Is Blockchain Technology the Right Solution for Your App?
NOVEMBER 1, 2017
According to CoinDesk ICO Tracker, organizations have raised over $1.8 billion through initial coin offerings (ICOs) since January 2017, exceeding the amount of money raised through traditional venture capital investment as of June 2017. This method of raising funds for app startups has gained popularity lately in the cryptocurrency world because company issued cryptocoins offer a number of useful features by providing the same anonymity as ordinary cryptocurrency, the potential for subdivision or consolidation, as well as, the ability to be bought and sold on cryptocurrency exchanges. However, an ICO comes with substantial risks of which security and regulatory compliance are major concerns. Here are a few things to consider to help you decide if you should use an ICO to fund your next app project.
Key Benefits of Blockchain Technology
Blockchain has the potential to disrupt many industries which is why it is getting so much buzz. To provide a general overview of what blockchain has to offer, blockchain technology offers some key benefits for apps, namely:
- Transparency. Blockchain technology ensures transparency because changes can only be made to a blockchain if the majority of the network agrees to the changes, given that a huge amount of computing power is required in order to make changes to a blockchain server.
- Security. The decentralized nature of blockchain technology ensures that it is highly resistant to all types of malicious attacks, including DDoS attacks. Blockchains also lack the single point of failure that often cause traditional apps to crash because blockchain blocks cannot be controlled by a single individual or entity.
- User Empowerment. With a blockchain app, every user retains direct control over all of their information and transaction history. As a result, blockchain has the potential to make identity theft extremely difficult or even obsolete.
- Faster Business Transactions. Blockchain technology solves two important problems, namely ensuring that no one individual has control over the information stored in the blockchain and avoiding duplicate digital transactions. As a result, transaction validation can occur in just seconds so that there is no waiting time or a need for transaction validation from a centralized authority. It will also automatically block a transaction if the transaction information is corrupted in some way.
Examining the Difficulties of Building Dapps
While blockchain technology has some incredible potential, there are also some very real hurdles to building Dapps. As a relatively new technology, the infrastructure to build Dapps remains underdeveloped. There are no stacks in place so blockchain developers must rely on their own custom tools and standards. As of right now, there are still no widely adopted security standards or best practices for developers to follow, although there are projects underway to combat these issues. Therefore, before you begin building a blockchain app, it is important for you to consider whether your app is really a good fit for the technology. Your needs might just be as well or even better served by traditional relational databases, such as MySQL. Testing and debugging a blockchain app is also infinitely more difficult than performing these actions for a traditional app which could potentially make developing, testing, and supporting a Dapp a lot more expensive than you might think. In addition, there are also legal ramifications to consider. Traditional apps that involve contractual agreements or financial transactions currently rely on banks, other heavily regulated organizations, and governments to guarantee the integrity and legality of those transactions. In contrast, there is no such level of legal backing for blockchains. As a result, most of these compliance-related expenses will fall on your startup. You’ll then have to determine whether or not the potential return on investment will justify these expenses.