“Distributed Apps” Using A Blockchain

Daniel Palmer writes at Coindesk about “decentralized apps”, AKA “dapps”, which he considers “one of the more novel ideas to emerge from the blockchain community”. Using the ubiquitous blockchain as a shared memory, and various versions of machine executable contracts (misnamed “smart contracts”), designers are creating services that have no “centralized authority”.

It’s early days, so it remains to be seen what might be done with this concept. Palmer reviews seven “dapps” under development using Ethereum, which has one of the more developed platforms, as well as its own cryptocurrency, “Ether”.

So what is being built?

  1. Vevue project

“Make video, earn bitcoin.”

They aim to “bring Google Street View to life”, by “enabling users to take 30-second video clips of restaurants, hotels, places, events and more to share with other around the world.” Revenue also comes in from responses to requests for live video in specific locations, paid in cryptocurrency.

As far as I can tell, the blockchain is mainly used to manage the flow of cryptocurrency, as people request and post videos. The overall system is organized as a DAO, but what does the organization do? I’m not sure.

As far as I can tell, most of the service is built on conventional resources, including Google Maps, YouTube, etc. These services are notably not run as DAOs. So Vevue is a “dapp” overlaid on conventional non-d technology.

  1. Etheria

A virtual world that looks like Minecraft, except “the entire state of the world is held in and all player actions are made through the decentralized, trustless Ethereum blockchain.”

The game mechanics appear to center on real estate—buying and selling ‘tiles’, and ‘farming’ income from tiles.

The supposed advantages of using the blockchain are:

“1.  Ξtheria cannot be taken down. Not by the government, not by its owner-players, not even by the developer (me). Ξtheria will exist as long as Ethereum does.

2. Likewise, Ξtheria cannot be censored or altered against the wishes of its owner-players.”

OK, I get that. But why?

This sounds like a solution to a non-problem.

  1. KYC-Chain

“KYC” stands for “Know Your Customer”, which is the standard bureaucratic process that legitimate financial institutions follow to deter money laundering and illicit commerce.

The “dapp” uses the Ethereum blockchain to make it easy to post and retrieve DYC certifications.   The certifications must come from conventional sources, i.e., “authorities”. The dapp uses Ethereum’s “trusted gatekeepers” to certify these IDs, which are cryptographically signed.

Essentially, the blockchain is making it easier and more efficient to perform conventional KYC.

This is actually a good idea, though it is nothing more than a digital notary system at base, so not that new.

One thing KYC-chain is not, though, is “trustless”. That is why it actually makes sense, of course, since the whole point is to establish trust.

  1. 4G Capital

This company aims to offer micro lending to small businesses in Africa.

We offer 100% unsecured debt funding to self-employed informal market traders”. The platform is deployed via mobile devices, which are ubiquitous.

From what I have read there is surely a problem to address, here. I don’t think that using a blockchain is necessarily better than conventional approaches, but the point is that conventional services are not reaching “the little guy”.

I have to worry a bit about this service. Microlending has received a lot of headwinds recently, for bad reasons and good ones. (“Microlending” is indistinguishable from and competes with loan sharking.) Also, there have been regulatory problems with cryptocurrency systems in Kenya and possibly elsewhere. (Crypto based systems compete with bank run payment systems.)

Myself, I tend to worry about “unsecured” loans, which tend to be usurious, exploitative, and often borderline illegal.

  1.  Eth-Tweet

Twitter like messages, stored on the blockchain. The messages therefore cannot be censored. Also, pseudonymous tipping is supported.

I’m not a big fan of spamming a blockchain with public messages, because I don’t especially want to expend my own computing power on such things (i.e., when I process and validate the blockchain).

If successful, the combination of concealed identity and inability to censor means that the channel will be filled with spam, flames, porn, and will quickly descend into useless chaos.

Also, I consider Twitter to be pointless, so why would you want to (poorly) replicate it.

  1. Ampliative Art

Ampletive Art is “a new, empowering art procedure” that “proposes to develop a reciprocity-based web platform”. The goal is for “art actors” to “contribute to the art community and be rewarded through alternative means”. (Alternative to the capitalist market, I assume.)

Users are invited to create their own galleries of digital art (for free), and to contribute to the on-line community through comments and tipping with cryptocurrency.   Any profits are disbursed accorting to “reputation” within this digital community.

I note that there are already other blockchain based certification systems for digital art. This one is a bit more “social” minded.

The web age notes that the peer to peer blockchain means “No speculative intermediaries”, which I’m willing to postulate is a real problem for artists.

It is less clear to me whether other parts of the solution make sense :

“Incentives for everyone: an alternative way to remunerate, make known and recognize your contributions to the art community.

“Income by merit: through the donations collected by your contributions and the distributed revenues received by your community reputation.”

  1. WeiFund

Let’s Decentralize Crowdfunding”, they proclaim.

Considering the already decentralized crowdfunding platforms as not decentralized enough, WeiFund is building a Kickstarter-like service using Ethereum. “Kickstarter in a box”.

All funding is in cryptocurrency and uses “smart contracts”.

A key feature is that no one can “censor” your crowdfunding activity.

Is this even legal? I would think that securities and financial regulators might take a dim view of some of this activity.

Discussion

Most of these “dapps” look to me like non-solutions, or solutions to non-problems.  It’s not clear that using blockchain technology or a DAO is actually useful.  But we shall see.

One interesting thing about this roster of “dapps” is that many of them are hybrid systems, using the “trustless” peer-to-peer architecture, blockchain, cryptocurrency, and smart contracts in tandem with conventional systems.

In fact, many of them use only some of the features of the Ethereum “ecosystem”, eschewing others. Some use the blockchain for ubiquitous write-once storage, others use smart contracts, and others use cryptographic signatures. One even uses the “trusted gatekeepers” instead of “trustless” decentralization.

In fact, when you think about it, it is interesting to speculate that pretty much the only application that would use all the features of a cryptocurrency, “trustless”, ubiquitous storage, cryptocurrency, and smart contracts would be electronic cash, a la Bitcoin. Almost any other application will probably eschew with one or more of these features of blockchain technology.

 

Cryptocurrency Thursday

 

4 thoughts on ““Distributed Apps” Using A Blockchain”

  1. Hey Robert – I like your analysis. You are right to examine to what extent a blockchain architecture, or specifically a Ethereum DApp, can address the business problems ourselves and others are looking at. Good blog!

    For us here at 4G Capital, a blockchain architecture is part of an ecosystem play that would interact with reputational credit scoring for customers. There are other potential security and transparency benefits too, but we’ve started by building a business to address the problems of those most in need (the financially excluded micro traders in Kenya) and then use technology to improve customer service and scalability.

    You’re also right to highlight the risks of the unsecured lending space. There are some pretty aggressive loan-shark options out there. Happy to tell you we are 100% compliant, using M-Pesa as legal tender, and have received multiple industry awards for our client-centricity and and customer service.

    I hope this lays your concerns to rest, but by all means please come and visit us in Kenya to see how we’re helping people in most need.

    Wayne Hennessy-Barrett
    CEO & Founder
    4G Capital

    Like

      1. I couldn’t agree more. Our DApp is safely in our R&D sandbox, and the advantages so far lie in the future when we see clear and attestable industry standards and credible adoption. Doesn’t mean the fault is with Ethereum per se. Any contract or automated facility has to be stress tested through multiple scenarios, piloted and validated by the market. Just like any other product.

        Hype and buzzwords don’t substitute hard research, market testing and fault finding. We’ve seen it all go horribly wrong when promises trumped good hard testing and governance.

        Keep up the good work, Robert. This is not a sport for cheerleaders! We need all the realists we can get in this world.

        Like

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