Recently, the term "blockchain", a technology enabling businesses to improve their visibility, streamline their operations and ensure security, has gained popularity amongst developers. The concept is sometimes a victim of the telephone game, as many misunderstand its real-life benefits, use cases and implementation requirements.
We'll explore what Blockchain is, its benefits, and how to develop a blockchain-based solution.
What is Blockchain Development?
The blockchain development process involves creating a shared, non-changing distributed ledger (DLT), which securely tracks transactions, whether they are financial assets like real estate or money, or digital assets like copyrights, within a network.
The ability to share information quickly, securely, and accurately makes it valuable in various industries. A blockchain network can track orders, payments, production or any other type of data. Before you can take advantage of blockchain development's benefits, it is important first to understand what Blockchain is.
What is Blockchain?
A blockchain, in general, is a digital ledger which uses cryptography for recording transactions and tracking assets (both tangible and intangible) across a peer-to-peer distributed computer network. These blocks of transactions are recorded, copied and then stored by each node (server) linked to the Blockchain.
Unlike traditional databases, a blockchain that stores data in a central location (i.e., records are kept in one place) is decentralized and managed by multiple parties. Its DLT gives each network node its version of the ledger. Anyone can offer their server as a network node. The technology will identify any inconsistencies in a record by comparing it to the copies made by other participants. The ability to verify records on a blockchain makes them virtually untameable.
Blockchain updates in real-time provide an accurate and reliable source for every member who has access to it.
How does Blockchain Work?
Blockchain technology allows organizations to trade and track almost anything without worrying about data duplication or falsification. How does it work?
- Create a Block: The transaction is made and transmitted to a distributed network. The nodes of the distributed network verify each transaction. If there is a consensus, they approve it and record all the data associated with the transaction in a block. You can select the data you want to include in your block, such as names, locations, dates, costs, etc.
- Blocks can be linked: The database blocks can only store a limited amount of information. A new block will be generated once the previous one is full. This newly created block is linked to the prior block using a code known as a hash. The hash will change if the transaction changes in any way. That makes it easier to detect tampering. The linkage creates a data chain that shows an asset's movement (whether in literal terms or as a matter of ownership).
- Add to the Chain: To form a Blockchain, all transactions are blocked together and in an entirely fixed manner. The network confirms the validity of the Blockchain by using the same consensus method every time a new block is added. The process prevents fraud and is extremely secure. Each network member can be confident that the transactions are accurate.
The History of Blockchain is Not Just about Bitcoin
Blockchain isn't synonymous with Bitcoin, the cryptocurrency. The two are often used interchangeably, mainly because the first use of Blockchain was to generate Bitcoins. However, this technology is capable of a wide range of other applications.
Blockchain technology can be used for tracking other assets as well. Businesses began to recognize this and invested in blockchain technology to streamline operations, break down data silos, improve transparency, reduce transaction costs, etc. Blockchain technology is used by various businesses to improve their bottom lines.
The Cases for Blockchain
Many sectors, such as:
- Health: Improved trust and security in clinical research processes.
- Property ownership records: accurate land and property records.
- Money laundering prevention: global payment reduction, reduction of tax and costs for intermediaries, etc.
- Voting: Preventing ballot duplication for accuracy.
- Tracking assets: accurately from suppliers to customers.
Blockchain Solutions: Benefits and Uses
The following are some of the benefits that can be realized by both organizations and individual developers who work for them when they implement enterprise blockchain solutions.
- Transparency: The network has to validate transactions as they occur. That means everyone agrees on the correctness of the data tied to each transaction, especially the hash. All members can see the history of every transaction in the distributed ledger. As a result, any single modification to the original record will affect all future records. That ensures that information remains accurate, safe, and transparent for every network member.
- Reduced Risk of Fraud: No matter what a company trades or sells, transactional history can be complicated--particularly if an asset changes hands or locations frequently. You can instantly access a full audit trail of an asset when everything is stored on the Blockchain. The Blockchain's unchangeable records of previous transactions prevent fraudulent activity and verify authenticity.
- Speed and Efficiency: If your transactional records are still managed manually (e.g. paper documents, spreadsheets or third-party systems), then you may be wasting valuable time you could spend on more important tasks. These traditional methods are prone to errors and require duplication of effort to be accurate. Blockchain simplifies the workflow, eliminates bottlenecks, and ensures everyone works from a single, current ledger.
- Reduced Costs: Cutting unnecessary spending can help you grow faster and improve your bottom line. The Blockchain eliminates third-party mediators without losing accuracy or trust. The network members confirm everything by consensus. That means you won't have to waste time on trade documents.
Blockchain Development Challenges
The blockchain ecosystem is evolving, and new use cases are emerging. As a result, blockchain developers face three major challenges: decentralization, security and scalability. Developers are challenged to overcome these three challenges, also known as the "blockchain trilemma," without compromising on quality.
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Decentralization
Industries use blockchain for a variety of reasons. Blockchain solutions, such as those used in finance, allow users to purchase and store cryptocurrency without handing over full control to the banks. Instead, Transactions are verified through consensus (a collection of notes rather than a single node). These transactions cannot be changed once they have been verified.
Decentralization comes with a price: the time required for several confirmations before reaching a consensus. Blockchain developers face a difficult task in finding a faster way to complete this process.
Scalability
The global adoption of Blockchain depends on its capability to process an increasing number of transactions as the demand for it increases. All this while maintaining normal operations and protecting itself against cyberattacks. Speed is another trade-off. That becomes more apparent as the block size increases.
Bitcoin initially capped its blocks at 1 Megabyte to minimize the threat of cyber-attacks. Each coin can record an unlimited number of transactions. That increases the size of every block. Blocks could end up exceeding any limits imposed upon them. That would further slow down processing speeds.
Bitcoin started the debate on block sizes, but all blockchain applications are affected by this decision.
The Security of Your Own Home
Security is a benefit of blockchain technology but also a problem for developers. Cybercriminals target blockchain because it's perceived as a safe technology. Any action compromising blockchain security will have a ripple effect, affecting decentralization and scaling. Without regulatory oversight, there is no central party that can intervene in case of security breaches.
Security breaches in Blockchain are uncommon, but people have exploited known weaknesses in the infrastructure. Blockchain networks must be created by developers that are not only secure but add value to the business.
It's vital to remember that blockchain technology is still in its early stages. The technology is constantly improving, which makes blockchain development a viable option.
What to Look for When Implementing Blockchain Development
Blockchain is a powerful technology, but it doesn't work for everyone. Before deciding whether or not Blockchain is right for your organization, you need to ask yourself some important questions:
- Are you looking for a safe place to keep your data? You may not have to implement Blockchain technology immediately if you need a place to store data. Take a moment to consider how much information you want to store. If you're a small business owner, the cost of a blockchain is not worthwhile. You can store data locally. Suppose you run a large-scale enterprise that needs to store a lot of data, maintain multiple databases and allow access by many people. In that case, Blockchain is the way to go.
- Do you need your data to be updated or shared frequently? The blockchain can help reduce time-consuming manual processes and the need for paper data. Imagine that historical data is constantly changing and essential to your business. You might then need a solution based on blockchain that allows multiple entries by a range of members and does not allow data to be modified.
- Are you experiencing slow transactional speed in your business? Blockchain can help remove certain barriers which can cause workflows to slow down. Still, it does not offer much speed on the transactional side without an accelerator. Blockchain solutions are the best choice if transactional speed doesn't matter to you and your focus is security.
- Are you in need of third-party authorization? Certain businesses need an intermediary to control data and authenticate. Blockchain won't be a good fit for them. Blockchain can offer total transparency for companies that don't use a third-party solution. The use of an intermediary can also result in delays and increased costs.
Read More: Best Features and Uses of Blockchain Application Development
How to Create a Blockchain Solution From Scratch
The time and effort required to build a blockchain-based solution depends on the specifics of your business. You'll still need to take certain steps, regardless of your specific needs or goals.
Step 1. Identify the Problem to be Solved
You can easily get caught up by all the advantages blockchain solutions offer. Remember: No one solution fits all. It's important first to define what your goal is. Compare your business's overall needs to those of the blockchain use cases described in depth above.
A problem statement that outlines all the issues you want to resolve can prove useful. Check that the Blockchain is capable of solving your problems. Decide whether to convert your existing solution into a blockchain app or build a new application.
Step 2. You will Need to Draft your Business Requirements
You'll then need to write down your business requirements so that nothing slips through the cracks. You'll also need to consider which technologies are needed, both off-chain and on-chain, to create a full ecosystem. These details can be used to develop a product roadmap that will keep you up-to-date on deadlines and understand your resource needs.
Step 3. Determine a Consensus Method
Next, you need to choose a consensus method. That is a way to ensure trust, security and agreement within a network of decentralized computers. You can select from a variety of consensus mechanisms, but the following are some of today's most popular:
- Evidence of Work.
- Proof of stake.
- Byzantine fault-tolerant.
- The deposit-based consensus.
- Evidence of time elapsed.
The best consensus method for your business will depend on the company's unique needs. Take the time to research each option and find the one that works well.
Step 4. Select the Best Blockchain Platform
You must choose the right platform to build your blockchain app. That will determine what skills your team needs. Developing a blockchain application takes time and research, so choose the right software platform for your needs.
Consider the problem you are trying to solve. Also, consider cost, requirements for developers, timeline, consensus mechanisms and other factors.
Step 5. Create Your Blockchain Nodes
You must decide whether a blockchain network will be permissioned or permissionless or if you want to use a programming language. Are you seeking a hybrid, private or public blockchain solution that meets your business requirements? The blockchain nodes will run in the cloud or on-premises? What operating system will your application run on? (e.g. Ubuntu, CentOS, Debian Windows or Red Hat)? This step is complex, so you should carefully consider all your options, as well as your budget, resources and objectives.
Step 6. Plan Your Blockchain Configuration
You'll have to consider several different configurations for the vast majority of Blockchain platforms.
- Permissions.
- Asset Issue.
- Re-issuance of assets.
- Atomic Exchanges.
- Key Management.
- Multi-signature.
Remember that some of these components can be modified at runtime. It's best to prepare ahead for a successful project.
Step 7. Create Your APIs
Some platforms come with pre-made APIs, while others don't. You may have to create APIs depending on what you need.
- Key Pairs and Addresses.
- Audit-related Functions.
- Data Authentication (via digital signatures and Hashes.).
- Storage and retrieval of data.
- Smart-asset lifecycle management.
- Smart Contracts.
Read More: A Step by Step Guide of Blockchain Technology for 2023
The User Interface
After you have planned your entire app, start creating each component's user interface (UI). You'll need to integrate the APIs you designed with the UIs of the backend. Visual and technical designs will impact how the app looks.
Select an Accelerator to Optimize your Blockchain Application
How can you ensure your app will work once you have built it? Hardware accelerators are needed for compute-intensive blockchain apps to improve performance, flexibility and power efficiency.
They also optimize the individual components of Blockchain, including transaction verification, governance and data storage. These accelerators are essential to save storage and time since they divide the transaction load among multiple components.
What is a Blockchain Application?
It is important that we first have a good understanding of how blockchains work. The blockchain network is an open system that stores data in chronological blocks and distributes it among its users.
Blockchain application is a system that stores all information chronologically in blocks. It means that any event in the blockchain network, such as a data transfer or transaction, is shared among all participants and recorded on each device.
Once added, these data blocks cannot be altered. A blockchain is, therefore, very difficult to hack and steal data. You'll require anywhere between a few Gigabytes and a Terabyte to set up a Blockchain.
Two major blockchains are based on networks:
- All network members can access a permissionless blockchain. Each user can access the code and check transactions. They may also connect to others or remain anonymous. Bitcoin is an example of a permissionless currency.
- A permissioned Blockchain allows only authorized parties to participate. Each user has roles and permissions. Permissioned blockchains have rules that regulate transactions among network members. This type of Blockchain is perfect for controlling activity within an enterprise.
Considerations for Blockchain Application Development
As with platforms, you have to consider various programming languages when developing a Blockchain application. Start with classic languages like C++, Python and Java or move on to blockchain-specific programming languages such as Simplicity, Solidity, Go and Java.
Simplicity: Simplicity in building smart contracts is used in blockchain Application development. The simple language leverages static analysis and can be considered an improvement over basic cryptocurrency languages like Ethereum Virtual Machine (EVM), Bitcoin Script, etc.
Solidity is an EVM-based: Blockchain programming language. It is used for creating smart contracts. This language allows for self-regulated logic to be easily implemented into smart contracts. The result is a record that cannot be disputed.
Considerations for the Development of Blockchain Applications
1. Platform Type
While some blockchain platforms are cryptocurrency-based, others rely on smart contracts or use several crypto tokens. Determining the best type for your needs will help you create Blockchain applications.
2. Smart Contracts
Second, you should consider whether a smart contract is required. As you might already be aware, a smart contract is an automated protocol that processes, validates, or enforces trigger-based actions stored in the Blockchain.
Different blockchain platforms have different consensus protocols. These include Proof of Work (PoW), Proof of Stake (PoS), Proof of Elapsed Time and Proof of Burn. Finding the right platform based on its consensus protocol can be a great win.
3. Cryptocurrency
When answering the question How to Create a Blockchain Application, you should also consider whether or not your application will include cryptocurrencies. It is important to consider this factor when deciding the platform.
4. Public/Private Network
You should decide if your network will allow anyone to make changes or only authorized users can participate. Select a blockchain platform, and then start developing an application.
5. The Adoption Rate of Functionality
The adoption rate of a blockchain and the level of community support are important. The adoption rate measures how far a blockchain has been adopted.
A technology with high acceptance is better than one that does not have a lot of support.
6. Scalability
If you plan to build a blockchain platform on the current technology, you must look at its transactional capabilities. That will help determine if your needs can be met. Three key factors come into play when evaluating blockchain scalability: security, speed and decentralization. The Scalability Trilemma refers to the fact that developers may be able to meet only two out of three criteria.
Blockchain App Market Overview
Blockchain applications are still quite new. The majority of mobile users have little or no knowledge of blockchains. It's typical for any major modern technology that people cannot imagine life without it after a couple of years.
Blockchain's advantages are expected to be recognized. Businesses are already trying to create and integrate a blockchain app for their benefit. A recent report states that there are currently over 2600 active on the market and over 37 000 users daily. It may not seem like a large number, but it shows the huge potential.
Blockchain mobile apps are rapidly increasing in number. Several Blockchain and Bitcoin-based applications are available today, but this industry is still far from saturation. A recent report states that the blockchain industry will reach approx $60 billion. Finance accounts for 60%.
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Conclusion
Our blockchain app (guide) is hoped to be helpful. You should now have a concept for your blockchain app developed based on the information and examples you've gained. It would help if you started developing your blockchain app development concept. Your concept and your contribution would be greatly appreciated. Consult a business specializing in Blockchain developer to help you incorporate changes into your ideas for app development. You will need a firm to help you expand your decentralized journey. If you need guidance, take the online Blockchain Quality Engineer.
