Application-specific blockchains are the future of decentralization

Blockchain is an advanced technology in today’s digital world. It secures online ledgers for cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) across all industries. The global market is expected to rise from $5.88 billion in 2021 to $1,314.03 billion in 2030, at a compound annual growth rate (CAGR) of 82.4%.

Enter application-specific blockchains. These platforms excel in performance, scalability, security, cost-efficiency, and manageability compared to general-purpose applications, shaping the future of decentralization. As this industry segment expands, these specialized blockchains hold enormous promise.

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This page explores the impact of application-specific blockchains. Read on to find out why they are the future of decentralization.

Main reasons why it is the application-specific blockchains

Application-specific blockchains are the type of blockchains designed to serve a single application rather than building an app based on an existing blockchain. They are new platforms created from the ground up with distinctive features such as custom virtual machines and consensus processes. In short, they are not codes written on a general purpose blockchain platform.

Apparently, application-specific blockchains are designed for individual decentralized applications (dApps). DApps are software programs that run on a blockchain or peer-to-peer network of computers rather than on a single computer.

There are two types of blockchains that you can distinguish: layer-1 (L1 coordinates consensus and execution on the same layer) and layer-2 (L2 separates execution from consensus). Avalanche Subnets, Polygon Supernets, and Cosmos Zones are some examples of how you can use these custom blockchains to promote decentralization.

The great thing is that the blockchain industry has a long history of internal support among industry players and key developers. These internal blockchain investments provide important opportunities for talented developers to create application-specific platforms. They can seek blockchain financing in various practical ways, for example through bootstrapping, venture capital or crowdfunding.

Application-specific blockchains can play an important role in more decentralized networks. This is why they are the future of decentralization:

1. They enable platform customization and optimization

As Web3 technologies become more widespread, application-specific blockchains allow developers to tailor blockchain features for specific use cases. This customization is especially beneficial for business applications. Companies may have specialized supply chain needs with specific characteristics that these platforms can help optimize.

For example, Re.al has launched blockchain platforms for real-world assets (RWAs). They address long-term challenges in decentralized finance by providing a tailor-made solution for managing assets such as property and raw materials. By developing its own blockchain platform, Re.al is improving its 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 scalability for platforms, allowing them to adapt capacity to demand. For example, EY’s Ethereum-based blockchain solution, the EY OpsChain Contract Manager (OCM), simplifies complex agreements, reduces costs and improves security.

Application-specific blockchains differ from smart contracts, which are self-executing codes written on general-purpose blockchains. Smart contracts automate and enforce agreements between parties without changing the characteristics of the blockchains. However, a smart contract audit process is critical for reviewing codes to detect and correct security errors or issues.

According to Grand View Research, the global smart contracts market will grow from $684.3 million in 2022 to $73,773.0 million at a CAGR of 82.2%. While this market growth could pave the way for future scalability in blockchain technology, the application-specific blockchain can offer more.

3. They guarantee network security and data privacy on the platform

Application-specific blockchains promote network security and data privacy. Thanks to artificial intelligence (AI) and blockchain integration, they are able to secure networks and safeguard information. While AI provides advanced data processing capabilities, blockchain maintains data integrity and transparency through a secure, decentralized ledger.

In logistics and supply chain management, protecting 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 industry. Decentralized AI networks on blockchain allow producers and consumers to communicate directly for guaranteed privacy and security.

4. They offer low transaction costs without sacrificing efficiency

Application-specific blockchains provide economic benefits by reducing transaction costs while maintaining efficiency. They also reduce costs by eliminating redundant functions 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 get more value from their operations.

Furthermore, application-specific blockchains allow applications to align token prices with the token value of the underlying blockchain. For example, if an app chain asks users to pay transaction fees in the application’s token, its market value will increase. This business model benefits the application and its user base, creating a symbiotic relationship.

5. They ensure that you get full management and control over the application

Unlike decentralized apps on general-purpose blockchains, application-specific blockchains provide full management and control over the infrastructure. They allow stakeholders to manage their own chain compared to shared blockchains from a broader, separate community.

Single-application blockchains align the interests of both the protocol and the application. They make it easier to make useful improvements tailored to specific needs, such as fixing common Apple Screen Time issues.

In industries such as automotive, blockchain securely records sensor and operational data for AI-driven performance improvements. Blockchain’s openness ensures audit data and security compliance, increasing accountability for AI decisions.

Here’s to a bright, decentralized future

Blockchain technology is undeniably shaping the future of decentralization, especially through application-specific blockchain platforms that promote decentralized networks. These platforms offer potential benefits such as:

• Customization and optimization
• Flexibility and scalability
• Privacy and security
• Cost efficiency
• Management and control

Whether you are a developer, entrepreneur or consumer, capitalizing on blockchain technology is essential. Using application-specific applications can have a significant impact on your transactions. Continued technological advancements and development in this area will further drive innovation, leading to more decentralized networks.

Application-specific blockchains are the future of decentralization – and we’re just getting started!

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