As it turns out, the crypto industry not only has huge advantages in the market, but also its dark sides. Everyone who is interested in the crypto market remembers the so-called crypto winter, which was associated with the bankruptcy of the FTX exchange. And yet, the crypto market was not only able to recover, but also proved the usefulness of its assets. This means that the activity of both crypto projects and blockchain projects is increasing. In practice, this means that various companies and startups are interested in blockchain-based projects. One of the main objectives of such projects is to minimize costs by optimizing the blockchain infrastructure. In most cases, blockchain projects are quite resource-intensive and require automation. Such challenges often prevent companies from achieving success in the market, so efforts to reduce the costs of blockchain infrastructure are a priority for such companies.
Blockchain as part of DLT
Often people whose activities are far from the crypto sphere have a question: is it really necessary to use blockchain technologies in their activities? There is no need now to define such a concept as blockchain, especially since many such definitions can be found in various sources. There is also no point in delving into the details of blockchain technology related to algorithms, consensuses, encryption, and so on. It is enough to remember that, in essence, blockchain is part of a large distributed registry system – DLT. DLT (distributed ledger technology) includes various distributed data storage capabilities, and blockchain is only a part of this technology. If you imagine distributed ledger technology as a geometric figure on a plane, then it will be a kind of conditional circle with nodes that unites the entire network in which information is stored. The blockchain will act as nodes, and this entire structure is united and maintained in working order using one or another consensus algorithm.
It is obvious that DLT is, first of all, a technology for storing information in a certain way and its key feature is the synchronization and sharing of data according to the rules of the consensus algorithm. Today, the number of different consensus algorithms is constantly growing, since the more ways there are to confirm information, the more this information becomes protected from various hacks, and therefore more secure.
DApps and smart contracts in the service of the blockchain
It’s time to figure out what decentralized applications (DApps) have to do with DLT and blockchain. DApp is a classic application that, instead of server-based information storage, uses the above-mentioned distributed storage technology. The peculiarity of DApps is that the subjects of these applications can perform a certain role in the network, for example, confirm the security of internal transactions or integrate tokens, or confirm the truth of the storage of some data or purchases, etc. And in this situation, the blockchain is precisely designed to store every ledger, every row, every transaction, i.e. everything that happens on the Internet. Its task is to record all actions and prevent them from being changed later. This helps to preserve the entire chronology of events, the ability to trace it and verify its truth. Today there are even examples of situations where blockchain was used as a valid means in legal proceedings, as it served as some kind of recognized confirmation of the truth.
Of course, it is impossible to imagine the triad “blockchain – decentralized applications – smart contracts” without its third component – smart contracts. It should be noted that smart contracts did not appear since the advent of blockchain technology itself. At their core, smart contracts are software code that allows you to develop applications based on blockchains. It is on the basis of smart contracts that a large number of projects are being implemented today, especially those related to some kind of purchase or sale. If you look into history, the first smart contracts appeared on the Ethereum platform. Today they exist on almost all platforms; moreover, every newly emerging crypto platform immediately takes up the implementation of smart contracts.
There are many other concepts that are associated with distributed ledgers, cryptocurrencies, tokens and other digital industries, but it is the blockchain that makes itself known loudest. Of course, its primary popularity arose precisely in the wake of the emergence and growth of popularity of cryptocurrencies. With the development of various projects, the popularity and demand for blockchain technology has grown. At the same time, situations arose when companies tried to use this technology even in cases where there was no need for its use. The fact is that blockchain is not intended to solve absolutely all problems that arise in business. Therefore, despite the enormous popularity of blockchain technology, it should be used only in cases where it can actually increase the profitability and technological level of a project or even the company itself.