Everything You Need to Know About Blockchain Application Development
Blockchain technology first appeared in 2009 as a cryptocurrency platform and within a year it became a viral sensation. The most authoritative media business influencers predicted a great disruptive potential of blockchain for financial and banking systems.
Several years ago, Bitcoin reached over $63 million wallet users. With all that, only some banks and financial institutions accept virtual currency today. However, their number is steadily growing as well as the number of businesses that create their own cryptocurrencies. As for the blockchain, it has evolved into a standalone technology that went beyond the borders of cryptocurrencies.
Nowadays, many companies are incorporating blockchain into their workflow, making their business even more stable, efficient, better protected, and lucrative.
In this article, we cover all you need to know about blockchain and blockchain applications development and explain how to implement it successfully into your business.
What Is Blockchain?
Blockchain represents a shared, transparent, decentralized, replicated, and immutable ledger that helps to record transactions and track assets in a business network.
This blockchain technology definition may be quite confusing, therefore, let’s break it down.
Simply put, a blockchain is a ledger that documents each transaction conducted by the blockchain participants also known as nodes. This ledger has a set of specific qualities, it is:
- Shared. It means that each blockchain node receives and stores a copy with complete information on all the transactions performed.
- Transparent. It implies that more participants can join the blockchain at any time and view all the data in the network. Being transparent, blockchain allows its participants to stay anonymous as it records a wallet address in the ledger but not the identity of the owner.
- Decentralized. It signifies that there is no head administrator who decides whether a transaction can or can’t be performed. Instead, blockchain nodes decide if to conduct the transaction. Once it receives 51% of the votes, the transaction becomes approved. Moreover, if any participant decides to withdraw from the network, the blockchain will continue to operate.
- Replicated. It means that all the new data is updated and synchronized with all the nodes automatically.
- Immutable. It implies that the data on the conducted and documented transactions can’t be changed or deleted.
The Three Pillars of Blockchain Technology
Blockchain technology relies on the 3 basic components. They represent the fundamental characteristics of a blockchain. When creating a new blockchain software, developers try to keep the three of them in balance.
Scalability
Scalability defines how well blockchain can increase its capacity and perform its operations. It means that the system should be able to stay stable and maintain a high-performance level while growing in size and increasing the load.
Decentralization
Decentralization means that there is no main node that is responsible for decision-making in the system. As a result, blockchain users are independent while working in collaboration in one distributed network.
Security
Security is the most important pillar in blockchain. The technology must be credible for participants to use it. For example, to ensure transaction and privacy safety Bitcoin uses crypto wallets with a digital address. It allows buying and selling cryptocurrency without revealing the crypto wallet users to the Blockchain network.
How Blockchain Works
A blockchain consists of blocks that are linked in a chain. Each block of this chain collects transactions. Each transaction contains some data, including the address of the sender, what was paid, and the address of the receiver.
Here are the steps to perform a transaction in a blockchain:
- A participant requests a transaction. It can be a cryptocurrency exchange, data exchange, or initiation of a smart contract.
- The requested transaction is sent into a network of nodes called a P2P network.
- The nodes should validate the transaction and its user’s status. Once 51% of nodes agree to complete the transaction, it’s considered validated.
- The transaction gets into the latest block and after added to the blockchain.
Blocks stockpile transactions for some period of time until it fills up. Once the block is full, it gets stamped into the blockchain with all the data on each transaction recorded in it.
What Is Blockchain Development?
Blockchain development process refers to building digital ledgers that securely record transactions across multiple computers.
Usually, developers design the rules for these ledgers, create systems to agree on transactions, and use encryption to keep data safe. It involves skills in programming, security, and working with distributed systems.
Core Components of Blockchain Software Development
All the blocks in a blockchain are linked to each other with hashes. Hash is a unique code that defines the content of each block. When a block is generated it includes its own hash and the hash of the previous block.
Hashes are important as they prevent any changes in a block. If any dishonest user decides to change any data in a block, this block will change its hash and won’t fit in the blockchain anymore. The concept of joining blocks with unique hashes makes blockchain a super-secure technology with a high level of data protection.
Another concept that enhances blockchain security is proof-of-work. A proof-of-work is a mechanism that slows down the creation and addition of new blocks to the blockchain. It prevents hackers from quickly recalculating and changing hashes in a new block.
For example, in Bitcoin, it takes almost 10 minutes to add a block to the chain. This way, any changes done to a block will be implemented really slowly.
Although blockchain is a secure and powerful system, software developers couldn’t put it to practical use apart from cryptocurrency exchange. However, with the emergence of smart contracts, things started to change.
A smart contract represents a self-executing program that works once an agreement between a buyer and a seller has been reached. For example, after a company provides a service, a smart contract works, and the company receives money from its customers.
An agreement between a seller and a buyer is incorporated into the lines of code and represents an ‘if-then statement’, e.g. ‘If the service is provided, then the money is sent to the company’.
Smart contracts made it possible to apply blockchain in various industries and perform secure data and service exchange.
Why Blockchain Development Matters
Blockchain isn’t just for Bitcoin or other digital money. Generally, it can be used in many areas, like tracking products in supply chains, keeping medical records under control, speeding up international payments, and even making voting systems clearer and tamper-proof.
In the business sphere, blockchain helps stop fraud and mistakes by keeping a permanent and clear record of all transactions that everyone can see. Plus, it can automate tasks with smart contracts, saving you money on middlemen and other third parties.
Blockchain technology is still growing and has a lot to offer. Right now, we’re seeing the splash of DeFi, which lets people handle money without traditional banks, and digital collectibles (NFTs), which are unique online items you can buy and sell.
As more businesses start adopting blockchain and crypto, there will be a bigger demand for skilled developers and new developments, making decentralized ledger an important technology for the future.
Do Blockchain Application Development Services Differ From General Apps?
When software developers create web, mobile, or desktop applications based on blockchain technology, they build Decentralized applications (dApps).
While front-end blockchain-based application development doesn’t diverge much from creating general applications, its back-end will have a different structure.
Basically, software engineers will use a special type of database that is decentralized, has a peer-to-peer connection, is cryptographically secure, and also may imply smart contracts. Therefore, it requires building special back-end architecture.
Software engineers will have to choose a back-end programming language and testing and debugging techniques that would suit the blockchain app development. As a result, blockchain projects often require more time to develop.
Before starting your blockchain development project, you need to realize which of the three approaches suits you best for building your application:
Platform Development
Building your own business platform is an ambitious project. This means software engineers will create a platform on which others can base their software products. For example, the Ethereum platform allows various businesses to build their own dApps based on the platform.
Ethereum offers its users its own Internet browser, coding language, and payment system. This network is supported by thousands and thousands of users around the globe and it never goes offline.
Software engineers can build a blockchain platform from scratch or fork the existing blockchain platforms. If you want to build a blockchain platform, you need to have an outstanding idea that will make your platform unique. Above all, you’ll have to gather a team of experts who have deep knowledge of the blockchain development process and expertise in the whole cryptocurrency matter.
Blockchain App Development
Blockchain app development implies the creation of dApps that run on blockchain platforms such as Bitcoin, Hyperledger Fabric, or Ethereum. If your business needs to solve a set of specific problems like data analysis or data aggregation then you should develop a blockchain application for your business project.
Businesses that consider developing their own blockchain software solutions need to find a professional blockchain development company with the latest software development tools and relevant expertise.
Specialized Blockchain Software Development
The creation of specialized software involves the development of applications, plug-ins, or protocols that integrate with blockchain protocols or dApps. For example, there are a variety of open-source projects that integrate with the Bitcoin platform.
If your business has any specific blockchain community projects, then you can build your application on top of them and benefit from these blockchain-based services.
Looking Forward to The Future Of Blockchain
And, however, the financial sector is still one of the main sources of blockchain investments, it’s expected that the technology will be widely implemented together with the Internet of Things (IoT).
Blockchain will enhance the security and scalability of IoT solutions, making them more robust and stable. This smart blend, also known as Chain of Things (CoT) can offer a wide range of benefits to various industrial, environmental, and humanitarian applications.
Nevertheless, many industries are already implementing blockchain for their daily needs. For example, blockchain is used in:
- Healthcare for secure sensitive medical data transfers between doctors and their patients
- Media industry for copyright protection
- Real estate for prompt title issuance and suggesting properties that can be purchased for cryptocurrency
- Logistics and transportation for data protection of cargoes and enhanced shipment management
- Retail to protect world brands’ product safety and ensure that the right products reach the store shelves
Bottom Line
Blockchain is no longer a means for the development of cryptocurrency platforms. Yet, software developers keep experimenting with crypto, digital wallets, and smart contracts regulating transfers, the technology continues to expand into other industries.
Now, blockchain developers have a clear vision of how to use blockchain for data protection, information sharing, and other things. More and more companies seek ways to implement the technology in their digital solutions.
Experts predict that by 2025 blockchain will grow several times, reaching nearly $40 billion. Therefore, if you’re still considering building blockchain applications then the right moment is now.
