Blockchain and the Dapp

The idea behind blockchain technology is simple – to create a perfectly immutable, distributed ledger of transactions where entries cannot be altered by anyone after the fact. There’s more to this technology, though, than just creating and maintaining this ledger (i.e. blockchain). Really, this chain can be thought of as the back-end of a new type of software known as the decentralized application (shortened to “dapp”).

These dapps, and their corresponding blockchains, act not only as programs meant to perform a certain set of tasks, but also often as fully-contained businesses. Unlike a regular business which is controlled by an owner(s) or CEO/board of directors, a dapp follows a business plan pre-defined by a cryptographic algorithm coded into the decentralized relative of a front-end application – the node(s). The blockchain back-end then serves as a publicly viewable ledger of all the actions that this business has taken while following this plan.

The code for the nodes of the dapp can be freely accessed and cloned for modification by anyone if they wish to do so. And, while the back-end records cannot be altered once approved, new records can follow different formats or even start off in an entirely separate blockchain. Individuals can then choose to run any node version (or even multiple versions) they want. In other words, the market determines which versions continue to exist and keep distributing copies of their blockchain. The versions not chosen die out, with their blockchains becoming completely inaccessible.

First Working Dapp

Bitcoin (Crypto: BTC) is the earliest functional example of this idea of a dapp. It was meant to work as a currency that anyone could earn and spend using the free node software (also called a wallet) and the Bitcoin blockchain. Because the code is public, it is easy to view it and use it to create other dapps. Some did just that, cloning it and then modifying the original code to create other digital currencies like Litecoin (Crypto: LTC).

Alternatively, others used that same source code to create new software protocols that were layered on top of the existing Bitcoin blockchain, and then continued to add records to it instead. The Omni (Crypto: OMNI) protocol can be considered one of these layer-two dapps that still run on the same back-end as the original wallets.

The Problem

In the beginning of many new blockchains, developers (who themselves are really just users whose changes to the code are generally considered beneficial and adopted by others) would often keep essentially hacking on additional features into their desktop wallets. As a consequence, the blockchains used by these wallets would begin to “bloat.” Arlyn Culwick, one of the founders of Blocknet (Crypto: BLOCK), saw a problem that would eventually arise from this as far back as 2014.

This bloating of the blockchain makes it much more difficult to handle as time goes on. Eventually, it would become inaccessible for many people, and this exposed the need for a goal-oriented approach to decentralized design. Using the previous business analogy, just as it is unreasonable to expect a business to take care of its needs solely on its own without any partnerships or contracts with other businesses, it is unreasonable to expect a dapp to take care of all its needs all through its own user base and blockchain.

The problem is that unlike businesses which could establish relationships through contracts, different dapps had no way to communicate with one another if they happened to reside on different blockchains. The blockchain is the record of all the “business deals” that happened on a given dapp, and there was no way for dapps using one blockchain to understand what was happening on another. Without an ability to communicate with different blockchains, dapps would naturally tend toward blockchain bloat as the market pressured them to fulfill all the needs of their users. People would be incentivized to accommodate all those needs on the only blockchain that dapps could interact with – their own. This pressure would eventually completely nullify the initial advantages offered by a specialized blockchain.

The Solution

Blocknet was developed as another protocol layer that enables this sort of cross-chain information and token exchange. It’s a platform that can be used to create partnerships between/within dapps through software code by establishing a communications channel between them. The Blocknet protocol layer can be utilized with all compatible nodes, and this enables them to communicate and exchange tokens with each other regardless of what blockchain they actually service.

Enabling the nodes of various networks to communicate with each other allows for the development of dapps that are not limited to running on a single blockchain. These “inter-chain” dapps can instead use the information and services of multiple blockchains concurrently. If a single blockchain is like the back-end software of an application, then Blocknet is like a router that provides easy, straightforward access to any version of this software. By using multiple chains at once, a single dapp can accomplish vastly more complex tasks without placing any unnecessary strain on any one blockchain.

Initial Application

The first dapp to use this new capability is Block DX, a decentralized exchange (“dex”) that was developed by the team themselves. Using the Blocknet protocol, this dapp’s mission is to decentralize every step of the cryptocurrency trading process.

Most decentralized exchanges such as Waves (Crypto: WAVES), CryptoBridge (Crypto: BCO) and others still contain some form of deposits/withdrawals, and inherently require at least some trust. On the Block DX, there are no deposits/withdrawals at all, no withdrawal fees, and no KYC. The nodes of different blockchains can communicate with one another to find matching buyers and sellers. They can also use it to facilitate the exchange of different coins without needing to trust any of the parties involved. Because there are no central parties involved, no one is looking to earn extra-large bonuses or to cover other operating expenses, which keeps the fees low.

Other Applications

With the exception of decentralized exchanges, current dapps rely on a single blockchain such as Ethereum (Crypto: ETH), or Bitcoin, but never two or more at once. Ethereum especially made it easy to develop other applications that can be layered on top of its blockchain thanks to Smart Contracts that allow whole programs (as opposed to just simple transactions) to be executed publicly on its blockchain. It is what enabled the creation of new dapps like Storj (Crypto: STORJ), which use the Ethereum blockchain to keep track of payments while also using layering a separate protocol on top to provide decentralized cloud storage. Still, this dapp and the others currently in existence continue to rely on just a single blockchain.

The Blocknet team aims to free dapps from their one-blockchain constraint regardless of their purpose. Using the inter-chain protocol, they could function by using features of several blockchains, and would be able to compensate the users of each blockchain fairly for the services they provide. In addition to this, the users of the dapp would be able to use either their own favorite coin or the dapp’s native token to access all of those resources without ever having to visit an exchange.

By connecting blockchains together in this way into an “internet of blockchains,” the team is looking to establish a new ecosystem that is compatible with all coins and tokens in the crypto space. This ecosystem could then apply market pressure directly onto dapp development by allowing dapps to compete with each other to be faster, cheaper, and more effective, empowering blockchain technology as a whole.

Learn more about Blocknet here: https://blocknet.co

Authored by: Vlad Prykhodko

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