In Part one, before talking specifically about Overledger, I need to explain some important concepts to help you appreciate what makes Overledger different from other Interoperability platforms. You may frequently see / use words such as DAPP, Blockchain, Private Keys etc but not necessarily understand what they are and how they function. My goal is not to provide a very technical, low level explanation, but instead hopefully fill in the missing pieces of how they all come together. This is part one of Eight on a series taking a closer look at Overledger.

What is an API?

API stands for Application Programming Interface and they are used everywhere in the world today. They define how a developer can program an application to interact with another and process their requests and responses. APIs have been around for a long time, whenever you use a desktop or laptop, APIs are what make it possible to move information between programs — for instance, by cutting and pasting a snippet of a LibreOffice document into an Excel spreadsheet. System-level APIs makes it possible for applications like LibreOffice to run on top of an OS like Windows in the first place.

On the Web, APIs make it possible for big services like Google Maps or Facebook to let other apps “piggyback” on their offerings. Some of the most popular API’s are the ones offered by Facebook, Google maps, YouTube etc where they allow other apps to use their services. Think about the way Yelp, for instance, displays nearby restaurants on a Google Map in its app or my post here on Medium embedding a video on YouTube below.

API’s when connecting to third parties over the Internet can significantly change the landscape for the services they provide. Every comparison site you go to connects to an API of the third party to provide a price. A more recent example, which will change banking dramatically, is the recent introduction of the EU PSD2 regulation.

In short, PSD2 enables bank customers, both consumers and businesses, to use third-party providers to manage their finances. In the near future, you may be using Facebook or Google to pay your bills, making P2P transfers and analyse your spending, while still having your money safely placed in your current bank account. Banks, however, are obligated to provide these third-party providers access to their customers’ accounts through open APIs (application program interface). This will enable third-parties to build financial services on top of banks’ data and infrastructure. Banks will no longer only be competing against banks, but everyone offering financial services. PSD2 will fundamentally change the payments value chain, what business models are profitable, and customer expectations. Through the directive, the European Commission aims to improve innovation, reinforce consumer protection and improve the security of internet payments and account access within the EU and EEA.

What is a DAPP?

I’m sure you all know what a DAPP refers to — A Decentralised Application, but what does that involve?

An Application consists of multiple layers — Front End and Back End.

Front end is where the user interface is and is what the end user sees to interact with the application. When you browse to twitter.com in a web browser or open the app on your phone that is the front end.

The back end handles business logic and data storage for the App. It is not visible to the user and generally associated with a database etc. When you sign into twitter and you can see your tweets, and people you are following etc, this information is stored in the back end.

For all but very basic testing environments, the front end and back end will reside on separate servers. The front end will generally be installed on a group of servers at a cloud provider for high availability and the back end will also consist of separate servers at a cloud provider for high availability. The front end requests data from the back end via an API and the API provides the back end responses to the front end. Even if they were located on the same server they would consist of separate applications and would still use an API to interact with each other.

Both the front end and back end are Centralised.

A DAPP is where the back end consists of a Smart Contract stored on the blockchain and is run on a Virtual machine such as Ethereum’s EVM. The Smart Contract and the blockchain are now used for the Business Logic and Data rather than stored on a database.

A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties. These transactions are trackable and irreversible

An API is used for the Front end application to communicate to the back end application (Smart Contract and Blockchain) as well as being used directly to move data on and off an underlying chain.