Introduction To The Next-Gen Blockchain

For the last couple of years, technology corporates and enterprises have taken on the biggest challenge in the financial and banking industry of building an entirely new economic system powered by artificial intelligence (A.I.), blockchain technology, and Data Science.

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The advantage of using blockchain technology is a decentralized system that provides a safe, encrypted, and decentralized means of transacting directly and instantaneously with parties without intermediaries.

Large corporate giants like IBM, H.P. Enterprises, Walmart, and many more have already publicly announced their involvement and utilization with the development of the blockchain technology as they begin to integrate it into their core business models.

There’s no question that the financial sector needs decentralization and scalability, and security. But why do these platforms seem to have already filled the tech space? The answer is that many of these platforms aren’t ready for real-world usage.

FIRST-GEN BLOCKCHAIN

These are still very early days of blockchain technology, dubbed “first-generation.” The implementations of blockchain technology like the proof-of-work (PoW) and proof-of-stake (PoS) protocols require excessive computational power or mining.

The technology behind Blockchain must indeed be decentralized, robust, secure, fast, scalable, and egalitarian. Smart contracts are still subject to human error and thus vulnerable to attack. Digital currencies, regardless of their purpose, must be backed by and pegged by real-world assets to sustain their value.

But these basic properties seem to be absent from the first-gen blockchain applications. ​While advocating a decentralized system, most blockchain platforms are still developed towards centralization because of how the PoW and PoS protocols work.

It’s essential to note that mining and stacking require substantial computational power. High computational power comes with high electricity bills, which are not affordable for everyone.

For these reasons, platforms lack scalability, allowing for smart contracts to be deemed vulnerable and cryptocurrency exchanges to remain open to cybersecurity attacks.

CYBERATTACK ON BINANCE

Binance suffered a large-scale security breach late today, according to a statement. Hackers obtained API keys, two-factor authentication codes, and other important authentication information. 7,000 Bitcoin ($40 million) were withdrawn in a single transaction.

The hackers used multiple techniques, including phishing attacks and computer viruses, to get at Binance and its hot wallets, where it keeps funds to manage the day-to-day operation of the exchange. The hackers could not access the Binance cold storage—the offline wallets held most funds. Likewise, individual user wallets were not directly affected.

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SMART CONTRACTS IN NEW-GEN BLOCKCHAIN SYSTEMS

Concerning smart contract technology, it’s essential to understand that even if they are computer code, they are still subject to bugs, no matter how many precautions are taken. Why? Human error.

The new blockchain platform can tackle this issue. If a problem is discovered within a smart contract, the only person or entity affected should be the entity that owns the account, nobody else.

If a problem is discovered surrounding a particular type of contract, the program template can be stopped from being linked to other account holders until the problem is fixed. They are essentially freezing everyone else out to prevent potential harm.