Have you got an API for that?
In the developing world of fintech, many platforms are based around Application Programming Interfaces (APIs). These APIs are essential for offering one’s services to clients who wish to consume machine to machine rather than through your website. They have become the next big thing after delivering your services over the web.
But while blockchain APIs are the inevitable next step of your digital service offering, they also can present specific issues and bottlenecks. Building your API interfaces takes time and money, not to mention talent, and these can be in short supply for a new startup or incumbent.
APIs are designed to communicate bilaterally , and as more and more interfaces emerge, this problem grows increasingly complex.
The idyll offered by open banking initiatives will never truly come to fruition because of this disconnect of data and cobwebs of bilateral connections. If APIs were designed to share data natively, this wouldn’t be an issue, but, in reality, that’s a near-impossible task.
Lastly, this scenario has led to a serious case of “platform fatigue” across early adopters of web and APIs in industries such as financial exchanges and property. Companies are tired of platforms being created that seek to pool their data and sell it back to them as a value added service. The new philosophy emerging is that a protocol should be independent of vendors. Instead, the vendors agree on a standard to follow that is in their mutual benefit, e.g., USB-C rather than Apple’s lightning cable, or perhaps more appropriately, how the success of the internet was factored largely on TCP/IP being adopted over IBMs attempt to own the protocol.
Fortunately, APIs, at least as we know them, don’t have to be the only option moving forward.
Enter the blockchain
More and more, startups are beginning to see that they are not simply reliant on the standard types of software that have permeated the status quo so far. Thanks to developments over the last several years in both blockchain technology and smart contracts, there are all kinds of new services and platforms that developers can leverage for a wide range of purposes. These platforms not only do a better job than legacy software but do it cheaper and provide more accessibility than many comparable tools being sold for use on the cryptocurrency markets today.
Decentralized, global computers underscored by blockchain projects, including Ethereum, and Corda, already have a wealth of offerings for software that remains unimpeded by any single entity.
What’s most important is that blockchains, when correctly set up, can offer a single system that can share data, handle state, run applications, support your digital wallet and more. Blockchain networks are cheap to use, transparent and trustless, which smooths out so many of the moving part issues seen in the current API landscape.
Blockchain leapfrogs bilateral cryptocurrency API connections and offers an industry of open and distributed communication rather than the rush to hoist yet another platform on an industry that already has platform fatigue.
To be sure, there are and will continue to be some stumbling blocks along the way. For one, businesses need to understand that there is a serious difference between creating a cryptocurrency and the true potential of blockchain technology for crypto exchanges. Education about what decentralized applications are, how they work, and how they can be implemented will take time to be absorbed by all. It will also be important to understand the limitations and potential trouble spots, as blockchain technology will take time to mature and converge.
Then there are regulatory concerns. Considering the world of decentralised technology and blockchain protocols is so new, and many of these services have financial assets built into them, it can be tricky to predict just how their use may be monitored or legislated by governmental bodies.
Will APIs still be a major part of the industry moving forward? Undoubtedly, but these programming interfaces will be updated and evolved thanks to the possibilities of blockchain and may no longer be the only solution to share data between companies.
For more information and industry insights, visit www.bcbgroup.com
About The Author
Richard Crook is former Head of Emerging Technology at Royal Bank of Scotland, with a 20+ year career specialising in leading teams to shape and deliver maximum business benefits through technology solutions for the largest financial service institutions. Richard became the COO of BCB Group in 2022 following the acquisition of LAB577, a software company at the nexus of financial services and emerging technology, which he founded.