How Important is the API Economy for Blockchain Application Development?

A blockchain cannot take care of all the information it handles. It should focus on its core capability blockchain and not about providing different data options. 

As we build more and more applications with blockchain, we need more advanced data to satisfy our use cases. This need for more advanced data sparked a new industry of blockchain data.

This industry of providing advanced blockchain data via APIs got fueled by the need for interoperability. Nowadays, there is still not much interoperability between chains. However, interoperability can be reached on the second layer via blockchain API data.

Imagine a gambling contract on Ethereum written in Solidity. The gambling contract picks a winner who receives a sum of $100 in Bitcoin. Your application first needs the API to detect who has won the raffle. Next, you need to send the payment via the Bitcoin network and monitor if the transaction has completed. All these actions can be provided by a single API. Therefore, it’s fair to say data APIs are a crucial part to build more applications with blockchain technology.

In my opinion, there is not always a need to go 100% trustless. I see many projects opt for a centralized-decentralized strategy. Going 100% trustless makes adoption though to achieve as it adds a lot of unwanted complexity. 

Furthermore, it’s a natural thing that this whole blockchain API economy has originated. The “gold rush and pickaxes” analogy will clarify this statement.

Gold rush and pickaxes: Data economy

When a new major technology emerges, entrepreneurs can try to capitalize on the trend by creating new products or create tools to enable new products. A common analogy here is that the people selling pickaxes got richer than the ones looking for gold. 

Creating a new product is much riskier than providing the tools to support the creation of a new product. Therefore, providing blockchain APIs is a natural thing to occur from the blockchain trend. On the other hand, it’s also a necessary thing to happen to spark innovation and create better products.

To get back to the gold rush analogy. The ones selling pickaxes started to improve tools, innovating the gold mining industry. Let’s hope blockchain data APIs can make the difference to reach larger adoption. These APIs provide the ability to any product to implement blockchain payments or any other smart contract functionality through an API. In short, blockchain APIs definitely lower the barrier for implementing blockchain functionality as an API is a well-known piece of technology. 

Next, this article will introduce you to four different blockchain APIs and highlight their core functionalities. Every provider has a unique selling point as they leverage the data in a certain way not provided by the underlying blockchain. Let’s take a look at the comparison of blockchain APIs.

Blockchain Data API Providers

Here’s an overview of blockchain-related data APIs covering a wide-range of features for developers or entrepreneurs to build products with.

Note: I do not have a vested interest in the below companies.

Blox API

Blox.io is one of the most well-known blockchain API solutions. The tool comes with a focus on cryptocurrency accounting, tracking, and management. Blox.io automatically tracks and syncs with a large number of wallets and exchange accounts. These wallets are monitored for changes so updates can be automatically fetched. 

The main functionality comes from the tracking the tool is capable of. First of all, Blox’s API allows your organization to build up an audit trail and export all transactional data to CSV files. Moreover, Blox allows your organization to generate financial reports.

Also, Blox has spent some efforts on security as well. It comes with the ability to define roles for different users. You can define read, write, or both roles to users.

Lastly, the tool is designed for:

• Asset managers
• Accounting firms
• Crypto companies
• Blockchain protocols
• VC’s

Next, let’s take a look at Blockchain.com.

Blockchain.com API

Blockchain.com is the next API on our list. It’s important to know that Blockchain.com mostly focuses on actions related to Bitcoin. The selling point here is that websites can accept Bitcoin payments for their goods and services. Therefore, blockchain.com offers an easy to use API for receiving Bitcoin payments.

In addition, it’s also worth mentioning you can connect with websockets to open up a low latency streaming channel which provides you with data on new blocks and transactions. This is ideal for websites that rely on real-time blockchain data.

Coinbase

Besides being an exchange, Coinbase tries to attract more money to the platform by offering a trading API. The Coinbase API allows users to perform standard actions such as purchasing, selling, sending, storing, and receiving Bitcoin, Ether, and Litecoin. In addition, the API provides endpoints to create new wallets for the above-mentioned cryptocurrencies and the ability to retrieve real-time or historical price information.

The Coinbase API is great for creating trading bots or any automated activity. However, it’s not great for performing arbitrage trading. You are limited to only one exchange and the data this exchange hosts.

BlockCypher

BlockCypher offers a wide range of APIs to fetch different types of data:

• Address API: Query information about addresses, generate new addresses, and generate multisig addresses from public keys.
• Transaction API: Information about transactions and how to send them.
• Events and Hooks: Interesting feature where you can subscribe for a wide variety of events on blockchains made available through webhooks or websockets.

The nice thing about BlockCypher’s solution is that it doesn’t store your private keys. However, for large value transactions, the API requires you to sign these transactions locally which can increase the complexity when developing applications on top of BlockCypher’s API. Still, it’s a nice feature to increase trust.

To conclude, many different formats of data can be found among the data providers. Some prefer to focus on a specific coin whereas some focus on a particular use case such as trading bot development. It’s fair to say that the availability of all these blockchain APIs can spark the interest in blockchain and encourage entrepreneurs to build new applications with blockchain technology.