Opinion The future of decentralization lies in applicationspecific blockchains
Disclaimer: The opinions and perspectives expressed in this article are the author’s own and do not reflect the viewpoints of the crypto.news editorial team.
In today’s digital landscape, blockchain stands out as a revolutionary technology. It provides secure online ledgers for popular cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) across various sectors. The global market for blockchain technology is expected to skyrocket from $5.88 billion in 2021 to $1,314.03 billion by 2030, growing at an impressive compound annual growth rate (CAGR) of 82.4%.
The emergence of application-specific blockchains is transforming the decentralized ecosystem. These specialized platforms offer superior performance, scalability, security, cost-effectiveness, and governance compared to general-purpose applications, shaping the future of decentralization. As this niche market expands, the potential of these tailored blockchains is truly promising.
Let’s delve into the significance of application-specific blockchains and explore why they are paving the way for decentralization.
Key Advantages of Application-Specific Blockchains
Application-specific blockchains are custom-designed to cater to a single application, rather than adapting an existing blockchain for a particular purpose. These platforms are built from scratch with unique features like custom virtual machines and consensus mechanisms, setting them apart from generic blockchain solutions.
These specialized blockchains are specifically tailored for decentralized applications (dApps), which are software programs that run on a blockchain or peer-to-peer network rather than a single computer.
There are two distinct types of blockchains: layer-1 (L1) and layer-2 (L2). Platforms like Avalanche Subnets, Polygon Supernets, and Cosmos Zones showcase how customized blockchains can drive decentralization forward.
One of the notable aspects of the blockchain industry is the internal support it receives from key stakeholders and developers. These internal investments empower skilled developers to create application-specific platforms through various funding avenues such as bootstrapping, venture capital, or crowdfunding.
Here are the reasons why application-specific blockchains are poised to shape the future of decentralization:
1. Platform Customization and Optimization
Application-specific blockchains empower developers to tailor blockchain features to specific use cases, particularly in business applications. By customizing these platforms, companies can optimize their blockchain infrastructure to meet specialized needs and attributes.
For instance, Re.al has introduced blockchain platforms for real-world assets (RWAs), addressing decentralized finance challenges by offering a bespoke solution for managing assets like properties and commodities. This tailored approach enhances accessibility for asset trading while ensuring fluidity and compatibility.
2. Scalability for Applications
Application-specific blockchains provide flexible scalability for platforms, enabling them to adjust capacity based on demand. For example, EY’s Ethereum-based blockchain solution, the EY OpsChain Contract Manager (OCM), streamlines complex agreements, reduces costs, and enhances security.
Unlike smart contracts on general-purpose blockchains, application-specific blockchains offer distinct advantages in terms of flexibility and scalability. Smart contracts automate agreements without altering blockchain attributes, but rigorous auditing is essential to detect and rectify security issues.
According to Grand View Research, the global smart contracts market is projected to grow significantly, opening avenues for scalability in blockchain technology. However, application-specific blockchains present additional benefits in this realm.
3. Network Security and Data Privacy
Application-specific blockchains prioritize network security and data privacy by leveraging artificial intelligence (AI) and blockchain integration. This combination ensures robust network security and data protection, with AI offering advanced data processing capabilities and blockchain maintaining data integrity and transparency through a secure ledger.
In sectors like logistics and supply chain management, securing AI data on a blockchain enhances data validity and traceability across the supply chain, safeguarding against tampering and ensuring compliance.
Similarly, decentralized AI networks on blockchain platforms benefit industries like media and entertainment by facilitating direct communication between producers and consumers, enhancing privacy and security.
4. Low Transactional Fees and Enhanced Efficiency
Application-specific blockchains deliver economic advantages by reducing transaction fees without compromising efficiency. By eliminating unnecessary features and focusing on essential functions, these platforms optimize resource allocation and cost-effectiveness.
In the web3 ecosystem, validators on platforms like ETC receive a significant share of transaction fees and revenue from defi apps interactions. Native chains empower defi apps to retain 100% of protocol earnings, maximizing value generation from their activities.
Moreover, application-specific blockchains enable applications to align token pricing with the underlying blockchain’s token value. This model benefits both the application and its user base, fostering a mutually beneficial relationship.
5. Full Governance and Control
Unlike decentralized apps on general-purpose blockchains, application-specific blockchains offer complete governance and control over infrastructure. Stakeholders can manage their own chains, facilitating tailored improvements to meet specific needs.
These single-application blockchains align the interests of the protocol and the application, making it easier to implement beneficial enhancements customized to address specific challenges.
In industries like automotive, blockchain securely logs sensor and operational data for AI-driven performance enhancements, ensuring auditability and compliance with safety regulations.
Embracing the Decentralized Future
Blockchain technology is reshaping the landscape of decentralization, with application-specific blockchains at the forefront of this transformation. These platforms offer a range of benefits, including:
– Customization and optimization
– Flexibility and scalability
– Privacy and security
– Cost-efficiency
– Governance and control
Whether you’re a developer, entrepreneur, or consumer, leveraging blockchain technology is crucial in today’s digital age. Application-specific blockchains have the potential to revolutionize transactions and drive innovation in decentralized networks.
The future of decentralization lies in application-specific blockchains, and we are only scratching the surface of their potential impact on the evolving technological landscape.
