What is the Blockchain?

To understand the role of APIs in the blockchain, we must first discuss what a blockchain actually is. In its most simple form, the blockchain is a digitally generated, immutable record of transactions. Typically, it functions across a wide number of nodes in a chain, with the record only being updated upon the consensus of multiple modes within the chain. Each individual node stores a record of an event, which is compared to the consensus of the other nodes.

While the blockchain has most famously been used in the development and widespread use of Bitcoin and other cryptocurrency, it can also be used for a wide number of other implementations, often taking advantage of its decentralized yet authoritative nature.

Since the network of blockchain nodes establishes a trust and verification system without a single, central authority, this provides a very powerful system for decentralized devices hoping to secure verification without dependence on a single node.

How Does Blockchain Work?

The blockchain works in six basic steps, each of which represents a unique aspect of the system itself.

  1. First, a transaction of some sort is defined. The transaction can be a literal transaction, such as a user wanting to send money to another user, or can be less literal, such as a user trying to pass a secure token for identification.
  2. Secondly, this transaction is codified into a block, which is then added to the network for processing.
  3. Third, the block is presented to all distributed members, and is compared amongst them for integrity and, in some cases (such as confirmation), against past record ledgers to prove authoritatively whether or not it is valid.
  4. Fourth, the members within the blockchain either deny or approve the block itself.
  5. Fifth, the block is either denied or approved, and if approved, the block is added to the chain of records.
  6. In the sixth and final step, the transaction is approved and carried out. In the case of a financial transaction, the money exchanges hands; in the case of something like a token, the token is then verified and trusted throughout the network.

Blockchain APIs as a System of Connectivity

One of the best elements of the blockchain is the fact it is driven entirely by the concept of trust. Each interaction on the blockchain trusts and verifies the transaction, and depends on the consensus of all nodes to track what is an otherwise untrackable, decentralized activity. The API community is likewise driven by trust as a key concept — and this is why the blockchain is an amazing element of connectivity in the API stack.

Utilizing the blockchain to facilitate communication for APIs allows for decentralized and authoritative methodologies of securing transaction histories, including the ability to prove that a previous transaction, such as key exchange, did in fact occur and was in fact legitimate. In other words, a network of devices running a secure blockchain implementation could form a sort of federated network of trusted devices that tracks and manages these relationships over time in a way that does not require a centralized authentication authority or tracking systems. At time of writing, AIKON is attempting just that — a decentralized marketplace for web APIs.

Decentralization is a huge boon for items such as the Internet of Things which may or may not be able to tie into a central authority, especially when the information on device is legally protected from sharing. In these cases, the data can be encrypted and, once sent, a ledger of transaction can be recorded and shared, establishing a chain of connectivity for both compliance and technical use.

Blockchain APIs as a System of Security

Expanding that extremely useful element of the blockchain, the ledger of transactions, we can also begin to see some serious implications for security arising from its use. Since the blockchain verifies each transaction and can pass this data securely and independently from a centralized authority, all interactions can be effectively encrypted or at least pseudo-anonymized. By doing so, the attack vector of the “authentication server” and “authorization server” can be effectively minimized.

While it’s true that, in this case, a single node can now in theory threaten the entire network, the fact that the blockchain is based upon the consensus of all nodes mitigates much of that threat. When a single node is compromised, the rest of the nodes can either reject that ledger or force its update (if the node allows), thereby correcting the record and re-securing the network.

It can be argued that the movement from centralized to decentralized creates independence from centralized, vulnerable security systems, thereby increasing both authority and reliability.

Blockchain APIs as a System of Processing

Due to the way the blockchain functions, it is prime for distributed processing and delivery. While the blockchain itself is not necessarily prime for computing, it can work as a token-based system for “renting” computation and verifying the results of those computations. In fact, this is the foundational crux of how Bitcoin mining works — and demonstrated by the extreme popularity of that type of mining, it can be rather effective when done properly.

APIs can thus facilitate this readily. By pointing accepted transactions to the API which has segmented the content into bite-sized pieces, computing can not only be orchestrated, its results can be verified and trusted across the network, thereby providing leveraged power by checking the results of this computation across multiple mirrored clients.

Blockchain APIs as a System of Ownership and Collaboration

Fundamentally, the blockchain is a collaborative platform – and as many APIs are crafted to support the modern collaborative environment, the blockchain is going to be an important aspect of that. Securing collaboration often requires an extreme amount of technology, encrypting every single step of the way to try and ensure that the user is who they say they are.

With the blockchain woven into this process, however, not only can the user in question be effectively authenticated and identified, this can be done leveraging the power of distributed computation. And, in the case of collaborative data, if something were to occur that maliciously harmed the data itself, this interaction could be tracked and tagged to a single actor and single resource. Additionally, if the data is backed up via the blockchain, then versions can be restored from a variety of distributed resources that host the data in secured, encrypted form.

Blockchain APIs as a System of Chain Management

One big aspect of the joining of blockchain and API can be found in the dynamic management of chains. Whether or not the chain is in Customer Relation Management or the Supply Chain, being able to log each transaction to a specific user, a specific time, and a specific environment can result in a massively powerful record of transactions that not only promotes responsibility within staff, but can aid in investigative procedures to resolve issues.

It should also be noted that these kinds of APIs can also improve these chains by the very nature of tracking them. By seeing where common faults are, identifying nodes of inefficiency, and highlighting continued areas of issues, the blockchain and the API that interacts with it in these situations almost serves as a type of quality control, continually forcing the network to improve itself in a trackable way.

Blockchain APIs as a System of Unification

Perhaps the most important, and truthfully, nebulous benefit of integrating the blockchain and API ecosystem is the fact that, in many cases, it can act as a system of unification. The Internet of Things and other massively interconnected devices rely on trust, but they also rely on communication of intent and a record of transaction. For these cases, the blockchain makes perfect sense, and can be a massive facilitator in this regard.

Let’s assume that we are integrating an API and a blockchain together in a car manufacturing network. By leveraging the blockchain, we can track each individual part from its creation to installation. We can track the transactions regarding their maintenance, replacement, recall status, and more. We can track the relationship between the recorded transactions and the projected maintenance cycles via an API to see parts that are wearing more quickly than they should, possibly identifying faults in production.

We could track the rate of replacement with the rate of purchase to find the prevalence of aftermarket parts, possibly identifying market failures and new methods to fill those gaps. We could do so much utilizing this integrated system that, in many ways, it would itself form an ever-growing network of useful information about our product — which, in turn, could be used to improve it.

Unification is the main driving force here, the value of which has already been identified by the market. It’s so valuable, in fact, that aeronautical platform Boeing has used a combination of Internet of Things and APIs to drive operational improvements, reducing cost, improving reliability, and delivering exceptional value.

Drawbacks

Not everything is perfect, of course – and the Blockchain is no exception.

First and foremost, the blockchain is often very wasteful. Since it relies on many nodes to verify content, this consensus ultimately means all the nodes repeat a task over and over to do a single verification, which makes for a slower and more expensive network of devices. This cost also comes in the form of speed — the larger the chain, the more is required of each device for checking transactions, and thereby the greater the loss of efficacy and speed without fracturing the data being queried.

There is of course the fact that the ledger is immutable. This means, in many cases, that once a mistake is made, there is no correcting it. You could issue a retraction or a linked transaction, of course, but then you will have to reference – and gain consensus – on two transactions to verify a single point of truth.

This all hinges as well on the network being decentralized. There have been many cases in which the blockchain has been tethered to a single authority by the nature of the systems used to track the items within it, such as the “wallet.” When a wallet is cracked, the network intrinsically trusts the transaction, and because the transaction is immutable, once the value is lost, it’s lost – which is a huge negative.

Final Thoughts

Whether or not blockchain delivers on its grandiose promises hinges on how well integrated it is into the modern APIs that drive the current internet. With any technology, there is great promise – but there are also great possible threats.

Concerns about centralizing otherwise decentralized networks aside, utilizing the blockchain properly and encrypting the various methods by which it functions delivers a strong, decentralized, secure network that can be used for a wide variety of tasks, delivering exceptional value and function across a wide range of possibilities.

Kristopher Sandoval

About Kristopher Sandoval

Kristopher is a web developer and author who writes on security and business. He has been writing articles for Nordic APIs since 2015.