Blockchain App Development: Pros & Cons

Exploring the Pros and Cons of Implementing Blockchain Technology in Software Development

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We've heard a lot about blockchains in recent years. Bitcoin's popularity soon spread to mainstream applications. Blockchain is no longer in the infantile phase, and businesses today can use it fully.

Blockchain technology has revolutionized all industries, not just cryptocurrency. Spotify has acquired blockchain startup Mediachain Labs to create solutions that use decentralized databases for connecting artists, licensing agreements and the numerous tracks available on its platform.

Warranty is another example of the widespread use of blockchain. It is a Blockchain application which allows customers to get information about the product they bought and prompt customer support in case of malfunction. Blockchain has proven its usefulness by breaking free from the shackles of traditional business and entering mainstream operations in all industries.

What is Blockchain?

Blockchains are a type of new database which allows transactions to be secure, transparent and untampered with. Initially developed for the Bitcoin system of digital currencies, they are now used by other methods such as Ethereum or Hyperledger Fabric.

The blockchain is similar to a traditional database because it allows you to organize data. However, blockchains use cryptography to prevent data from being altered or stolen. Therefore, they are particularly suitable for industries such as healthcare, financial services and supply chains where data security is paramount.

Blockchains can also be used to build decentralized systems where parties can trust one another without having to depend on third parties like banks or governments. It could result in more effective and efficient business processes for various industries.

How Blockchain Works?

Let's use Bitcoin as an example to explain the blockchain. Bitcoin is a digital currency similar to other national currencies. Blockchain uses ledgers to keep track of the number of bitcoins each individual owns. It is decentralized because the ledger isn't stored on one central server. The log is held in private computers around the globe and distributed to all parts of the world.

If X wishes to send 5 Bitcoins to Y, they broadcast a message (to all computers) that X should reduce his bitcoins by five and Y to increase it by 5. Each computer now receives this information and updates its copies of X's and Y's Bitcoin balances.

Blockchain allows you to view all transactions of others and doesn't force you to rely on a particular person or organization. To enforce reliability and security, mathematical codes and functions are used. A unique pair of keys is used to protect each wallet: the public and private keys. These features all have a unique advantage.

Blockchain Technology: 15 Uses

Blockchains were first imagined to support Bitcoin(CRYPTO BTC). Satoshi Nakamoto created an unalterable ledger that records transactions using digital cryptography to solve the problem of double spending with digital currencies.

Blockchain technology has many other applications besides Bitcoin. These are just 15 examples:

1. Transferring Money

Blockchain technology's original idea is a great application. Blockchain-based money transfers can be cheaper and quicker than existing services. It is particularly true for cross-border transfers, which can be slow and costly. In the modern U.S. financial system, money transfers between accounts may take several days. Blockchain transactions, however, can be completed in minutes.

2. Financial Exchanges

Over the last few years, many companies have emerged offering decentralized crypto exchanges. Blockchain exchanges allow for quicker and cheaper transactions. A decentralized exchange does not require investors to deposit assets at a centralized authority. That gives them greater security and control. Blockchain-based businesses deal primarily in cryptocurrency, but the concept can be used for more traditional investments.

3. Loans

Lenders can use smart contracts to implement collateralized loans. On the blockchain, smart contracts can be built to trigger certain events, such as loan repayment, service payment, margin call and collateral release. Lenders can now offer lower rates and faster loan processing.

4. You can also get Insurance

Smart contracts can be used on the blockchain to provide more transparency for insurance companies and customers. By recording all claims in a blockchain, customers cannot make duplicate claims. Smart contracts also speed up payment to claimants.

5. Real Estate

In order to transfer titles and deeds to the new owner, and verify ownership information and financial data for real estate transactions, a lot of paperwork is required. Blockchain technology can prove and transfer ownership in real estate transactions. That can help speed up the transaction, reduce paperwork, and save you money.

6. Protecting Personal Data

It may be safer to keep data like your Social Security Number, date of birth, and other identifying details on a public ledger (e.g., a blockchain) than using current systems that are more vulnerable to hackers. Blockchain technology is a way to improve access and secure identifying data in education, travel, health care, finance, or healthcare sectors.

7. Voting

We are just one step from being able to vote with a blockchain solution if personally identifiable information is stored on the blockchain. Blockchain technology ensures that no one votes more than once, eligible voters can only vote, and the votes are not manipulated. It can also make voting as easy as pressing buttons on your phone. The cost of running an election will also be reduced.

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8. Government Benefits

A blockchain can also administer government benefits, such as the welfare program, Social Security and Medicare. Blockchain technology can reduce costs and fraud. Beneficiaries can also receive their funds faster through the digital disbursement of funds on the blockchain.

9. Share Medical Data Securely

Medical records stored on blockchains can provide doctors with accurate, up-to-date patient information. That can help patients who see multiple doctors receive the best care. In some instances, it can speed up the retrieval of medical records. If insurance data is stored in the database, doctors can quickly verify if a patient has health coverage and if their treatment will be covered.

10. Artist Royalties

Blockchain technology can be used to ensure that music and movie files are distributed on the Internet in a way that pays artists for their hard work. Blockchain technology, created to prevent duplicate files from being in multiple places at once, can help reduce piracy. Using a blockchain for tracking playbacks and smart contracts to distribute payment can also provide more transparency and ensure that the artists get paid.

11. Non-fungible Tokens

Non-fungible or NFT tokens are a way to acquire the rights to digital artwork. The blockchain is designed to prevent data from being duplicated. Placing an NFT onto the blockchain ensures that there will only be one copy of the digital artwork. It's like buying physical artwork but with none of the downsides.

They can serve many purposes but ultimately are a means to transfer ownership over anything that is represented as data. That could include the title of a home, broadcast rights for a video or event tickets. An NFT could be anything remotely unique.

12. Tracking the Logistics and Supply Chain

Blockchain technology for tracking items through a supply or logistics network has several benefits. It allows for more accessible communication among partners since the data can be accessed on a public ledger. The data stored on the blockchain cannot be changed, which provides greater data security. That means that logistics and supply-chain partners will be able to work more efficiently with each other, as they can trust the accuracy of the data provided.

13. Internet of Things Security Networks

The Internet of Things makes our lives more convenient but also opens the doors for malicious actors to access our data and take over essential systems. Blockchain technology provides greater security by storing passwords and data in a distributed network rather than a central server. It also offers protection from data manipulation since blockchains are virtually unalterable.

14. Data Storage

Blockchain technology can be added to data storage solutions for greater integrity and security. Data can be decentralized, making it more difficult for hackers to wipe all data from the network. A centralized provider of data storage may have only a few redundant points. That also allows for greater data access since it is not dependent on the operation of one company. Using blockchain to store data may be cheaper.

15. Gambling

The gambling industry can use blockchain to offer several advantages to players. Transparency is one of the most important benefits a blockchain-based casino can provide players. Bettors can verify that games are fair and casino payouts. Using the blockchain, you don't have to give out personal details, such as a bank account. That may pose a problem for those who want to gamble. The blockchain also allows players to bet anonymously and is not susceptible to shutdowns by the government.

Blockchain Benefits

Blockchain technology will change the world for those who master and use it. We'll discuss blockchain benefits:

  • Transparency- The blockchain makes the transaction history more transparent. It is distributed ledger type, so all the nodes share the exact copy. Everyone can easily access the data in a ledger on the blockchain. Everyone in the network can see any changes made to a previous transaction. All information on currency exchanges is therefore available to all.

Read More: Top Benefits of Blockchain Technology to get Used to it

  • Security- Blockchain has the best guarantee of any record-keeping system. Only consensus can be used to update and modify the shared documentation. Information is only edited if all nodes or the majority agree. When a transaction has been approved, the data is encoded and linked to the previous transaction. No one party or person can alter the record. A decentralized blockchain means that no individual can update records at their discretion. Any industry can use blockchain to secure sensitive information, such as government, healthcare, and financial services.
  • Efficiency- A transaction completed using traditional paperwork is time-consuming and prone to errors due to the need for third-party mediation. Blockchains can automate and streamline these conventional methods, removing the possibility of mistakes and making trades more efficient. There is just one ledger. That means that parties do not have to keep multiple documents. When everyone can access the same data, it is much easier to establish trust. Settlements are also made more accessible and more seamless without the need for intermediaries.
  • Trackability- In complex supply chains, tracking products to their source can be challenging. With blockchain, all exchanges are followed, providing a trail of information to help you determine where an asset originated. That allows you to track the journey of the products and verify their authenticity.
  • Auditability- Another vital aspect is auditability. Each transaction in the blockchain is tracked for its entire lifetime so that you can check and verify your asset's authenticity.
  • Cost Reduction- Blockchain eliminates third parties and intermediaries. That saves businesses a lot of money. You don't have to rely on anyone else for the exchange rules or policies because you trust your trading partner. It also saves time and money on the documentation process and revisions, as all parties can view one version of the ledger.

Drawbacks Of Blockchain

Every coin has two sides. Blockchain technology is still in its early stages, but it has some limitations that must be addressed before it can be used widely for daily transactions:

  • Scalability- Blockchain application Bitcoin has a huge following. It can, however, only process seven transactions every second. Hyperledger, on the other hand, can perform 10,000 transactions and Visa, 24,000. Scalability makes it challenging to envision the practical application of blockchain. The verification and approval of a Bitcoin transaction can take several hours because each participant node must verify the transaction.
  • Storage- Since the blockchain database is stored on every network node indefinitely, storage becomes an issue. The size of the blockchain database will only increase with the growing number of transactions. Personal computers cannot store all the data that gets added. The Ethereum blockchain grows at a rate of 55GB/year.
  • Security- Data in a public Blockchain is anonymous and encrypted, yet it's in all the network nodes. Everyone in the network can access this information. Someone can track an individual's identity in the network using transactional data. That would be similar to how businesses use web trackers or cookies. Unfortunately, this proves blockchain to be not 100% secure.
  • Regulations- Financial regulatory regimes are one of the biggest challenges for blockchain implementation. Blockchain applications must define the steps to be taken in the event of fraud. That is a challenging task. For blockchain technology to become widely adopted, establishing other regulatory aspects will be necessary first.
  • Security- Satoshi Nakamoto emphasized the "51% attack" when introducing Bitcoin. This attack is stated as follows: if more than 51% of nodes on a network are lying, then the lies will be taken to be true. Everyone in the network must be constantly on guard to detect any unwelcome influence.

These challenges could be resolved as the technology becomes more widely adopted. Blockchain enthusiasts and developers will find ways to overcome these obstacles.

Public vs. Private Blockchains

Read More: Benefits of Blockchain Technology for Digital Identities

Public Blockchain

A public blockchain is a decentralized, open platform for anyone to read and send transactions. In the ledger are all valid transactions. Cryptoeconomics is used to secure public blockchains. That combines economic incentives with cryptographic validation. The amount of resources brought into the system will determine the degree of influence on the consensus process:

  • Ethereum: Providers of a decentralized platform and programming language which helps run smart contracts. It also allows developers to create distributed applications.
  • Blockstream: Is a blockchain provider focusing on extending capabilities in cryptography and distributed systems. They want to create an ecosystem to solve problems related to financial systems, such as fraud, counterfeiting and accountability.

Private Blockchain

The write permissions in a blockchain are centralized within one organization. This system is tightly controlled regarding access, licenses and modification rights. This concept could attract a lot of interest from FIs and large companies. The cost of transactions will be reduced, and the efficiency of validation will be increased with a proprietary system built using a private blockchain:

  • Industries is a provider of a multi-network Blockchain client. That is a proof-of-stake-based, controllable blockchain with smart contracts.
  • Developers can use the APIs provided by blockstack.js for authentication, retrieving and storing data.
  • MultiChain is an open-source distributed database that facilitates financial transactions.
  • Chain Inc. is a similar enterprise-grade blockchain infrastructure to Multichain, allowing organizations to create better financial services.

Blockchain The Future Is Here Predictions for the Next Few Years

Blockchain's future is bright. These are some of the most promising uses for this technology:

  • Governments Based on DLT - Distributed Ledger Technology (DLT) isn't a trend. Dubai aims to have all its government systems replaced by DLT-based ones by 2020. Transitioning to DLT from paper-based systems is a logical step for government agencies.
  • Collaboration of Blockchains - While different blockchain networks may operate within a single company, each geared toward achieving other business goals, customer benefits can only be achieved when all networks are brought together in an open standard.
  • Transparency in Industries - Blockchain guarantees that every transaction is visible to everyone and that changes can only occur after the network nodes verify them. Blockchain will therefore help to introduce some transparency into industries' operations.

Blockchain will surpass our perceptions of its challenges and be combined with the Internet of Things to build trust, reduce the risk of fraud, lower costs by removing intermediaries and accelerate settlements from taking days to being almost instantaneous.

Why are Companies Using Blockchains?

Companies use blockchains for a variety of reasons. Blockchains can improve security, transparency, cost and time, create a tamper-proof record of contracts or assets, etc.

Blockchain technology allows secure and transparent transactions to be made between two parties without the involvement of a third-party such as a bank. Computers, not people, check the transactions. That eliminates any risk of error or fraud. Blockchain is a perfect solution for companies that want to track their finances securely.

Blockchain can also reduce the time and costs spent on specific processes, such as signing contracts or registering assets. Businesses can create a record that is tamper-proof using blockchain technology. That ensures all data remains correct, no matter how future changes in the industry are handled.

There are also many reasons for companies to use the blockchain. These are some of the reasons:

  • Secure data to prevent unauthorized modification or access.
  • Create an unalterable, immutable transaction record.
  • Reduce the processing time for transactions.
  • Transparency and trust are vital to improving business transactions.

Does It Just Concern Cryptocurrency?

Blockchain technology goes beyond Bitcoin, the most popular cryptocurrency in the world. Trust, security and centralization are the critical components of blockchain technology.

The blockchain is a decentralized ledger that records data in "blocks" of encrypted data. Each block also contains other information that links the block to previous blocks in the chain. Anyone with internet access can view the blockchain. Blockchain technology is therefore applicable to any sector, such as finance or healthcare, that requires many transactions recorded securely and efficiently. Although blockchains are often associated with cryptocurrencies such as Bitcoin and Ethereum, they can be used for many different purposes.

Which Areas could Benefit from Blockchain Technology?

Blockchain is a distributed ledger that records transactions and data. The data is secured and verified using cryptography, so it can't be changed without detection. Blockchain technology can be used in many different ways. The technology can be applied to many other industries and applications. It's not only a replacement for currency:

  • Supply Chain Management.
  • Manufacturers.
  • Supply chains for retail and wholesale.
  • eCommerce.
  • Distribution, logistics and warehousing.
  • Data Management.

Can Blockchain be used Safely in Software Development, and is it Secure?

Yes, that's the short answer.

Because it is immutable, blockchain can be used to develop software. Developers can create blockchain-based applications without the involvement of an intermediary such as a financial institution or bank. Software development teams can now build blockchain-based applications without worrying about hacking and theft.

What is the Role of Blockchain in Software Development, and How does it Work?

The blockchain is a distributed ledger technology that allows transactions to be secure, transparent and untampered with. In software development, it has been utilized to build trust among parties and track code changes.

The blockchain can record all phases of software development, from signing contracts to deploying code. Blockchain provides transparency on who changed what, when, and how, as well as where the changes ended up after deployment. All parties involved must know about changes or updates to avoid misunderstandings or disputes.

Blockchain technology can improve security and speed up project turnaround time by reducing paperwork. It also increases accuracy because of its immutable records.

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Bottom Line

Blockchain is making its mark, thanks to Bitcoin and cryptocurrency. Blockchain is a word that has become a household name among investors. It promises to improve business and government processes by making them more efficient, safe, cheap and accurate. It's not a matter of whether legacy will be adopted by blockchain companies but when. We are seeing a rise in the number of NFTs and tokenization. The next decade will be an introductory period for the growth of blockchain.