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Application-specific blockchains are the future of decentralization
Disclosure: The views and opinions expressed herein are solely those of the author and do not represent the views and opinions of the crypto.news editorial.
Blockchain is a cutting-edge technology in today’s digital world. Protects online records for cryptocurrencies like Bitcoin (Bitcoin) and Ethereum (ET) in all sectors. Its global market is projected to go out from $5.88 billion in 2021 to $1,314.03 billion by 2030 at a compound annual growth rate (CAGR) of 82.4%.
Blockchain Technology Market Size | Source: Research on the Strait
Enter application-specific blockchains. These platforms excel in performance, scalability, security, cost-efficiency and governance compared to general-purpose applications, shaping the future of decentralization. As this industry segment expands, these specialized blockchains hold immense promise.
This page explores the impact of application-specific blockchains. Read on to find out why they are the future of decentralization.
Main reasons why these are application-specific blockchains
Application-specific blockchains are the type of blockchains designed to manage a single application instead of building an app from an existing blockchain. They are new platforms built from the ground up with distinctive attributes, such as custom virtual machines and consensus processes. In short, they are not codes written on a generic blockchain platform.
Evidently, application-specific blockchains are designed for individual decentralized applications (dApp). DApps are software programs that run on a blockchain or peer-to-peer computer network rather than on a single computer.
There are two types of blockchain that you can distinguish: layer-1 (L1 which coordinates consensus and execution on the same layer) and layer-2 (L2 which separates execution from consensus). Avalanche subnets, polygonal supernets, and Cosmos zones are some examples of how these custom blockchains can be used to promote decentralization.
What’s great is that the blockchain industry has a long history of internal support among industry players and key developers. These internal blockchain investments provide talented developers with key opportunities to create application-specific platforms. They can search blockchain financing in various practical ways, through bootstrapping, venture capital or crowdfunding.
Application-specific blockchains can be instrumental to more decentralized networks. This is why they are the future of decentralization:
1. They allow customization and optimization of the platform
As web3 technologies become more widespread, application-specific blockchains allow developers to customize blockchain features for specific use cases. This customization is especially beneficial for enterprise applications. Companies may have specialized chain needs with particular attributes that these platforms can help optimize.
For example, Re.al has launched blockchain platforms for real world assets (RWA). They address the long-term challenges of decentralized finance by providing a tailor-made solution for managing assets such as property and commodities. By developing its own blockchain platform, Re.al improves the infrastructure, making assets more accessible for trading while maintaining fluidity and compatibility.
2. They allow you to scale applications up and down
Application-specific blockchains enable flexible scaling for platforms, allowing them to adapt capacity in response to demand. For example, EY Ethereum-based blockchain solutionEY OpsChain Contract Manager (OCM), simplifies complex agreements, reduces costs and improves security.
Application-specific blockchains differ from smart contracts, self-executing code written on general-purpose blockchains. Smart contracts automate and enforce agreements between parties without changing the attributes of blockchains. However, a smart contract verify The process is critical for reviewing codes to detect and fix defects or security issues.
According to Grand View Research, the global smart contract market will grow from $684.3 million in 2022 to $73,773.0 million at a CAGR of 82.2%. While this market growth may pave the way for future scalability of blockchain technology, application-specific blockchain can offer more.
3. They guarantee network security and data confidentiality on the platform
Application-specific blockchains promote network security and data privacy. Thanks to artificial intelligence (AI) and blockchain integration, they are able to protect networks and safeguard information. While AI provides sophisticated data processing capabilities, blockchain maintains data integrity and transparency via a secure, decentralized ledger.
In logistics and supply chain management, securing AI information on a blockchain ensures data validity and accuracy throughout the supply chain. This eliminates tampering while ensuring compliance and traceability.
The same technology applies to the media and entertainment industries. Decentralized AI networks on blockchain allow producers and consumers to communicate directly to ensure privacy and security.
4. They offer low transaction fees without compromising efficiency
Application-specific blockchains offer economic benefits by reducing transaction fees while maintaining efficiency. They also reduce costs by eliminating extraneous functionality and focusing resources on critical functions.
In web3, validators on platforms like ETC receive a significant percentage of the transaction fees and revenue generated from interactions with defi apps. However, defi apps on native chains can keep 100% of the protocol costs, allowing them to extract more value from their businesses.
Additionally, application-specific blockchains allow applications to match token prices to the value of the underlying blockchain’s tokens. For example, if an app chain asks users to pay transaction fees in the application token, its market value will increase. This business model benefits the application and its user base by establishing a symbiotic relationship.
5. They allow you to gain full governance and control of the application
Unlike decentralized apps on general-purpose blockchains, application-specific blockchains provide complete governance and control over the infrastructure. They allow stakeholders to manage their own chain versus blockchains shared by a larger, separate community.
Single-application blockchains align the interests of both the protocol and the application. They make it easier to adopt beneficial improvements tailored to specific needs, such as solve common problems with Apple display time.
In industries like automotive, blockchain securely records operational and sensor data for AI-driven performance improvements. Open Blockchain ensures audit records and compliance with security rules, increasing accountability for AI decisions.
Towards a bright and decentralized future
Blockchain technology undeniably shapes the future of decentralization, particularly through application-specific blockchain platforms that promote decentralized networks. These platforms offer potential benefits, such as:
- Personalization and optimization
- Flexibility and scalability
- Privacy and security
- Cost efficiency
- Governance and control
Whether you are a developer, an entrepreneur, or a consumer, taking advantage of blockchain technology is essential. Using application-specific applications can have a significant impact on your transactions. Technological progress and ongoing development in this field will further stimulate innovation, leading to more decentralized networks.
Application-specific blockchains are the future of decentralization and we’re just getting started!
Yevhen Yevsieienko
Yevhen Yevsieienko He has over seven years of experience in the technology industry. His passion is content creation and he enjoys writing articles and guides to help others navigate the fast-paced world of technology.