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Smart contracts are by far the most important product that the blockchain industry has ever invented. They opened the door to all other products, they eliminated the need for third parties, and most importantly, they are fully transparent and immutable, which is why they do not require trust.
However, for all their advantages, smart contracts still have a flaw that has been troubling them for a long time, and that is the fact that they are based on the blockchain, and as such — disconnected from the real world. More importantly, they are disconnected from the data coming from the real world. As they are self-executable, they require this data to know when the conditions of the contract have been met. This led many projects to develop a solution in the form of oracles.
However, this solution only managed to spark another issue, as oracles are middleware that sits between APIs and smart contracts. This, once again, increases cost and centralization, which led to it being known as the Blockchain Oracle Problem. API3 brought a solution that bypasses this issue and provides a more direct and more convenient method.
What Problems Does API3 Solve?
As mentioned, API3 solves several issues by finding a more efficient way of bringing data to blockchain’s smart contracts. In fact, it may very well be the project that invented a solution that will someday be commonly used among businesses and various projects in the crypto industry itself.
The Blockchain Oracle Problem
The biggest contribution of API3 is that it solves the Blockchain Oracle Problem. As mentioned above, the oracle problem revolves around using oracles. While they have been helpful in bringing off-chain data to the blockchain, oracles are still 3rd party technology, which makes them an additional cost for the network. Furthermore, they are offered by specific projects, such as Chainlink, which makes them centralized.
API3 solves this by enabling API providers to operate their own nodes. The solution is rather simple, but it could be a major game-changer in the API world.
Building of decentralized APIs
Another major contribution of the project is that it enables decentralized APIs. This is important because their decentralization allows them to provide superior data transparency all the way to the factual data source level. In comparison, oracles do not consider the data source API to be within the scope of their solution.
Benefits of API3
API3 has a solution that brings a number of benefits to the crypto industry, smart contract users, and above all, APIs. Those include:
Provides timely, reliable real-world data
For years now, data has been the most valuable asset in the world. It turned companies like Google and Facebook into the most powerful corporations in the world. Now, it is also crucial for running blockchain’s smart contracts, and through them, all other blockchain products. As a result, it is crucial for data used by smart contracts to be reliable, fresh, and delivered in real-time, and API3’s solution is capable of enabling that.
Increases data transparency
While it is important for data to arrive quickly and from reliable sources, it is also extremely important for it to be transparent so that there is no need for trust when it comes to using smart contracts and blockchain, in general. If everything is clearly visible, there is no room for disputes, which makes every smart contract-involving process faster and more efficient.
Easy to deploy in a record amount of time
Lastly, API3 created light and robust middleware called Airnode that is extremely user-friendly and efficient. Most importantly, the tool can be deployed in minutes, enhancing transparency and substantially reducing transaction fees in the process. The tool was created with efficiency in mind, and so far, it definitely delivers.
How Does API3 Work
API3 is a project that solves the issues that smart contracts have been seeing in terms of accessing dependable data. The project has a goal of allowing the creation of decentralized APIs, which would be managed and monetized at scales. The team behind the project has noted that blockchain technology’s role in modern society is growing slowly but surely, as adoption progresses.
Blockchain now goes far beyond just the economy, and it still has plenty of potential use cases that are becoming realized throughout various industries. With that in mind, it is more important than ever for smart contracts to have access to timely, reliable real-world data.
Others have recognized this requirement too, and they came up with their own solutions, such as the blockchain oracles. However, while the oracles did the job, they are no longer considered to be the most efficient solution, as they come as a middleware that sits between APIs and smart contracts, and their use means an increased cost, as well as an increase in centralization.
API3 aims to help with bringing the decentralization of smart contracts to the next level by offering APIs to run their own nodes, which would lead to superior data transparency all the way to the factual data source. Plus, the project uses Airnode – light and robust middleware that can be deployed in mere minutes with maximum efficiency achieved immediately.
How to Buy API3 (API3)
API3 (API3) is available on the following exchanges:
Binance – Best for Australia, Canada, Singapore, UK and most of the world. USA residents are prohibited from buying API3. Use Discount Code: EE59L0QP for 10% cashback off all trading fees.
KuCoin – This exchange currently offers cryptocurrency trading of over 300 other popular tokens. It is often the first to offer buying opportunities for new tokens. This exchange currently accepts International & United States residents.
Coinbase – A publicly traded exchange listed on the NASDAQ. Coinbase accepts residents from 100+ countries including Australia, Canada, Singapore, UK & the United States (excluding Hawaii).
API3 – The most efficient way to connect APIs to smart contracts
API3 is potentially the most advanced solution for bringing reliable data to smart contracts in a transparent, efficient, and cheap way that leads further into decentralization. Its contributions to the sector could potentially lead the crypto industry to the discovery of new use cases, or the realization of existing, theoretical ones.
And, if time shows that API3’s solution is not only more advanced but also capable of being implemented on other blockchains, it might completely replace blockchain oracles that are currently considered the main avenue for bringing data from the real world to the blockchain.
Ali is a freelance writer covering the cryptocurrency markets and the blockchain industry. He has 8 years of experience writing about cryptocurrencies, technology, and trading. His work can be found in various high-profile investment sites including CCN, Capital.com, Bitcoinist, and NewsBTC.
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