What is Blockchain Development ? Features and Use Cases

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When it comes to emerging technologies, blockchain is the first thing that comes to thought. Almost every one of you might have heard about it at least once by now. However, the concept is mostly confused with cryptocurrencies, which actually is not the case.

Though a part of blockchain deals with cryptocurrencies, a fair number of its features and use cases go unnoticed. Well, no need to worry, as I will be discussing them in detail.

But, before we begin, here are some basic concepts to help you familiarize yourself with what blockchain is.

What is Blockchain

Blockchain is an unchangeable distributed ledger that makes it easier for businesses to track their transactions and assets in a network. These assets can either be tangible, including but not limited to properties, possessions, vehicles, and currency.

Or, they can be intangible, normally including computer software, licenses, patents, and copyrights. Overall, blockchain virtually facilitates the transaction and trade of anything while simultaneously reducing the risks and required costs.

Therefore, making it an ideal medium when it comes to delivering information with security and accuracy at faster rates.

Benefits of Blockchain

Although blockchain has many advantages, some notable ones are as follows.

Information can be shared immediately with complete transparency while eliminating the risk of being manipulated since it is only accessible to those with access.

You can nearly trade anything without the risk of data duplication, falsification, or manipulation since the record gets maintained across multiple nodes in a network.

From tracking orders to payments and production, you have access to a detailed analysis of a particular transaction.

Curious to know how it works? Let’s dig in.

 

Blockchain: How does it Work?

To begin with, it starts with a block creation. As soon as a transaction occurs, it gets transmitted across multiple nodes in a network.

Each of these nodes verifies the transaction, and when a mutual agreement between all of them is established, the transaction and its corresponding data get recorded on a block.

Since a block has limited storage space, once it gets full, another block is created and gets linked to the previous one while having its unique code referred to as a hash. The hash is an important element here because any change in the transaction changes it as well.

The linkage forms a data chain, maintaining a detailed record of how the data moves. So, as multiple blocks get created, they get blocked together in a fixed way, forming a blockchain.

With the creation of every new block, the network uses the same approach of validating the information by reaching a mutual agreement with the previous blocks. As a result, data tampering can be easily spotted, and the process becomes highly secure, preventing fraudulent activity.

So you’re probably wondering how a blockchain is developed. Well, let me explain.

 

Defining Blockchain Development

Blockchain development refers to the process of creating, maintaining, and designing blockchain applications and systems that can be utilized to solve problems as well as create new opportunities.

How? Well, an innovative example includes smart contracts, a type of intangible asset, basically programs, that are stored on a blockchain.

These are documented agreements between two parties designed to get triggered when mutually agreed terms and conditions are met. Thus, ensuring compliance and correct execution in real-time.

Sounds exciting, right? But how a blockchain solution is actually developed?

 

Blockchain Development: A Step-By-Step Guide

Aside from the complex coding required for blockchain development, a couple of things should be considered to ensure optimal functionality.

The process requires time, intensive research, and, most importantly, a strong understanding of your business requirements. So, here are some steps you can follow to ensure smooth development.

 

Determining the Problem to Be Solved

To develop a well-tailored solution for your business, you must clearly understand the task you intend to accomplish. In this case, creating an adequately structured problem statement is always helpful.

It should address all the challenges you intend to overcome and whether or not you will be migrating your existing solution to the blockchain or need to build the solution from scratch.

Developing a Business Requirement Draft

Next, you need to create a business development graph to ensure that nothing gets missed while deciding the technologies for building a complete ecosystem.

These details will help you create a more tangible product roadmap, keeping you on schedule and letting you know how many resources you will need.

Identifying a Consensus Mechanism

Moving forward, identify a consensus mechanism that best suits your business needs and objectives.

Why? Because decentralized computer networks establish trust, security, and agreement through consensus mechanisms. Therefore, it is all the more reason you should take your time and explore every element before selecting one.

Some of the consensus mechanisms you can choose from are appended below.

• Byzantine fault-tolerant
• Proof of elapsed time
• Proof of work
• Deposit-based consensus
• Proof of stake

Choosing the Best Blockchain Platform

After selecting a preferred consensus mechanism, choose the best possible blockchain platform, as it will eventually affect the skill set you will need from your development team.

Additionally, since the process is time-consuming and requires in-depth research for development, choosing the platform that best aligns with your business needs significantly simplifies the process for you. Therefore, it is vital to get it right.

 

Designing Blockchain Nodes

Additionally, you must decide whether you require a permissioned or permission less blockchain network, the type of blockchain nodes, for example, cloud, on-premises, or both, and the operating system to be used.

In addition, you will also need to choose a programming language that best fits your needs and whether you need a private, public, or hybrid solution. Ultimately, these requirements should align with your business needs to ensure optimal functionality. So, take your time and be as thorough as possible.

Planning Your Blockchain Configuration

The next step involves planning your blockchain configurations, and for this, you have a long list of elements to consider. At this point, you will be looking at the following elements,

• Permissions
• Parameters
• Asset issuance
• Native assets
• Asset re-issuance
• Address formats
• Atomic exchanges
• Key formats
• Key management
• Block signatures
• Multi-signatures
• Hand-shaking

Although some of these elements can be modified at runtime, staying organized and planning every move is critical for successful development.

Building Your APIs

What’s more, you will also need to build your APIs. Although, some of the platforms come packed with pre-made APIs, but it is fair to consider that some do not. So, per your business requirements, you might need to build APIs for

• Data authentication
• Data storage
• Data retrieval
• Performance of audit-related functions
• Generation of key pairs and addresses
• Smart-asset lifecycle management
• Smart contracts

Designing the User Interface

After meeting the prerequisites for your blockchain solution, you next need to work on designing a User Interface for each of your software’s components.

It is because visual and technical design will eventually impact your solution’s overall appearance and architecture.

 

Optimize Your Blockchain Application With an Accelerator

Lastly, after the successful development of your blockchain application, it is time to select a hardware accelerator.

Why? Because hardware accelerators significantly enhance the performance of your blockchain application. They provide flexibility and help you effectively utilize power.

Moreover, hardware accelerators are pretty effective when it comes to optimizing individual components of your blockchain application. This includes governance, transaction validation, as well as data storage.

Additionally, hardware accelerators distribute transaction loads among multiple components to increase the speed and output of transactions. Thus, saving time and storage space.

So, is it really worth the effort, you might ask? Yes, it does. Here are a couple of features to help you better understand how effective blockchain technology can be.

Features of Blockchain

From immutability to faster settlements, blockchain technology indeed looks promising. Let’s dig into its features.

Unchangeable

To begin with, while blockchain technology does have many exciting features, immutability is, without a doubt, the most important one. The fact that data cannot be altered, changed, or corrupted makes blockchain the most secure technology to opt for.

Unlike typical solutions that rely on centralized authorities, blockchain adopts a decentralized approach. That is, data gets stored on multiple nodes across a network. Each of these nodes contains a copy of the digital ledger, and when any transaction is added, its validity is checked by every node.

The transaction is only added when a mutual agreement is reached between all of the nodes, thus promoting transparency while simultaneously making the transaction corruption-proof. Therefore, no unauthorized transaction blocks can be added to the ledger.

Moreover, once a particular transactional block gets created, no one on the network can change, edit, delete or update it.

So, why is this feature important, you might ask?

Importance of Immutability

Given that almost every year, a massive amount of money gets hacked through regular channels, a considerable number of people spend trillions of dollars investing in cyber security to protect their assets.

However, what they usually fail to take notice of are the internal cyber security risks that come with the corrupted intentions of individuals and authorities. In most cases, hacks occur because of them. So, by the end of the day you are only paying for trust.

What you need to overcome this issue is a trustless environment. This is where blockchain comes in, as it offers a corruption-free environment. With its integration, businesses can rest assured that no one will be able to hack, alter, or steal their assets.

A most practical example of this includes public blockchains, they are super transparent, allowing everyone can see the transactions.

Decentralization

In addition to Immutability, decentralization is blockchain technology’s second most important feature. Simply put, the information on a blockchain is monitored and maintained by several nodes instead of a single governing authority, as in the case of centralized solutions.

Therefore, users have complete power over their assets and can access them anywhere through the web while being able to add new ones simultaneously. This includes important documents, contracts, cryptocurrencies, or any other type of valuable digital asset.

Simply put, you have complete control over your valuable assets.

What Makes it Useful?

With decentralization, failures are less likely to occur. Why? Because everything is organized within a blockchain, and it does not rely on human calculations, making it a highly fault-tolerant technology.

Secondly, users have complete control over their assets. They do not need to rely on third-party authorities to maintain them. Instead, they can do it themselves.

Decentralization is also effective when it comes to accidental breakdowns. It is because malicious attacks do not affect blockchain technology. The system is unique for every person making it almost impossible for hackers to get in.

Moreover, since the system runs on complex algorithms, it practically makes it impossible for people to utilize it for their gains and scam you in the process.

Another important aspect of decentralization is transparency. A transparent profile of each participating individual is created. On top of that, every change made to the blockchain is viewable.

A Higher Level of Security

When talking about blockchain features, let us not forget enhanced security. Encryptions add layers of security to the system, and since no central authority is involved, the network’s characteristics cannot be changed.

What’s more, blockchains utilize cryptography, a complex mathematical algorithm acting as its firewall against attacks, with decentralization, it adds another extra layer of defense protecting your valuable assets.

In this case, every piece of information is recorded on a blockchain is hashed cryptographically, hiding the true nature of the data. A mathematical algorithm process the data producing a different value every time it passes through it, creating a unique identity for the data.

Additionally, every block within the blockchain has a unique hash of its own, along with the hash of the precious block linked together. Thus, if someone intends to change or tamper with the data, that would mean changing all of the hash IDs, which is nearly impossible.

Importance

What makes this security process effective is that hashing is practically irreversible. Given that the process of hashing is quite complex, it is impossible to alter or reverse it.

There is no way to create a public key from a private key. Moreover, a single change in the input can result in a completely different ID, so small changes aren’t an option here.

If anyone intends to corrupt the network, he/she will need to alter data stored on all of the nodes across the network. When it comes to this point, there could be millions of people across the globe having the same copy of the ledger.

In this case, accessing and hacking millions of computers is nearly impossible as well as costly. So, you can rest assured that hackers will not be able to access or steal your digital assets.

Distributed Ledgers

In addition to enhanced security, another important feature of blockchain is transparency. Considering that a public ledger provides information about every participant and their transactions, it is completely transparent.

Even though federated or private blockchains have slightly different cases, individuals can still see what is going on in the ledger. It is because, ultimately, the ledger on the network is being maintained by multiple users.

 

Why are Distributed Ledgers Important?

First and foremost, it is a great way of preventing malicious changes. Distributed ledgers respond to any suspicious activity or tampering attempt in real-time.

Secondly, given that it cannot be changed and that the information is being updated really fast, it becomes quite convenient to track these changes

Moreover, the ledgers are verified by nodes. Upon the creation of a new block, the transaction gets verified by all the nodes.

In addition, everyone is treated equally across the network. So, when adding a block, everyone goes through the same process. Carrying more authority does not mean that you will get extra privileges.

Furthermore, each active node in the blockchain maintains the ledger and participates in the validation in order for the blockchain features to work effectively. Changes made within the ledger are updated within minutes or even seconds.

Consensus

Consensus algorithms are the backbone of every blockchain residing at the core of cleverly designed architectures.

For a network to make decisions, blockchain needs a consensus, making it the central decision-making authority for every group of nodes active across a network.

Simply put, it is a kind of voting system where majority has the upper hand while the minority simply agrees with it. It is the main feature that makes the network trustless.

There might be a disagreement between the nodes as they might not trust each other. However, all of them do trust the algorithms running at the core of blockchain architecture, making every decision on the network a winning scenario for the blockchain.

Consensus algorithms within blockchains differ across the globe, each having its own unique mechanism. Therefore, decentralization that makes every blockchain going must have a consensus algorithm.

A few types of consensus algorithms include

• Proof of Work (PoW)
• Delayed Proof of Work (dPoW)
• Proof of Stake (PoS)
• Delegated Proof of Stake (DPoS)
• Proof of Authority (PoA)
• Proof of Burn (PoB)
• Hybrid PoW/PoS Consensus
• Practical Byzantine Fault Tolerance (PBFT)
• Proof of Capacity
• Proof of Elapsed Time (PoET)

The Settlement is Faster

Last but not least, another important feature that blockchain offers is a considerably faster settlement. Normally, a traditional banking system works quite slow when it comes to processing transactions. It could take you days before your transaction finally gets settled.

However, the transactions made using blockchain are secure and faster, enabling you to transfer funds relatively faster, while saving a lot of time.

So, where do all of these features practically fit in? Well, below appended are a couple of use cases highlighting how beneficial incorporating blockchain technology in your business solutions can be.

Blockchain Use Cases

Besides serving as the fuel behind Bitcoin, blockchain has a wide range of use cases, from business applications to industrial ones. These are as follows.

Making Payments Internationally

When it comes to making international payments, no other solution has the potential to work as efficient as blockchain does. It is secure and on top of that allows you to make international payments faster.

Consider Santander One Pay FX as a prime example. Launched in 2018 by Banco Santander, it utilizes Ripple’s xCurrent which enables individuals to transfer money internationally on the same day or the next day.

Given that the overall process is automated and that the number of intermediaries is considerably reduced, the transactions are quicker than ever, making the overall process quite efficient.

Moreover, international payments are cheaper since the banks do not need to settle them manually.

Improved Capital Markets

Blockchain does quite an effective job when it comes to improving capital markets. Some of the benefits that blockchain solutions offer to the capital market include

• Consolidated audit trail
• Operational improvements
• Faster clearing and settlement

For example, the distributed ledger network by Axoni is a game changer for  managing equity swap transactions. It enables both sides of an equity swap to be synchronized throughout their life cycles, communicating changes to each other in real-time.

Improved Trade Finance

Traditional trade financing methods are a major source of disappointment for most businesses since the lengthy processes frequently disrupt their operations while making it pretty challenging to manage liquidity.

It is because a wide range of variables, such as country of origin and product details, are involved when communicating cross-border information. Besides this, the transactions alone generate high volumes of data.

So, a blockchain solution is the best option here since it streamlines the trade finance deals while simplifying the overall process across the trading borders. Therefore, eradicating any sort of regional or geographical boundaries makes it easier for enterprises to carry out transactions.

 

Compliance and Audit

Accounting and auditing process gets simplified by incorporating blockchain solutions because they are highly secure and significantly decrease the possibility of human error.

In addition to this, it is quite effective in ensuring a particular record’s integrity since no one can change or alter the accounts. So, in the long run, blockchain solutions have the possibility to eliminate the need for auditors.

 

Protection Against Money Laundering

The fact that the highly secure encryption makes a blockchain immutable comes into play here as it practically makes it impossible to launder money.

The technology works on the principle of record keeping, making it possible for businesses to verify unique identities of all of their clients.

 

Insurance Industry

When talking about insurance, it is fair to say that smart contracts are the best practical application of a blockchain solution, allowing both the insured and the insurer to manage claims in a transparent and secure way.

It eliminates invalid claims since blockchain rejects multiple claims on the same accident if all contracts and claims are recorded while being validated by the network.

 

Enhanced Peer-to-Peer Transactions

Although present peer-to-peer payment services are convenient, they have certain limitations. For example, some of them have geographical restrictions, while others can be a bit costly.

Not to mention that they are prone to cyber attacks, making it hard for people to trust these institutions with their financial assets. On the contrary, blockchain opens up doors to multiple possibilities, eliminating all these challenges and giving people a trustless environment on which they can completely rely.

 

Enhanced Supply Chain Management

Real-time tracking of goods becomes simpler with blockchain’s immutable ledger system. The goods can be tracked as they move and change hands throughout the supply chain, making blockchain the best technology to opt into for companies that deal in transporting goods.

It offers a new and dynamic way of organizing and utilizing data tracking. Assigning goods arriving at a port to different shipping containers is one way to queue up events using a blockchain.

 

Healthcare Industry

Data pertaining to a particular person, such as age, gender, immunization history, or vital signs, can be stored on a blockchain. This data can later be accessed by multiple individuals, primarily medical experts, without any undue privacy concerns.

Moreover, as specialized connected medical devices become more common, they can be connected to the individual’s health data via blockchain.

These devices will be able to store and append data generated by a healthcare blockchain to a personal medical record, making the treatment and diagnosis process much easier.

 

Enhanced Real Estate Process

The overall real estate process can be improved considerably by incorporating blockchain technology.

Through a quick verification of finances, home sales could be expedited. Moreover, the feature of transparency also comes into play here, making the selling and buying process more transparent while simultaneously reducing fraud risks.

 

Enhanced Record Management

Maintaining records such as date of birth, marital status, property transfers, or death dates is a complex and time-consuming process.

Since the records of many people exist only on paper, they have to get them updated or changed manually. In this case, blockchain can simplify the record-keeping process significantly.

What’s more, the central encryption of blockchain is also helpful for record management because it prevents data duplication and falsification as well as fraudulent entries.

 

Voting

With the implementation of blockchain technology, the voting process can become easily accessible and secure.

There is no way hackers would be able to change anything and most importantly, each of the vote will be attributed towards a single user identity, making it impossible to cast fake votes.

Taxes

Taxation process is complicated with more chances of human error. Storing information on the blockchain can not only simply the process but make it error free as well.

Non-Profit Agencies

Through greater transparency, blockchain could solve the anti-trust issues that charities are increasingly facing. The technology has the ability to show donors that NPOs are, in fact, using their money as intended.

Furthermore, blockchain technology could assist those non-profits in donating those funds more efficiently, managing their resources more effectively, and improving their tracking capabilities.

Cybersecurity

Last but not least, cybersecurity is one of the best use cases of blockchain since it offers end to end encryption and privacy removing the risk of single point of failure.

 

Conclusion

Blockchain technology indeed shows promising results in many areas. From enhanced security to complete ownership and faster transactions, it offers features that can take your business to new heights.

It is secure, decentralized, and transparent, making it a technology you can completely rely on. All you need to do is formulate a clear strategy per your business requirements, sit back, relax, and let the blockchain solution do the rest of the work for you.