Application-specific blockchains are the future of decentralization | Opinion

Application-specific blockchains offer several advantages over smart contracts on general-purpose blockchains. Here are five key benefits:

In the current digital landscape, blockchain technology represents a pioneering innovation. It safeguards digital record-keeping systems for popular cryptocurrencies, such as Bitcoin (BTC) and Ethereum (ETH), across various industries. The global market value of this technology is anticipated to surge from $5.88 billion in 2021 to an impressive $1,314.03 billion by 2030, growing at a remarkable compound annual growth rate (CAGR) of 82.4%.

Delve into the realm of application-tailored blockchains. These solutions outshine generic applications in areas such as speed, adaptability, security, affordability, and administration. As this sector grows, these customized blockchains represent a significant opportunity for the future of decentralization.

As a blockchain analyst, I’d like to delve into the significance of application-specific blockchains in today’s digital landscape. Prepare to discover why these innovative solutions are poised to revolutionize the concept of decentralization.

Top reasons why it is the application-specific blockchains

Application-specific blockchains refer to bespoke blockchain systems engineered for a specific application, rather than being derived from a pre-existing platform. These novel architectures come equipped with unique features such as custom virtual machines and consensus mechanisms. Essentially, they represent fresh foundations, not mere codes running on a general-purpose blockchain infrastructure.

It’s clear that application-specific blockchains are tailored for unique decentralized applications (dApps). dApps represent pieces of software that operate not on a solitary computer, but rather on a blockchain or peer-to-peer network of computers instead.

Two primary categories of blockchains exist: those that manage consensus and execution on the same layer (referred to as layer-1 or L1), and those that separate consensus and execution into different layers (layer-2 or L2). Examples of customized blockchains in the first category include Avalanche Subnets, Polygon Supernets, and Cosmos Zones. Utilizing these distinct blockchain solutions can contribute significantly to enhancing decentralization.

The blockchain sector boasts a rich tradition of collaboration and financial backing among its members and pioneers. This internal financing enables skilled developers to construct specialized platforms for specific applications. They can secure funding in various avenues, such as self-funding, venture capital investments, or crowdfunding campaigns.

As a researcher studying the evolving landscape of distributed ledger technologies, I’ve come to believe that application-specific blockchains hold great promise for creating more decentralized networks. Let me explain why I think they represent the future of decentralization.

1. They allow for platform customization and optimization

With the increasing adoption of web3 technologies, application-specific blockchains offer a solution for developers to tailor blockchain features to suit distinct use cases. This adaptation brings significant advantages, particularly for businesses, as they often require unique chain characteristics to enhance their applications. These platforms enable companies to optimize their specialized needs and attributes.

Re.al has introduced custom blockchain solutions for dealing with real-world assets (RWAs) such as real estate and commodities. These platforms tackle persistent issues in the decentralized finance sector by offering a specialized approach to asset management. By creating their own blockchain infrastructure, Re.al enhances accessibility for trading these assets while ensuring seamless fluidity and compatibility.

2. They enable you to scale applications up and down

Application-specific blockchains offer flexible scalability for platforms, enabling them to adapt capacity according to demand. For instance, EY’s Ethereum-based blockchain solution, named EY OpsChain Contract Manager (OCM), streamlines intricate contracts, cuts down costs, and enhances security.

The functionality of application-specific blockchains varies from that of smart contracts, which are self-executing codes installed on common blockchain platforms. Smart contracts facilitate and govern deals among parties, leaving the underlying blockchain’s features untouched. Yet, it is essential to conduct a thorough audit of smart contract codes to identify and address any security vulnerabilities or issues before implementation.

Based on Grand View Research’s findings, the worldwide smart contracts market is projected to expand dramatically, increasing from $684.3 million in 2022 to a staggering $73,773.0 million by 2027, representing a remarkable compound annual growth rate (CAGR) of 82.2%. This significant expansion could open up exciting possibilities for enhancing the scalability of blockchain technology in the future. However, it’s important to note that application-specific blockchains can provide additional benefits as well.

3. They guarantee network security and data privacy on the platform

Application-specific blockchains promote network security and data privacy. Thanks to artificial intelligence (AI) and blockchain integration, they are capable of securing networks and safeguarding information. While AI provides sophisticated data processing capabilities, blockchain maintains data integrity and transparency via a secure, decentralized ledger.

In the realm of logistics and supply chain operations, securing artificial intelligence data on a blockchain ensures authenticity and reliability of information as it travels through the supply chain. By doing so, potential manipulation is prevented, and compliance and traceability are maintained.

In simpler terms, the technology behind decentralized AI networks on blockchain is applicable to both the media and entertainment industries. This setup enables direct communication between content creators and consumers, ensuring privacy and security throughout the transaction process.

4. They offer low transactional fees without compromising efficiency

Blockchains tailored for specific applications bring about financial advantages through reduced transaction charges, all while preserving productivity. By discarding unnecessary elements and concentrating resources on essential tasks, they help minimize expenses.

As a web3 analyst, I’ve observed that validators on platforms such as Ethereum Classic receive a substantial share of the transaction fees and earnings generated by interactions with decentralized finance (DeFi) applications. In contrast, DeFi apps built directly on native chains can retain 100% of the protocol costs. This enables them to maximize the value derived from their activities.

Additionally, customized blockchains for specific applications enable tokens’ prices to correspond with the underlying blockchain’s token value. For instance, when an app requests users pay transaction fees using the application’s token, the token’s market worth grows. This revenue model favors both the application and its user community, fostering a mutually beneficial interaction.

5. They let you gain full governance and control of the application

Instead of application-specific blockchains giving users less control over infrastructure in contrast to decentralized apps on general-purpose blockchains, these specialized blockchains offer full governance and management capabilities for stakeholders. This sets them apart from shared blockchains where control is handled by a broader community outside the specific application.

In simpler terms, single-application blockchains bring consistency between the blockchain network and the particular app, facilitating customized enhancements that address unique requirements. For instance, they can help tackle common challenges like managing screen time in Apple devices more effectively.

As an industry analyst in the automotive sector, I would explain that technologies like blockchain play a crucial role in securing and managing vast amounts of operational data generated by sensors and AI systems. This data is essential for enhancing performance and optimizing processes within the industry.

To the bright, decentralized future

As a blockchain analyst, I can’t ignore the transformative impact of this technology on the future of decentralization. Application-specific blockchain platforms are leading the charge in this regard, empowering decentralized networks. Here’s why:

• Customization and optimization
• Flexibility and scalability
• Privacy and security
• Cost-efficiency
• Governance and control

As a researcher studying the dynamic world of technology, I strongly advocate for leveraging blockchain technology, regardless of whether you’re a developer, entrepreneur, or consumer. By employing application-specific solutions, you can enhance your transactions in meaningful ways. The rapid advancements and continuous progress in this sector will only serve to fuel more groundbreaking innovations, eventually leading us toward increasingly decentralized networks.

Application-specific blockchains are the future of decentralization—and we’ve only just begun!

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2024-06-09 15:18