Blockchain to Catalyze a Second-Wave API Economy
The role of a CIO (chief information officer) in the corporate world has evolved over time, keeping pace with the rate of innovation characteristic in technology and business. From the position’s original mandate to steward the IT department and ensure a company’s systems ran smoothly, today’s CIOs are expected to not simply enact IT platforms, but to understand and create new business models that employ existing technology and external solutions for unique tasks.
As technology moves away from the monolithic model and into a mix-and-match paradigm, APIs have become a key component for success. APIs (application program interfaces) are sub-functions, or small applications, that allow developers to use different tools in a single solution by enhancing communication between different components. In essence, APIs act as communicators between two pieces of software, enabling both to work as if they were a single program.
APIs have become increasingly popular tools, with companies like Facebook, Amazon, SalesForce, and more launching their own APIs which allow companies to access some of their services without having to fully migrate into their ecosystem. This new paradigm has led to the rise of what some experts call the “API economy,” a model that enhances a company’s bottom line by improving interoperability and thus creating new systems from existing ones.
Much in the same way businesses today are building new platforms not from single sources but from a variety of applications, blockchain technology offers a more democratic and efficient way to construct new solutions.
Blockchain is founded upon the idea of democratization and decentralization, two notions that are inherently built into API development paradigms. Like APIs were the catalyst for a technological revolution, the technology that supports cryptocurrencies like bitcoin has shown vast potential to lead a new wave of innovative development. (See also: What is Blockchain Technology?)
The concept of APIs was borne out of the necessity evolving technology brought about. Whereas legacy systems were dependent on a single monolithic application that handled every aspect of an operation, APIs offered developers the ability to simply plug in existing solutions from other systems to gain functionality without sacrificing efficiency. Moreover, they presented companies the ability to integrate tools with proven track records for key functionality all whilst shaping a more decentralized environment for innovation.
The API economy came about as companies understood that more than simply developers’ tools, APIs delivered a way to expedite business processes, use existing technology to produce novel platforms, and establish a more connected and interoperable environment for applications. In an increasingly cloud-based world, APIs offer an easy way to connect services and create solutions that can employ the best of what’s readily available. For many companies, this model is highly attractive, as it allows them to deploy existing technology, but also increase their footprint and revenues—as companies such as Facebook, SalesForce, and others have already done.
One excellent early example of both the rise and stagnation of the current API economy is LinkedIn. Initially, the company opened several APIs that let developers use LinkedIn tools in a variety of ways. The program was highly successful and allowed users to share large portions of information from their accounts within other services.
However, after it became too popular, the company announced a decision to shutter most of its APIs, or heavily restrict them to paying members, killing off what was a vibrant developer ecosystem using the company’s tools. LinkedIn’s reaction highlights a problematic dichotomy in the industry.
APIs are built to remove centralization.
