People can attest to the fact that we are experiencing the longest bear market in the brief and turbulent history of cryptocurrency. Traders have taken heart from a recent revival in bitcoin prices, and some continue to dream of another meteoric rise. In the meantime, many would settle for more regulatory acceptance of securities token offerings to spur interest in the crypto market.
Yet interestingly, according to a report published by Wintergreen Research, the Blockchain industry is forecast to be worth US$60 billion by 2024, almost 90 times its value of $708 million back in 2017. So, what is the reason behind the blockchain industry's exponential growth despite the low market prices of cryptocurrencies?
Contrary to what many people still think, Blockchain technology is about a lot more than just about cryptocurrency investments. Blockchain is essentially any kind of peer-to-peer digital ledger that records time-stamped data that is accessible by everyone yet resistant to any kind of modification. Given these unique and decentralised characteristics, there are multiple factors contributing to the potential for explosive growth in its value.
First, the adoption rate of Blockchain-as-a-Service (BaaS) is growing rapidly, with big names including IBM, Microsoft, Tencent, Amazon and many others exploring the technology. Second, traditional investment firms are jumping on board. The New York Stock Exchange is launching a digital asset platform called Bakkt, and Nasdaq is introducing bitcoin futures. Finally, among the less well-known use cases, we have Dapps, short for decentralised applications.
PLATFORM POWER
Cost, trust, convenience and efficiency drive most of our day-to-day decisions whenever we use an application service. If you think about it, we only use Grab to book a car because we don't trust a stranger to charge us fairly and drive us safely to our desired destination. Furthermore, the hassle of waiting to hail a cab often outweighs the cost saving.
In exchange for a trusted and a well-connected platform, Grab Thailand imposes a 25% commission on driver earnings. The accommodation service Airbnb is also powered by commissions -- 3% deducted from the host and 6-10% charged to the traveller.
So, what if there was a shared platform that allowed peer-to-peer transactions for Grab or Airbnb services but without the transaction fees? This "what if" might seem far-fetched but it is at the core of decentralised applications.
Basically, when you use a Dapp, its backend code is embedded on a blockchain, while that of a typical centralised application is embedded on a centralised hosting server.
In addition to getting rid of unnecessary transaction fees that have helped turn the likes of Grab and Airbnb into multi-billion-dollar companies, ownership of data is a very important benefit of Dapps.
Many companies such as Facebook, Instagram and Google are built on the concept of selling users' data. Whenever you click a link or enter search words, there's an advertiser somewhere who has contracted with Facebook to reach someone matching your description and interests. With Dapps, users can regain control and ownership of their personal data and can decide for themselves whether to monetise it or not. If so, you -- and not Mark Zuckerberg -- get to keep the money.
Additionally, as more and more people use the same centralised application, it becomes a bigger single point of failure on the internet. In 2018, for example, Apollo, a data aggregator admitted to a breach that had exposed its database of 200 million contacts to hackers. Such leaks can be used to create phishing campaigns and other types of digital attacks.
We have been seeing similar security issues all over the internet and no credible solution has yet to be put in place. Having said that, Dapps can offer added security benefits. There is no central place for a hacker to breach and gain data since the transactions of any application will be running on top of a distributed and encrypted Blockchain.
Likewise, since there is no central authority or monopoly in Dapps, unlike that of Grab or Airbnb, there is a very low chance of price manipulation in financial transactions.
CHANGING THE LANDSCAPE
Dapps can provide peer-to-peer marketplaces like Amazon or Lazada, peer-to-peer cloud storage like Dropbox or Google Drive, a peer-to-peer application market like Google Play and the Apple App Store, and many more. Dapps can change the business landscape through decentralisation, powering a world where all users' content, storage, services and personal data will be distributed across the platforms themselves instead of held on centralised servers.
Blockchain technology is continually innovating to transform traditional businesses and Thailand is one of the leading countries in Southeast Asia pioneering for such transition. Although Dapps are still in their infancy, they already offers tremendous potential that should be considered in various industries.
The implications of this technological transition for businesses are profound. Companies may feel they are not ready to jump on the bandwagon, but those that hesitate too long could one day join Kodak or Blockbuster on the list of market leaders that lost the plot.
Jirayut Srupsrisopa is the Group CEO of Bitkub Capital Group Holdings Co Ltd, a local blockchain technology specialist that is also advising businesses on decentralised applications
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