Blockchain is an emerging technology that has the potential to reshape numerous industries, including mobile apps. Among other things, it offers the ability to secure data, reduce intermediaries, provide global transparency, and keep an immutable record.
In this blog, we’ll provide a basic overview of how the technology works, the benefits it can offer in a variety of industries, and some opportunities within the mobile app economy.
What is Blockchain?
It’s difficult to land on a clear, concise description of blockchain technology. It’s not a new concept in the technical landscape, but there are very few comparable systems that are commonly known and can be used for analogy.
If you’re familiar with financial record keeping then you’re familiar with the concept of a “ledger” – a record of transactions. Blockchain could be thought of as a public ledger; one where no user is trusted more or less than any other user, and where the data is not stored centrally in any one location, but distributed among the users.
Now, why on earth would anyone want a distributed, permissionless, public ledger? Getting past that requires understanding of “distributed trust.” Whenever a user updates the ledger with a new block, every other user can, and often does, perform a validation check. This typically happens automatically with all users checking that the new block is cryptographically valid.
In order to be cryptographically valid, the new block must match the secure hash of the previous block. This means that the entire chain of blocks going back to the beginning must match a very specific cryptographic pattern that becomes exponentially harder to fake the longer the chain grows. This combined with the fact that all users are validating all the time and no one user can override another is what leads to the distributed trust.
In our opinion, the idea of distributed trust and direct peer-to-peer transmission is a key innovation behind blockchain. But even if we read the last paragraph with blockchain-colored glasses and think “Ok, I’m game,” there is another challenge you might have started to consider. Wouldn’t a highly-used, highly-successful blockchain generate a huge amount of data? The answer is yes. However, we’re in an era where digital storage has become quite cheap. Also, the “computational cost” of validating your local copy of a blockchain is also quite inexpensive in terms of CPU and memory. This is due to only needing to examine the previous block, rather than the entire ledger at once. So now we are starting to see some of the potential benefits of blockchain and why it is becoming popular.
Where Can Blockchain Add Value?
Blockchain’s popularity has not yet let led to its wide use throughout industry. This is due, in part, to the fact that blockchain isn’t disrupting any particular industry with a lower cost, quick-to-implement solution. Instead, it is a technology that has the potential to create new frameworks for our current economic/business systems, creating a profound transformation over time.
Blockchain could grow into an effective solution, but not for all systems. Smaller systems with few users or few integrated systems would not benefit as much from using blockchain technology. Companies and industries that should consider blockchain are those with a large number of integrated systems where reconciling their “transaction ledgers” is tedious.
The areas where we see blockchain technology having the largest initial impact are supply chain management and financial services. Both of those areas have high-volume operations that could benefit from reducing the complexity of verifying records.
Consider the food distribution industry: from harvest to packaging to regional transit to local transit to local sales. A properly-implemented blockchain could confirm with ease that food is starting and ending where it’s supposed to, reducing costs from waste. It could also greatly simplify food recalls as suspect product could be identified and removed from any point in the process.
How Can Blockchain Impact the Mobile App Economy?
There are a number of ideas around how blockchain could improve the app industry at large, as well as ideas for how to leverage blockchain technology within an app to offer features and benefits.
From the industry perspective, blockchain could potentially streamline app approval through the creation of a blockchain based app store that was used instead of (or in addition to) the current Apple App Store and Google Play store. The premise is that such a store would be based on a “transparent developer reputation system” that could leverage a decentralized public ledger, theoretically lessening bias and improving approval speed.
At the individual app level, most of the mobile apps that currently tie to blockchain are directly related to cryptocurrency applications. There are apps for asset traders and miners that exchange the currencies, electronic wallet apps to store and spend money, and digital asset tracker apps that help users stay abreast of crypto market dynamics.
Many people are excited, though, about the possibility of using blockchain to undergird the functioning of a mobile app in other ways. For example, blockchain could prove useful for in-app purchases. Rather than paying any of a myriad of charges from card-processing fees to app store fees to bank transfer fees, developers could realize more of the money by using app coins that offer peer-to-peer transfer. Similarly, it could be employed for mobile payments at large, as cryptocurrency becomes more common.
Blockchain could also be a game changer for apps that can leverage smart contracts. These self-executing contracts that are managed peer-to-peer hold appeal in areas like insurance, real estate, and even crowd-funding. Similarly, any app that needs to employ digital records (medical, employee, student) could find blockchain helpful because of its security and immutability.
As with any new app development project, you should only incorporate blockchain technology if it’s value for the particular business is clear. It’s important to know what role blockchain technology can uniquely play, and whether or not you can adhere to the blockchain principles.
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