Already a MEMBER? Registered users are kindly asked to reset their passwords for Full Digital Access to all our content. Just select LOGIN and RESET PASSWORD.

DApps' Disruption of Payments Is Inevitable

The 'decentralised apps' tied to blockchain bring increased transparency, automation and security to traditional payment systems. This can create a domino effect that leads to a reduction in operational costs, accounting expenses, and friction which can benefit the business and pass savings on to customers.

When Blockchain technology first became available, a brand new phrase was coined ‐ “decentralised applications” also known as “smart contracts” or “dApps."  Smart contracts are public agreements between a blockchain such as Bitcoin or Ethereum and one or more of its users, with terms that are enforced by the network itself rather than a person or central authority.

Blockchains such as Bitcoin and Ethereum are distributed computer networks, which are secured by high degrees of redundancy, transaction chaining, and proof-of-work incentivisation of miners. All transactions and contracts in a blockchain-based system have to be verified by the entire network, which adds the ability to automate audits, accounting and record‐keeping in a way that can be empirically verified.

The blockchain can be defined as timestamped and transaction ledger of truth, which cannot be influenced by a third party, or retroactively modified at all. The main benefit of decentralized applications running on a blockchain, however, is that they are not controlled by people or organizations, but rather by network consensus and cryptography. This means that even if the centralized servers go offline, the blockchain continues to exist.

Even though most banks and financial institutions still react to Bitcoin as if it were venomous, many of the major players in finance including NASDAQ and NYSE have been successfully researching blockchain technology for securities trading, and other financial instruments such as options and bets. In these scenarios the blockchain network acts as a form of counterparty, creating a high degree of trust and a platform that is entirely neutral towards its participants.

By cutting costs and removing friction, decentralised applications are the foundation of a true international peer-to-peer economy and possibly a truly free market. Projects that take advantage of these optimizations include a decentralised ride-sharing app, where drivers pay nothing to the middle man resulting in cheaper fares for the customer, as well as border-neutral governance solutions and decentralized KYC application.

And now most of the next generation platforms being built on the Ethereum protocol have an opportunity to obtain funding. The decentralised fund known as TheDAO (decentralised autonomous organisation), which is powered by the Ethereum protocol, has raised over $150 million in just over three weeks, making it the largest crowdfund to date. The main purpose of the fund is to back different projects working on the blockchain technology that benefit the community within the blockchain ecosystem and beyond.

For a decentralized application on a programmable blockchain network to run successfully, every step of programming logic and processing power has to be paid for with something called gas. According to Ethstats, the current gas price on Ethereum is 20 gwei. This means that 100 000 gas costs around 0.00002 Ether (cryptocurrency) or around €0.00014. This means that on Ethereum, over a hundred thousand transactions between users can be completed instantaneously for under a pence.

Compared to the technical and compliance costs of running a server and operating a centralized exchange, this is a considerable cost-efficiency. Additionally, it offers many other such as transparency, as well as being able to issue rebate systems and reward programs programmatically.

The current trend and the growing number of entrepreneurs and freelancers shows that over the next few years, structuring a business model on the blockchain technology is going to be more common. As a result, an overlap between the traditional finance and blockchain will be unavoidable.

The most startling innovation we will witness is consumers using the technology on a daily basis without being aware of it. However, in the context of commerce and e-commerce, it is clear that blockchain technology is still a brave new world, and many of the most significant use-cases have not yet been discovered.

Danial Daychopan is founder and CEO of, a London-based technology company.

For reprint and licensing requests for this article, click here.