In the year 2024 and beyond, we can expect to see an increase in the number of decentralized apps. This is largely because blockchain infrastructure has now matured enough to be able to support more use cases that were previously deemed unfeasible. If you have an interest in web3 and the decentralized economy model, it's important to understand why this shift is taking place now, rather than years ago.
To fully comprehend the significance of the year 2024, it is necessary to trace back to the inception of Bitcoin. Initially, the only function of Bitcoin was to hold and transfer the native BTC asset. To use this asset, one needed a wallet, which required considerable technical expertise to operate. To put it in perspective, imagine having to run a mini Bitcoin node on your desktop to access the wallet.
To make it easier for more people to participate, certain infrastructure updates were necessary. As a result, several new companies emerged, some of which developed mobile app wallets while others provided third-party blockchain node services via APIs. This made it simpler for those creating mobile app wallets as they no longer had to worry about maintaining their own blockchain nodes or indexers, among other things.
This was fun for some time but then there were two main problems.
- What you could do on the blockchain was limited.
- Even as just a payment system the blockchain was very slow.
Ethereum was the first blockchain platform that was Turing complete. This meant that any imaginable application could be built on top of it. As a result, different interesting applications such as Tokens, NFTs, DEXs, Tokenization, and DEFI were built on the blockchain. This era is now commonly referred to as Web3.
But this also came with issues that again needed more work to be done on infrastructure.
- High transaction fees.
- Still very slow.
With the rise of Layer 2 (L2) Blockchains, the problems related to slow transaction processing and high fees have been resolved. As a result, we are witnessing a significant increase in the number of Dapps being moved onto these L2s, which has led to a surge in their usage as well. These L2s provide faster transaction processing and significantly lower fees, making them a practical choice for the foreseeable future. Additionally, they take advantage of the security provided by the Ethereum Blockchain.
High speed and low transaction costs have made it possible to develop more applications on the platform. For example, entire peer-to-peer and trading platforms can now be built directly on the blockchain. The blockchain can also support large-scale voting, real estate tokenization, prediction markets, and virtually anything else you can imagine.
This is a crucial validation step for the web3 narrative. If we are unable to build more useful decentralized applications from this point on, then perhaps the idea of web3 will remain just a dream that might never come true. In that case, any further optimization of infrastructure would be a complete waste of effort.
To engage with the blockchain, users are required to have a wallet. The only way to authenticate Dapps is by connecting your wallet. However, this process is not as straightforward as it may seem. Wallets employ public key cryptography, which means that users must keep a private key, typically in the form of a 12-word mnemonic.
Losing your keys in the world of blockchain means losing all your money with no chance of account recovery. This can be a frustrating experience for users, especially for those accustomed to the more forgiving nature of traditional web applications. Furthermore, this approach seems to be at odds with human nature, making it a significant barrier to entry for many people.
The concept of account abstraction has led to the development of a new way to create wallets. Now, users can easily create their wallets using a standard username and password or with social authentication methods such as Facebook, Gmail, X, and so on. With account abstraction, the possibilities for authentication options are limitless.
New methods of account recovery have been developed, including social recovery where friends can help restore missing keys. Organizations can easily use multi-signatory wallets without complicated hardware setups.
Layer 2 scaling solutions coupled with Account Abstraction have paved the way for the next generation of Web 3 and Blockchain Dapp development. I invite you to join in on this next wave of exciting developments.