a supporting structure for developing blockchain based applications. They provide tools that help with development, deployment and support.

Many of the popular blockchain applications provide their own frameworks. In this chapter the most important ones will be discussed.

Bitcoin Blockchain. The Bitcoin Blockchain framework is the foundation for the world’s first and most well-known cryptocurrency, Bitcoin. It is based on the 2008 whitepaper published by Satoshi Nakamoto. This framework has remained highly popular due to the continuing prominence of Bitcoin. It is designed with a strong emphasis on security and immutability, making it ideal for secure financial transactions. However, because of its high level of decentralization and the large user base, Bitcoin’s processing speed is relatively low, averaging around 7 transactions per second. The framework operates on a Proof of Work (PoW) consensus algorithm, requiring miners to solve complex cryptographic puzzles to validate transactions and secure the network. While highly secure, this also contributes to the slower transaction throughput and significant energy consumption.

Ethereum Blockchain Ethereum is an open-source blockchain framework that supports distributed applications. It was proposed in 2013 and has become one of the most widely used blockchain platforms for building decentralized applications and smart contracts.

Ethereum is designed with three core components:

1. Smart Contracts: These are self-executing contracts with the terms of the agreement directly written into code. Smart contracts allow for decentralized automation of agreements, reducing the need for intermediaries in transactions and ensuring transparency.
2. Ethereum Virtual Machine (EVM): The EVM is a decentralized computation engine that executes smart contracts and runs decentralized applications. It is responsible for processing smart contract instructions, and its ability to execute arbitrary code makes Ethereum a versatile platform for various use cases, from financial services to supply chain management.
3. Proof of Stake (PoS): While Ethereum initially launched using a Proof of Work (PoW) consensus algorithm, it transitioned to Proof of Stake with Ethereum 2.0. In PoS, validators are chosen to propose blocks based on the number of tokens they hold and are willing to “stake” as collateral, which significantly reduces the energy consumption associated with the network and improves scalability.