Blockchains are the way of the future. It has the potential to revolutionize everything around us and have a massive impact on the industry, much like electricity, and the internet did.
Blockchain is currently in its early stages, with significant development worldwide to increase its acceptance rate to new heights.
The competition’s leading contenders include Hyperledger, Corda, and Ethereum. Each of them attempts to address the issue to accelerate blockchain acceptance and deployment. This article will look at how anyone can set up their blockchain network.
What exactly is a block?
You may have heard of blocks and are wondering what they are. Simply put, a block is a data collection, and multiple blocks combine to form a blockchain.
Every block in a blockchain has the following characteristics:
- Data to be recorded on the Blockchain, such as transaction data
- A block hash, the block ID generated using cryptography techniques
- The previous block’s hash is the Blockchain’s last cryptographic hash.
- It is recorded in each block to connect it to the chain and improve its security.
- A timestamp indicating when the block was created and added to the Blockchain
- Proof of Work (PoW), which is the amount of effort required to calculate the current block’s value
Why is Blockchain so trendy?
Blockchains are gaining popularity in today’s markets. Amazon, Microsoft, Google, and other large corporations are already developing blockchain technology services.
Many people associate Blockchain with cryptocurrencies such as Bitcoin, but this is only sometimes the case.
You might be wondering why Blockchain is getting so much attention right now. What exactly is the big deal?
So here’s the deal: Blockchains enable us to create secure, public, and decentralized ‘databases’ to store data. Before Blockchain, large amounts of data had to be stored and verified by some mediator or intermediary.
Banks serve as intermediaries in the case of financial data. We trust banks to keep track of all our financial data and that they will not tamper with it or mistreat it in any way. This method works, but it gives these institutions a lot of power.
The fundamental idea behind blockchain technology is to use cryptography and complex computer algorithms by top blockchain development companies to create a secure and transparent method of eliminating intermediaries, allowing data to be stored and validated by a massive open network of servers.
Types of Blockchain Network
- Public Network Blockchain
- Private Blockchain Network
1. Public Network Blockchain
A public blockchain is one that anyone in the world can access and submit transactions to, with the expectation that those transactions will be accepted if they are genuine. It also enables anyone to participate in the consensus process, determining which blocks are added to the chain and the current state.
Cryptoeconomics protects public blockchains by combining economic incentives with cryptographic verification methods such as proof-of-work (Bitcoin) or proof-of-stake (Ethereum) (Ethereum). In general, these blockchains are considered wholly decentralized.
Public blockchains protect app users from their developers by establishing that specific acts are beyond the power of even the app’s creators. Because public blockchains are open, many businesses will likely adopt them without requiring third-party verification.
Another reason for the public Blockchain’s popularity is its anonymity. Yes, it is a safe and secure open platform to conduct profitable and efficient business. You are also not required to reveal your identity or name to join. No one can track your network activities if your identity is protected.
2. Private Blockchain Network
Private blockchains, also known as managed blockchains, are permissioned blockchains managed by a single entity. The central authority chooses a node in a private blockchain.
Furthermore, the central authority sometimes grants different permissions to each node to perform functions. On the other hand, private blockchains are only partially decentralized due to the prohibition on public access.
Ripple (XRP), a business-to-business virtual currency exchange network, and Hyperledger, an umbrella project for open-source blockchain applications, are examples of private blockchains.
Due to data confidentiality concerns, network sharing at the business level typically necessitates a higher level of privacy. If this is one of your requirements, the ultimate solution is a private blockchain. Private blockchains are unquestionably a more reliable network option because only a few users can access specific transactions.
Furthermore, compliance is essential in all businesses. Any technology that follows strict compliance guidelines will succeed eventually. Private blockchains adhere to and include all compliance standards in their ecosystem to ensure smooth and straightforward transactions.
What are the Key Features of Blockchain Technology?
Blockchain relies on a decentralized network of users to validate and record transactions rather than a single authority. Because of this feature, blockchain transactions are consistent, quick, safe, affordable, and tamper-proof.
- Constant: Blockchain networks operate around the clock.
- Quick: Transactions are delivered directly from the sender to the receiver, eliminating the need for a middleman.
- Safe: The distributed network of nodes in a blockchain provides collective protection against attacks and outages.
- Affordability: Blockchain networks are less expensive because there is no centralized database or rent-seeking intermediaries.
- Tamper-proof: Once data is timestamped to the ledger, it cannot be changed, making the Blockchain resistant to fraud and other criminal activity. Similarly, anyone who has access to the transactions that have been made may be seen by the public blockchain network.
A Step-by-Step Guide to Creating Blockchain
- Determine the Appropriate Use-Case
- Select a consensus mechanism
- Select the Most Appropriate Platform
- Create the nodes
- Make a Blockchain instance
- Create the APIs
- Create the user interface
- Incorporate Future Technology
Step 1: Determine the Appropriate Use-Case
Before you begin Blockchain development, you must determine whether it will add value to your business. Blockchain technology is primarily used in the following industries:
- Healthcare: Securely records patient data
- Finance: Reduces the need for intermediaries, increases transaction processing speed, and reduces the risk of money laundering.
- Supply chain: Tracks product information from sellers to customers.
- Real Estate: Keeps land ownership certificates authentic.
- Banking: Facilitates fast cross-border transactions.
Step 2: Select a Consensus Mechanism
The next step in developing a Blockchain is to select a consensus mechanism after choosing an appropriate use case.
Proof-of-Work, Byzantine fault-tolerant, Proof of Stake, Federated Byzantine Agreement, Proof of Elapsed Time, Redundant Byzantine Fault Tolerance, Robin Round, Simplified Byzantine Fault Tolerance, Federated Consensus, and other mechanisms are available online.
Most consensus mechanisms require powerful hardware and a lot of energy to function correctly. It is necessary to select the one that best meets your company’s needs.
Step 3: Select the Most Appropriate Platform
Numerous blockchain platforms are available today, most of which are free and open source. You must choose the best blockchain platform depending on the consensus mechanism you selected in step 2.
Step 4: Create the Nodes
Following the identification of the appropriate use case, consensus mechanism, and approach, the next step is to design nodes for your Blockchain. You have the option of using a permission network or a permissionless network.
Businesses that do not want to share vital information choose a permission network, whereas those who want to share information with the public must select a permissionless network.
After deciding on the web, you must determine the hardware requirements for each node, such as memory, processors, and disc size.
After selecting your hardware requirements, you must choose an operating system for your nodes. You can choose between Windows and free Linux operating systems like CentOS, Fedora, Debian, or Ubuntu.
Step 5: Make a Blockchain Instance
The Blockchain instance will be built on the Blockchain platform you select. Before creating the Blockchain instance, you should think about permissions, asset issuance, asset re-issuance, key management, native assets, atomic exchange, block signatures, key formats, etc.
Step 6: Create the APIs
Some blockchain platforms include pre-built APIs, while others do not. The main API categories that you would require are:
- Creating key pairs and addresses
- Carrying out audit-related tasks
- Data validation using digital signatures and hashes
- Data management and retrieval
- Smart-asset lifecycle management – issuance, payment, exchange, escrow, and retirement
Step 7: Create the User Interface
With the backend in place, the next and final step in creating your Blockchain is to design the user interface for the admin and users. Front-end programming languages such as HTML, CSS, C#, PHP, and JavsScript used by top software development companies can create an appealing and eye-catching user interface.
Step 8: Incorporate Future Technology
Integrating Artificial Intelligence, Biometrics, Bots, Cloud, Cognitive services, Containers, Data Analytics, the Internet of Things, and Machine Learning can significantly increase the power of your Blockchain solution.
How Blockchain Technology Implement?
- Bringing Cryptocurrency Trading Under One Roof
- Smart Contracts Implementation
- Blockchain Traffic Acceleration
- Blockchain Security
1. Bringing Cryptocurrency Trading Under One Roof
A bitcoin or cryptocurrency payment gateway can be highly beneficial to any application or website that sells products, charges membership or subscription fees, accepts donations or accepts any other payment type.
By incorporating a bitcoin API into your new app, you will be able to increase revenue by attracting all those who prefer to pay in bitcoin. Nonetheless, you will save money since most payment gateways charge lower transaction fees than credit card companies.
Even though cryptocurrencies such as bitcoin allow for anonymous transactions, governments and CEOs from all industries affected by these digital currencies dismiss bitcoin as a tool primarily used by drug dealers. This, on the other hand, is unique.
Allowing customers to pay in bitcoin has numerous benefits for many businesses, particularly those that provide confidential services. Furthermore, because most consumers want to avoid such purchases appearing on their monthly credit card statements, cryptocurrency is widely regarded as a welcome form of payment.
2. Smart Contracts Implementation
As advocated by organizations such as the Ethereum Project, smart contracts provide businesses with many tools to help them customize their initiatives. Furthermore, smart contracts developed by top smart contract development companies allow two or more parties to enter legally binding agreements.
These contracts further provide greater security and confidentiality and eliminate the requirement for a third party, such as a lawyer, to support the transaction.
3. Blockchain Traffic Acceleration
Aren’t you curious about how businesses around the world perceive Blockchain and whether they intend to invest in it? Companies are certainly investing heavily in Blockchain!
Markets stated that global spending on this technology would increase from $1.2 billion in 2018 to $23.3 billion by 2023. This equates to an excellent CAGR of 80.2 % from 2018 to 2023.
Grand View Research has identified several significant growth areas as driving this expansion. Some examples are as follows:
- Blockchain integration with IoT;
- Blockchain integration with supply chain management;
- Blockchain integration with ERP (Enterprise Resource Planning);
- Governments using Blockchain to improve service delivery efficiency;
- Healthcare institutions using Blockchain to increase patient-centricity.
- Smart contracts can be used to facilitate a wide range of transactions. They are expected to automate various organizational processes, from finance to medical research.
4. Blockchain Security
- Identity management software is becoming increasingly important as globalization increases the demand for service integration across domains and regions.
- Integrating a blockchain-based ID solution into your app will help secure it and reassure customers that they are safe.
- While this isn’t a huge selling point right now, the massive increase in data breaches, such as the September 2018 Facebook breach that exposed 50 million user accounts, raises awareness about the critical need for ID security.
- Whether you have the resources to build your blockchain-based ID security solution from the ground up or integrate an existing blockchain ID solution, such as Validated ID, providing such a secure solution will undoubtedly benefit you.
Use-Case of Blockchain Technology?
Banks are complex organizations with numerous arms or divisions that allow them to conduct business in various financial sectors.
Banks can offer client services such as loans, mortgages, and other financial products while conducting trade financing and other activities.
Aside from the much-discussed advantages of banks issuing their coins, they stand to benefit significantly from blockchain technologies such as smart contracts and blockchain-based IoT networks.
Many of their critical processes can be automated by smart contracts. One such example is mortgages. When consumers find a piece of land they want to buy, they can approach a bank, which will set up a smart contract for them.
Because the bank already has the entire account history of the customer, the smart contract determining their suitability for the required mortgage would be the first step. Following document verification, the agreement may initiate payment to the seller for the property.
This would result in the buyer receiving the deeds and the automatic mortgage repayments being initiated from the buyer’s account.
These would continue until the mortgage was completely paid off, at which point the smart contract would turn off the payments and end the deal.
Automating this procedure could save banks tens of millions of dollars annually by eliminating the administrative and human resources required to handle such transactions manually. Smart contracts would also eliminate the possibility of mistakes.
Since its inception, blockchain technology has been the talk of the town. Entrepreneurs from various industry verticals have begun investing in the technology due to its use cases in multiple sectors.
Even though we have explained the step-by-step procedure for creating a Blockchain in this blog post, aspiring entrepreneurs may need help. In such a case, it is advised to contact a reputable Blockchain development company.
Reveation Labs is committed to providing the best Blockchain development services. We effectively cater to your needs with business-oriented services, whether you want to create your Blockchain from scratch or fork an existing blockchain.
The contract can include a list of fulfillment criteria. When these conditions are met, the agreement will initiate a series of actions, eliminating the need for manual intervention. Among other things, activities can range from making a payment to verifying documents.