The three versions of blockchain are:

Blockchain 1.0 (Cryptocurrency—

Bitcoin)

Introduced in 2005 by H all Finley was Blockchain Version 1.0, which

implements Distributed Ledger Technology (DLT), representing its first

application based on cryptocurrency. This allows financial transactions

based on blockchain technology or DLT, which is executed with the help of

Bitcoin. This version is permissionless as any participant will perform a

valid transaction of Bitcoin. This is mainly used in currency and payments.

Blockchain 2.0 (Smart Contracts)

As there were problems in version 1.0 wherein mining of bitcoin was

wasteful, and there was also a lack of scalability of the network in it, the

new version of blockchain came. This problem has been improved in

version 2.0. This version of the blockchain is not j ust limited to

cryptocurrencies but extends to smart contracts.

These smart contracts live in the chains of blocks and are free computer

programs that execute automatically, checking the conditions defined earlier

like facilitation, verification, or enforcement and reducing transactions cost

efficiency. Bitcoin is replaced with Ethereum in Blockchain 2.0. Blockchain

2.0 successfully processes a high number of transactions on public networks

rapidly.

Smart Contracts are computer protocols that embed the terms and

conditions of a contract. The source code of a contract is compiled into

executable computer code that can run on a network. Many kinds of

contractual clauses may thus be made partially or fully self-executing, self-

enforcing, or both.

Blockchain technology enables smart contracts by building on its

distributed ledger architecture. The code that makes up the smart contract

can be added as part of an entry to the Blockchain 2.0 application. Smart

Contracts among third parties unknown to each other can now be entered

into due to the trust that is built into the blockchain as a database that

cannot be forged or tampered with. Thus, the definition of a blockchain-

based smart contract is: “a piece of code (the smart contract), deployed to

the shared, replicated ledger, which can maintain its own state, control its

own assets and which responds to the arrival of external information or the

receipt of assets”.