How APIs Are Powering the Next Era of Finance

An application programming interface, popularly known as API, comprises a set of protocols and definitions for developing and integrating application software. APIs enable technological products or services to communicate with each other, simplifying the process of application development. Simply put, APIs reduce the workload for developers while adding flexibility for more integrations along the way. 

Most companies today use an API in one function; at the core, APIs have enabled existing corporations to open up their applications’ data, giving access to internal departments, business partners and third-party developers. The beauty of APIs is that developers do not have to spend time understanding the implementation. Instead, one can integrate a specific API depending on the purpose it serves in application development or design. 

So, how do APIs technically work? The process is pretty straightforward; a client application raises a request to retrieve information, after which the call is processed to the web server through the APIs Uniform Resource Identifier (URI). The web server responds to the request by providing the API with the required information, which is then transmitted to the client application. 

Notably, several types of APIs exist in the current market. Some popular ones include open APIs, Partner APIs, Internal APIs and Composite APIs. All these serve a different purpose but have a similar goal – facilitating communication between modern-day applications and web platforms. 

The Value Proposition of APIs 

As mentioned in the introduction, the API infrastructure is a game-changer in application development. For starters, APIs improve the internal and external collaboration in company operations, given that a majority of today’s enterprises leverage over 1000 applications built on cloud ecosystems. In addition, it is much easier to integrate solutions from other applications with APIs, ultimately improving native systems. 

In addition, APIs open up room for more innovation and flexibility. Companies can use this infrastructure to integrate new services and markets to scale their value proposition. For instance, Stripe started with a few lines of code, but the firm has grown into a multinational payment giant following the integration with other global financial service providers. Last but not least, APIs present an opportunity for corporations to monetize their data. 

Modern-Day API Use Cases in Application Development 

Given their value proposition, APIs are extensively used to develop today’s web ecosystems. Common examples include universal logins, and this API function allows users to log in to other applications via other platforms such as Google profile, Twitter and Facebook. 

The other category is third-party payment processing APIs like the ones used by PayPal. This API function enables integration with e-commerce sites, allowing users to make payments directly from their PayPal accounts. 

Google Maps service also uses APIs to enhance user experience. Besides the core APIs that display interactive or static maps, Google Maps leverages other API infrastructures to feature directions and points of interest. 

Decentralized APIs 

While the current API market has proven to be a fundamental building pillar, it is limited to centralized ecosystems. This means that upcoming decentralized markets are still underserved regarding API services. The total crypto market cap is well over $2 trillion, earning a place in the futuristic financial markets. This potential calls for the integration of decentralized API services to enhance the growth of this burgeoning niche. 

Thanks to the innovative nature of stakeholders in the Web 3.0 ecosystem, some decentralized projects such as Bware Labs are now offering decentralized API services across several blockchain networks (Ethereum, BSC, Moonriver, Fantom, Avalanche, etc. Elrond, Polygon and Moonbeam). They are also working on integrating the Polkadot blockchain, introducing the decentralized API service to the larger blockchain ecosystem. 

Unlike centralized API services, Bware Labs decentralized model incentivizes node providers with ecosystem rewards for providing API services. Meanwhile, DApp developers can access the featured APIs through the platform’s website by paying a small subscription fee. In doing so, Bware Labs facilitates a decentralized API market to serve the growing needs in the development of DeFi platforms. 

With decentralized markets becoming more popular, it is no surprise that API providers are looking for alternative ways to enable communication within the existing DApps. The Bware Labs decentralized API solution paints a rough picture of how futuristic markets will operate based on incentivized API services. After all, it is a win-win situation for both client applications and node providers. 

Conclusion  

Despite facing a lot of criticism over the years, cryptocurrencies have emerged stronger than ever before. APIs will scale this decentralized ecosystem to new heights; stakeholders will not only be able to initiate communication between different DApps but also reap network incentives for contributing towards a platform’s DAO governance through staking. That said, it may take a while before most of the valuable API services find their way into the decentralized market ecosystem.