How DApps Are Streamlining and Benefitting the Retail Sector
If blockchain was the buzzword of 2017, then 2018 is the rise of the DApp. Beyond cryptocurrency and finance, what do they mean for e-commerce?
What is a DApp?
Pronounced “dee-app” like B-track or email, DApp is the shorthand name for “decentralized application.” Rather than operating under a company that oversees and facilitates interactions, DApps are peer-to-peer services, underwritten by the consensus of the other users.
There are four criteria that an application must demonstrate in order for it to be considered a DApp:
1) Open source — The source code underlying the applications is available to all. Some applications might be built on existing DApp blockchains (Bitcoin’s blockchain is often used by other DApps) or they may create their own.
Data is cryptographically secured in a public, decentralized blockchain: Its security is not dependent on external verification. It is an autonomous application, and no one entity holds the majority of the tokens. However, a DApp is not simply left on the net to flourish or fail based on its source code: changes may be made, but they must be made on the consensus of its users rather than an autonomous developer.
3) Token Generation
Tokens are distributed from a cryptographic algorithm. On the Bitcoin network, “miners” are rewarded for proving a new block, by solving the cryptographical puzzle which is difficult to do but easy to prove, by being paid with Bitcoins, which are then circulated.
There is some form of reward for contributing to the network. Miners compete against others to provide the first “proof-of-work” answer to the puzzle, so it pays to be quick. Conversely, in “proof-of-stake” validations, which Ethereum plans to move to, the “forger” of a new block is determined by chosen values, notably wealth but also age or other factors, and they receive a fee for authenticating the block.
The Decentralized Autonomous Organization (DAO)
One of the most ambitious and infamous DApps was the ill-fated Decentralized Autonomous Organization (DAO), which in 2016 was exploited out of $50 million worth of Ether.
The DAO was intended as the ultimate decentralized platform for businesses and non-profit ventures, but vulnerabilities in its code led to an attack that syphoned away a third of the investment funds and prompted Ethereum to take a hard fork to reclaim most of its losses. This was perhaps the most spectacular hacking of a cryptocurrency, and it may have made investors wary: However, the “hacker” didn’t break into the blockchain, but instead exploited known weaknesses and gave it commands that it followed; blockchains in themselves are inherently secure.
DApps Beyond Cryptocurrency
Although cryptocurrencies, and particularly Bitcoin, are the developments most people think of when they consider blockchains, over the past few years we have seen how they have filtered into more areas of the web, including logistics, healthcare, and government services — but these are primarily under the control of a company that oversees the transactions that are being stored on the blockchain.
A DApp must remain under the control of its users rather than a corporation.
When a business provides a peer-to-peer platform, it is less vulnerable to attacks and its data is secure, due to the cryptographical verification, multi-user verification, and the spread of blocks throughout the entire network, making it impervious to hacking. It’s attractive to consumers, who aren’t placing their trust in a corporation to behave responsibly.
DApps in Retail
Intellectual and creative property, such as songs, that are currently primarily exchanged on centralized apps such as iTunes, could be bought directly from the artists involved — and even if a song is passed through other vendors, it would carry the information of all participating artists inscribed into its blockchain. Even Kodak has, along with development of its own cryptocurrency, has built a DApp that protects artists’ rights and enables new streams of revenue.
Blockchain has already been used to monitor the journey of food before it reaches our table: from farmer, to packer, to distributor, to supermarket, to delivery, every aspect of our produce can be writ into a blockchain ledger. Similar DApps are likely to be employed in retail to verify aspects such as organic materials and non-sweatshop labour.
Earlier this year, Shopin, a DApp that uses blockchain and AI to target retail customers, announced its partnership with iExec, a decentralized Ethereum-based Cloud platform, to improve customer recommendations and conversion rates. Rather than selling its own product, Shopin is a platform for exchange between customer and retailer to benefit both parties.
BitRewards as a DAO
At BitRewards, we aren’t pushing customers towards products they’ve bought before, but instead incentivizing spending across a range of stores and platforms. It’s a transparent rewards system that sees users benefitting from spending money by receiving digital BIT, which in turn encourages more spending with the “free” currency.
As a DApp, the BitRewards network operates independently of individual vendors’ interests and monetary influence, and instead its users (any individual or entity that had makes transactions with us) vote for a majority rule in decision-making, and BitRewards success is enjoyed through increased customer conversions and the increased worth of each BIT as it becomes more valued.