One of the major areas of friction between Application Programming Interface providers and API consumers is undoubtedly the subscription process. And as your target audience spreads around the world and you add more currencies and taxes, it only grows more complicated.
The current API monetization model is built around centralized entities that have data and provide service agreements. Developers need to make agreements with service providers and buy subscriptions in order to build products using those services. All of this makes Scaling an API limited to a small number of service providers.
But could cryptocurrency be a viable solution to this scaling challenge? This article touches upon what cryptocurrency — the most notable of which is bitcoin — is and how you can take advantage of it as a new API monetization model.
What Is This Bitcoin?
Before we get into how to get a piece of the $5 billion cryptocurrency ecosystem, let’s first give a quick overview of what bitcoin and other cryptocurrencies are. It all started back in 1971 when President Richard Nixon shocked the world by deciding that the dollar would no longer be backed by the gold standard, meaning that you can’t just trade a U.S. dollar for its worth in gold. Since then, countries around the world have been moving to unbacked money or fiat currency as a way, among other things, to play with the value of their home currency, inflating and deflating the currency when they deem necessary.
Cryptocurrency, built with cryptographic protocols, has been around for about six years now, when bitcoin became the first of this kind of Decentralized currency. This makes bitcoin the world’s first completely open financial network. This means that, since no one controls the central network, there is no central bank controlling things such as inflation. It also means that no one needs permission to create new bitcoin services.
Bitcoin acts similar to PayPal or a credit card for online transactions and person-to-person transactions, but with seven important twists:
- Bitcoin is its own currency.
- Bitcoin operates with no transaction fees and no taxes.
- Bitcoin is probably the fastest way to make international transactions.
- There is no Alexander Hamilton or Elon Musk. The creator of bitcoin is a mystery. But it doesn’t really matter since bitcoin, unlike traditional governments, is a blend of anarchy, crowdsourcing and open sourcing.
- Bitcoin is driven by peer-to-peer verification, sometimes referred to as a consensus mechanism. The more positive confirmations you receive from this network of bitcoin users, the more valid and final your transaction.
- Bitcoin transactions are only semianonymous. How much is transferred and when is a point of public record, but those involved in that transaction may not be.
- Bitcoin’s value is whatever people are willing to give you in exchange for it. The trend since the start had been up and up, going from a value of 30 cents in 2011 to $600 in 2013, with bitcoin currently at $241. Some predict that by the end of 2015, all cryptocurrencies’ value will halve.
But, if you’re reading this article, you’re much more interested in what cryptocurrency can do for your API, so let’s get on with it.
What Does a Bitcoin API Monetization Model Look Like?
David Johnston is a board member of the nonprofit API Network who spoke at last year’s APIcon UK on just this topic. The API Network project is the IMAP, OAuth2 and email classification network, where anyone can expose data via an API on this open source marketplace, and, in return, earn APICoins.
As the website reads: “The goal of API Network is to take all the APIs out in the world, and provide a universal mechanism for querying them. APICoin will provide a transparent and distributed way to compensate developers and service providers for their effort.”