In October 2008, Satoshi Nakamoto published a landmark white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System. Although the true identity of Satoshi has not been ;revealed, this paper triggered a gold rush to cryptocurrency and led to the birth of a new technology—blockchain. While the initial rush to cryptocurrency has suffered a severe setback due to dramatically descending prices of main cryptocurrencies such as BTC (bitcoin), XRP (Ripple), and ether (Ethereum), blockchain as a technology is alive. Numerous blockchain projects are being worked on worldwide. The technology will fundamentally change the way most businesses will be conducted and how people will live. ICOs, a primary fundraising method used in the cryptocurrency and blockchain world, have played the main role in this gold rush, driving up the BTC's price to an unprecedented level, by over USD 19,000 in December, 2017. The cryptocurrency bubble burst in late 2018 as BTC's price crashed. It is below $4,000 as of January, 2019. The dramatic drop in price of the main cryptocurrencies led to the death of ICOs.

It is not coincidental that the ICO bubble burst. A similar event occurred in the financial world over ten years ago—the 2008 financial crisis. The primary reason for the 2008 crisis was the lack of control in lending standards, resulting in the issuances of many loans to unqualified borrowers. The loans were then packaged via a financial-engineering process called securitization, and sold to unsuspecting investors worldwide. When enough borrowers started to default on their mortgages, a worldwide financial crisis broke out. The ICO fundraising model is fundamentally flawed in its lack of control on many of the proposed projects, for which funds were raised. Via an ICO, an entrepreneur can raise tens of millions of US dollars within minutes without a real product or even a company! All it has is a white paper, sometimes only a few pages long. To address the issues of ICOs and support the blockchain industry's future growth, the blockchain community has proposed and promoted the STO idea. STO has attracted a lot of attention and it is expected to play a promising role in the replacement of ICOs.

In his paper, Satoshi Nakamoto pioneered a way to integrate several key ingredients and develop an electronic payment application. This application offers a more efficient and low-cost solution to fulfill a payment through the removal of intermediaries. These key ingredients include digital money, encryption, decentralization, consensus mechanism, chained blocks, and a peer-to-peer network. Many people responded to Satoshi's idea. They formed the core team to implement the idea.

In January 2009, Satoshi Nakamoto released the first software and blockchain platform. This blockchain platform is referred to as bitcoin, which minted the first coins of the bitcoin cryptocurrency—BTC coins. Many of the key ingredients have evolved. Satoshi's main contribution is to put them together to address the pain points of the existing business model, such as high cost and long execution time for facilitating cross-border payments.

When relying on an existing business solution, it usually takes three days to complete a cross-border payment transaction. With Satoshi's proposed solution or its variations, it takes a few minutes or seconds to finish the same transaction at a tiny fraction of the costs of non-blockchain-based solutions.

For the rest of our discussions, we will use the term blockchain industry to refer to both cryptocurrency and blockchain technology. The word blockchain refers to a sequence of encrypted blocks chained linearly. Bitcoin's platform shares many of the same characteristics as a genealogy tree. They are summarized as follows:

• Like a clan consisting of many related families, a blockchain network (a clan) consists of nodes. Each node is like a family.
• While every family keeps a copy of the clan's genealogy, each bitcoin node maintains a copy of all transactions that occurred on the chain, starting from the very beginning. The collection of all these transactions is a distributed ledger. Since every node keeps a copy of the ledger, blockchain is essentially a decentralized data repository.
• A genealogy starts with a common ancestor of the clan. The ancestor has offspring. The equivalent of a common ancestor is called the genesis block. The genesis block is followed by one child block, which, in turn, is followed by its own child block, and so on. The collection of all blocks is the blockchain (or in business terms, the ledger). Each block contains one or multiple transactions.
• Adding a new name to a genealogy requires a consensus of families within a clan. Similarly, bitcoin relies on a consensus mechanism to decide whether a newly built block is valid, and can be added to the chain.
• Like a genealogy, after a block is added to a chain, it is difficult to change. This is the immutability feature of bitcoin.
• Genealogy provides transparency regarding a clan's history. Similarly, a blockchain allows a user to query the ledger on BTC transactions. This is bitcoin's transparency feature.

The bitcoin blockchain design is restricted to resolve one specific business problem—the cash payment. Its value is therefore limited. A generic blockchain platform, called Ethereum, is then implemented by adding new ingredients such as smart contracts, as well as generic programming languages.

As is being pointed out, bitcoin has shortcomings, such as the following:

• Bitcoin serves a specific purpose—cash payment.
• Bitcoin's scripting language is not Turing complete; for example, it has no looping statement, and so on. Here, the Turing completeness refers to the ability of a programming language to resolve any computational problems.
• Bitcoin does not have a state. Consequently, to answer a question such as What is the total number of minted BTCs?, you have to search the entire ledger.

To address these issues, Vitalik Buterin, a Canadian cryptocurrency researcher and programmer, proposed the idea of Ethereum in late 2013. Funded by an online crowdfunding sale—an ICO—the system went live on July 30, 2015, with 11.9 million coins premined for the crowdsale.

The core idea for Ethereum is to implement a general purpose blockchain. With that, users can address a wide range of business problems. Ethereum introduced a few key concepts:

• A Turing complete programming language, such as Solidity.
• Smart contracts, which define business logic and are deployed on the blockchain—every node maintains and runs the same code at almost the same time. Thus, smart contracts are immutable and are guaranteed to be executed and yield the same outcomes.

The idea of Solidity was initially proposed in August 2014 by Gavin Wood. The Ethereum project's Solidity team led by Christian Reitwiessner later developed the language. It is one of the four languages (Solidity, Serpent, Lisp Like Language (LLL), Viper, and Mutan) that was designed for Ethereum virtual machine (EVM).

The introduction of the smart contract concept, along with others, has significant implications:

• A smart contract is a scripted legal document, since it is immutable and enforceable.
• The code built into the contract is stored on the Ethereum blockchain and cannot be tampered with or removed. This makes the scripted legal document credible.
• After being triggered, smart contracts cannot be stopped, meaning no one can easily influence the running code. As long as triggering conditions are met, the code will be guaranteed to run and the legally defined actions will be fulfilled.
• Ethereum to blockchain is like an OS to a computer. In other words, the Ethereum is a general purpose platform.
• It now has a Turing complete language—Solidity.

Bitcoin and Ethereum, along with many of their variations, are collectively called public blockchain, since they are open to everyone who is interested in participating in the network. No approval is required. Public blockchains cannot satisfy the needs of many companies. As per these firms' business models, a participant has to receive approval before being authorized to join a network. To satisfy their needs, private blockchain platforms are implemented by modifying public blockchain platforms such as Ethereum and adding an authorization and entitlement component.

Since the membership of a private blockchain network is tightly controlled, several things can be simplified. For example, the consensus algorithm is simplified. Consequently, a primary blockchain platform has much better performance. Also, a private blockchain does not require that you issue a coin so that it gets its work done. Hyperledger is a well-known private blockchain. It is also referred to as an enterprise blockchain.

Ethereum greatly expanded the blockchain technology's capabilities. However, there are many scenarios where Ethereum is not enough, as we just pointed out. The issues of Ethereum are restated here:

• Enterprise applications, for example, credit card transactions, require high-performance, as there are potentially billions of transactions a day. The current form of Ethereum has a maximum capacity of handling around 1.4 million transactions a day. Bitcoin is even worse: 300,000 transactions a day.
• Many financial markets, for instance, over-the-counter (OTC) derivatives or foreign exchange contracts, are permission-based. A public blockchain supported by Ethereum or bitcoin does not satisfy such a need.

Big companies across industries are addressing these issues. They form consortia to work on enterprise blockchain projects. With a permission-based enterprise blockchain network, a node has to receive approval before it can join the network. Hyperledger is one of them.

The Linux Foundation (LF) created the Hyperledger project in December 2015. Its objective is to advance cross-industry collaboration by developing blockchains and distributed ledgers. On July 12, 2017, the project announced its production-ready Hyperledger Fabric (HF) 1.0.

Currently, Hyperledger includes five blockchain frameworks:

• HF: A private blockchain, initially contributed by IBM and Digital Asset, is designed to be a foundation for developing applications or solutions with a modular architecture. It takes plugin components to provide functionalities such as consensus and membership services. Like Ethereum, HF can host and execute smart contracts. However, HF uses the term chaincode instead of smart contract. An HF network consists of peer nodes, which execute smart contracts (chaincode), query ledger data, validate transactions, and interact with applications. Transactions entered by users are channeled to an ordering-service component, which essentially serves to be HF's consensus mechanism. Special nodes called orderer nodes validate the transactions and ensure the consistency of the blockchain and send the validated transactions to peer nodes, as well as to Membership Service Provider (MSP) services. MSP is the certificate authority.
• Hyperledger Iroha: Based on HF, it is designed for mobile applications. Iroha was contributed by Soramitsu, Hitachi, NTT Data, and Colu. It implemented a consensus algorithm called Sumeragi.
• Hyperledger Burrow: Contributed initially by Monax and Intel, Burrow is a modular blockchain that was client-built to follow EVM specifications.
• Hyperledger Sawtooth: Contributed to by Intel, it implemented a consensus algorithm called Proof of Elapsed Time (PoET). PoET was invented by Intel and is designed to achieve distributed consensus as efficiently as possible. Sawtooth supports both permissioned and permissionless networks. Sawtooth is designed for versatility.
• Hyperledger Indy: Initially contributed by the Sovrin Foundation, it is to support independent identity on distributed ledgers. Indy provides tools, libraries, and reusable components to support digital identities.

The blockchain technology is still in its early stages. It may take many years before it becomes mature and its potential has been fully explored. At the moment, there is no universally agreed way to classify generations for the technology.

In her book on blockchain, Melanie Swan defined blockchain 1.0 – 3.0. According to her view, these phases can be described as follows:

• Blockchain 1.0 refers to the cryptocurrency phase. During this phase, the blockchain applications focus mainly on cash payment, such as currency transfer, remittance, and digital payment systems.
• Blockchain 2.0 refers to the smart contract phase. During this phase, the blockchain applications focus in certain areas of the financial industry, for example, currency, financing, and security markets.
• Blockchain 3.0 refers to the blockchain technology being applied to areas beyond currency, financing, and security markets. For example, blockchain technology is utilized in areas such as non-profit organization causes, the health industry, the supply chain, manufacturing activities, and so on.

Some others divided the blockchain evolution into four generations:

• Blockchain 1.0: Bitcoin is the most prominent example. Financial transactions are executed based on distributed ledger technology (DLT). Cryptocurrency is used as cash for the internet.
• Blockchain 2.0: Ethereum is the most prominent example. The key concept is smart contracts, which are stored and executed on a blockchain.
• Blockchain 3.0: The keyword is Dapps (decentralized applications). Dapps use decentralized storage and decentralized communication. Unlike a smart contract, which only involves a backend or server-side code, a Dapp can have a frontend code, also called client-side code, for example, user interfaces, to interact with its backend code in a blockchain. In summary, Dapp is a frontend and has smart contracts.
• Blockchain 4.0: Blockchain platforms are being built to serve Industry 4.0. Industry 4.0 refers to automation, enterprise resource planning, and the integration of different execution systems.

Regardless of how the generations are defined, it is certain that the growth of this technology is far from over. New ideas and implementations will be incorporated into the existing platforms to deal with challenges from real-life problems. In other words, blockchain technology will be nimble and is self-adjusted to be an enabler in resolving business problems.

Issuing a cryptocurrency or a token is more relevant to public blockchains. In the next two sections, we discuss bitcoin and Ethereum in detail.