You may be familiar with the well-known term cryptocurrency by now and maybe wondering whether it's worth investing in 2022 or not. With the advent of digitization in every sector, digital currencies are gaining an upper hand over traditional currencies. With our blog, you will find the major merits and demerits of cryptocurrency app development.
It’s a term whose popularity has quite grown over the years, and gained value in public understanding and use.
You must have heard about Bitcoin and Ether. Well, these are cryptocurrencies that use the Blockchain technology.
In this article, we are going to present you with a bigger picture of Blockchain, and discuss the benefits of using this kind of currency when it comes to mobile app development, as well as some of the cons and barriers that come with the territory of this form of trade that is not yet fully established.
What is the blockchain?
Blockchain is what lies beyond cryptocurrencies – it is a distributed database that is made out of data blocks. Each of those data blocks has a stamp and a link to the block that came before it.
This makes this kind of technology a great way to run an anonymous P2P system for your transactions and exchanges.
Since the technology is digital, the possibility of chargebacks and random reversals is mostly out of the picture.
Due to the fact that the settlement is done in real-time, and there is no involvement of 3rd parties between the developer and the customer, Furthermore, no personal data is exchanged.
The appeal of cryptocurrency to app developers is in markets where either most of the web-connected users are completely mobile-first or where the majority of the customer base can’t access traditional financial institutions.
This accounts for a great percentage of people in countries in Asia, Latin America, Africa, and the Middle East.
What is cryptocurrency?
Cryptocurrency is nothing but a digital currency. Cryptocurrencies are difficult to counterfeit as it uses cryptography for security. These are decentralized systems based on blockchain technology.
These are not issued by any central authority, which theoretically makes it immune from any kind of manipulation or interference from anybody including the government.
Bitcoin was the first blockchain-based cryptocurrency and it remains the most popular even today.
Apart from Bitcoin there are several alternative cryptocurrencies with a variety of functions and specifications.
Some of these are merely clones of Bitcoin, whereas others are forks, that is new cryptocurrencies separated from the existing ones.
What is the greatest benefit of cryptocurrency?
The greatest benefit of Blockchain technology is the decentralization of traditional finance. Developers and users can cooperatively manage the database.
This means that a central authority no longer has control, and you are relieved of interest rates and transactional charges.
This makes business dealings faster and more cost-effective, and a great solution for developers that have to face long settlement periods.
Moreover, the cryptocurrency is a transparent ecosystem, it allows its users to view and track their coins through all the accounts.
Apart from making it a transparent system, blockchain technology also makes it auditable and verifiable. These benefits make the case stronger for cryptocurrencies against the fiat ones.
This feature also makes it difficult for hackers to attack since cryptocurrencies don’t have any centralized system.
Apart from hackers, even the government can’t have access to or information about cryptocurrencies.
Now let’s see how it actually operates? In cryptocurrency every block which contains a group of transactions is confirmed against the previous block once the miner validates it.
The miner does this by computing complex cryptographic functions. And since it has no central regulator, the cryptocurrency community has complete access to and over the supply of cryptocurrencies.
This is what makes it the most democratic financial ecosystem.
Apart from this cryptocurrency also offers several advantages over fiat money. For example, it would be challenging for citizens of developing countries to locate a currency that has a value in the global marketplace.
Due to this, such a population could get deprived of the global financial system. Cryptocurrencies such as Bitcoin can give them access to the global market and hence allow them to participate in the worldwide economy.
These benefits have inspired many entrepreneurs and developers to go for Digital wallet app development.
The problem, however, comes for the US developers, as Apple and Google have introduced harsh policies against alternative methods of payment, in order to make sure that each company gets its 30% cut from in-app purchases.
Microsoft has dropped the use of bitcoin payments for a while due to their volatility.
However, they have restored it as a payment option, because they have worked out with their provider “to ensure lower Bitcoin amounts would be redeemable by customers”.
Read More: Essential Factors to consider for your wallet app startup
The downside of decentralization
The biggest disadvantage that cryptocurrencies have is the idea that is virtual currency worth any value.
For example, precious metals such as gold and silver always had a high value since the time they were accepted for exchange.
Similarly, the US dollar gets its value from the government which grants them the legal status.
These critical arguments also get supported by the fact that cryptocurrencies have no practical purpose in the contemporary market.
It’s almost impossible to assign any value to it and people have to just accept it as a usual token in economics of demand and supply.
Apart from that another disadvantage that cryptocurrency have is that they are slow to process.
For example, Bitcoin miners take 3 to 7 transactions per second. Whereas Visa can process over 24000 transactions per second.
Scams have also become common in the crypto world. The crypto experts can exploit people since there are no strict regulations. The experts can buy cheap tokens and then hype them up in the mainstream media to cause a demand spike.
This demand spike helps them to get handsome profits while the other loses their money.
Another problem that cryptocurrencies face is the lack of consistency.
However, what every web agency will tell you, is that decentralization is both cryptocurrency’s greatest asset and largest risk.
When we take a look at distributed apps, they run on networked computers and the actions made are regulated through shared memory or by exchanging messages between different instances of the app.
The good side is that distributed databases are a lot more available than non-distributed apps, so it works in favor for their functionality when it comes to problems that can isolate a part of the network from the rest of it.
However, there is a price to be paid. It’s problematic to keep data consistent in a distributed database because you’ve got no assurance that updating the system in one location will certainly make it to the rest of the distributed network.
When it comes to Bitcoin, this means that there is a possibility that a customer can spend the same Bitcoin multiple times.
Blockchain’s recording of transactions is a means to solve this problem. While the consistency of the Bitcoin Blockchain isn’t really assured, the way that the network was made is supposed to convince us that it will be.
What this discrepancy means is that it might happen that Bitcoin users disagree on whether it occurred at all. It may lead to users finding themselves in complicated settlement issues.
Problems with distributed apps
The development and testing of distributed apps can be a challenge. It’s difficult enough to test and debug ones that run on a single device.
When you are working on a software that needs to coordinate with other instances over a buggy network can be a rather complicated task.
There is a possibility that you will run across various kinds of bugs.
There are heisenbugs, which change the way they behave when they are tested. They are a common problem when it comes to distributed apps.
Another “pest” that you may come across is a mandelbug. The cause of a mandelbug is so complex and hard to determine, that it may seem completely chaotic and impossible to resolve.
There are also schrödinbugs, which don’t appear until the app is used in an unconventional way.
These kinds of bugs make developing, testing, and supporting a distributed app one hell of a job.
Basically, if you intend to use Blockchain for your app, you need to set the right expectations for the cost and plan according to realistic values.
In the case that you are new to distributed apps, this is going to be a big exercise for you. This is certainly a bigger problem when you’re developing on-demand apps.
Looking at the mobile industry at the moment, the fact is that cryptocurrency isn’t going to change it.
However, the fundamental technology behind it, such as Blockchain, enables app developers to change the way that apps are made, distributed, and maintained.
While it is still more of a story for the future, it is impossible to ignore the fact that cryptocurrency can have a major impact on mobile app development in the days to come.