Eric Rykwalder is a software engineer and a co-founder of Chain.com, a bitcoin API for developers. In this article, he examines how bitcoin APIs have made life easier for cryptocurrency startups over the last year, and looks ahead to what 2015 might bring.
Toward the end of last year, in November 2013, speculation shot the price of bitcoin from just under $200 to more than a $1,000.
This meteoric rise couldn’t be sustained at that time, but it served an important purpose. It drew the attention of the world, and made people wonder what bitcoin could become and how they could be a part of it. Thousands of developers began to sink their teeth into the blockchain.
As developers and entrepreneurs began to explore bitcoin, they found the landscape required tilling.
Before they could even think about their innovation, all the groundwork had to be done. Seemingly simple tasks, like checking the balance of an arbitrary address, required spinning up and maintaining servers, indexing all of the data, and parsing a new scripting system. These formidable tasks are hindrances to the creation of new products and services.
Problems like these, in the broader developer world, have been solved by companies like Amazon, Github, and Stripe. They created developer tools that gave people a strong foundation to build upon.
By relying on Amazon Web Services, Netflix has been able to avoid setting up data centers and instead focuses on its video-streaming service. In a similar vein, bitcoin APIs have emerged to remove the legwork of creating blockchain applications.
So far, bitcoin API services, like Chain, have focused on providing access to the primitive data structures, such as transactions and addresses. This alone has served to eliminate the problems, mentioned above, of managing servers and indexing data.
Consider the size of the blockchain, which is now over 25GB. That’s just the size of the raw blocks and their transactions. To make this data easily searchable requires it to be catalogued and indexed, further increasing its size.
Instead of simply treating all this indexed data as just a store to be queried, APIs have created push services to speed up the app development process.
Chain Notifications, for example, uses 'webhooks' and 'websockets', enabling developers to tap into the events on the blockchain, and learn about updates as soon as they are propagated in the network. This allows them to simplify otherwise complex data workflows.
This year, APIs developed preliminary services aimed at providing confidence around zero-confirmation transactions.
This work will definitely continue to progress in the following year, with more tools for risk analysis and fraud prevention being created. Exposing and analyzing the metadata around the blockchain will allow developers to enhance the end-user experience of bitcoin.
Each new currency and chain added represents additional data to manage and new primitives to learn. Developers will require easy mechanisms for operating across multiple chains, empowering them to harness all the progress being made.
More than anything, API advancements next year will focus on increasing levels of abstraction around the blockchain.
So far, most progress has been on the necessary step of exposing the core data of bitcoin. The fewer of these core data structures that developers have to concern themselves with, the more time they can dedicate to their own product. Although there will always be use cases for this data, the majority of applications will be able to ignore most of it.
Overall, 2015 will be a very exciting time. As APIs mature, well established businesses will begin integrating bitcoin into their operations and, as the level of abstraction provided by APIs grows, more and more developers will be enabled to create innovative applications. As a result, the marketplace will continue to grow and continue to push the entire community forward.
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