Mobile Applications like Google Search, Facebook, LinkedIn, Instagram and so on have transformed the way the internet works. These Apps are reliable as they are developed by some of the biggest companies in Silicon Valley.
Enter Decentralized Application. These are identical to the mobile or web application, the only change is that they run on virtual decentralized platforms which execute programs based on distributed consensus mechanism. The data and functions are stored on the blockchain or DLT (Distributed Ledger Technology) to provide decentralized privacy and security.
While all this jargon might be a little complex to comprehend, the idea behind Decentralized Applications is to shift from the centralized servers and monopolized internet businesses to a secure and public chain or a network of nodes. Hence, no single individual or entity can claim ownership of the platform on which the programs are being executed.
Social Media Platforms
The most popular Social Media platform today is undoubtedly Facebook. In the fourth quarter of 2018, Facebook reported more than 2.32 billion monthly active users on its social media platforms. However, reports of a breach in privacy of 30 million users and its unethical utilization to influence votes in state elections have tainted the image of the Social Media giant.
The personal information on Facebook or any other social media is stored in centralized servers of the firm. The content is also regulated by the sole discretion of the parent company only. Hence, Facebook is no longer the trustworthy social media platform people once loved to use.
Decentralized Social media platforms like Steem and Cosmee is the way to go. The smart contracts govern these platforms and the information is stored on the blockchain. Decentralized Social Media platform would work just like an ordinary social media web site. However, the story behind the front-page would change entirely as things would now work on top on Blockchain.
Facebook is also working on releasing its stable coin: Facebook Cryptocurrency. The cryptocurrency will primary be used to pay for the promotional and other additional charges for specific features on Facebook to promote businesses. Moreover, the Facebook coin would be centralized as well, i.e., the firm will be able to control the circulating supply and authorize changes to the ledger.
Nevertheless, due to the ubiquity of Facebook, the stablecoin might gain popularity and adaptability sooner than expected. However, the implementation of currency is not the same working on a Decentralized Platform.
Trust is the building block for any Financial Deal. Trust in the 21st century comes from the reliability in a system rather than an individual.
For example, a product needs to be transferred to a person A in Australia. The manufacturer of the product is although in Brazil. The flow of product and money can be executed in two ways: the manufacturer sends the product first, or Person A makes the payment early. However, if a guarantee from a reliable source does not secure the parties they would get stuck in a paradox of disapproval; the manufacturer would warrant settlement first, and Person A would like to verify his product before making payment.
‘Smart Contracts’ and ‘Decentralized Applications’ provide a platform for implementation of real-world contracts on a secure channel. The escrow accounts on the blockchain would hold the token/cryptocurrency paid by the buyer.
Furthermore, a chain of verifiable images or quality control check and record-keeping of the product details on the Blockchain ensures customer protection. Therefore, in the above example, if smart contracts are implemented to verify the flow of things and address redressals, cross-border trade deals can happen without the need of intermediaries like Alibaba, Amazon or eBay.
Bitcoin is an efficient decentralized payment system. It can also include a ledger like a bank account which is encrypted, secure and decentralized. The early proponents of Bitcoin convinced the world that it is an apt replacement of the Banking System. However, the banks do more than just acting as custodians of money. Moreover, the primary business of banks involves lending through loans and post-paid cards.
The banks and lending institutions essentially induce liquidity for its lending business through savings and business accounts deposits. The banks earn a decent rate of interest from these lendings. The reason why individuals do not get involved in the process is trust and reliability.
Decentralized Application can enable Peer-to-Peer lending between individuals. The applications can be coded to keep ‘financial security’ from the borrower as a caretaker of risk for the lender. It also secures the borrower from unethical practices like withholding the security even after payment or changing the interest rates.
More Ideas to flow in the next update. Feel free to share your views with us.