This is a step-by-step guide on How to Create a Blockchain. Walk-through the entire content to know what is blockchain development? We shall cover the technical aspects of blockchain technology development and the industry in total.Cryptocode
Before understanding the basics of creating your own blockchain, you better understand blockchain networks. How does the network work, and what good does it offer?
Here we are discussing the possibilities and function of a blockchain network.
What is Blockchain Technology?
A blockchain is actually a distributed database. This database is shared across the nodes of a computer network. Within a blockchain network, you can store data electronically. Currently, a blockchain network plays a crucial role in the cryptocurrency system. But most people think it is only for cryptocurrency business.
Blockchain is capable of recording anything of value. Most people think Bitcoin first introduced blockchain. Well, that’s not the case. The technology started its development in 1991. A group of researchers wanted to timestamp digital documents so that nobody could temper or backdate them.
Yes, the technology was unused, and finally, Satoshi Nakamoto started using this technology.
In short, blockchain is a database. But blockchain is different from any standard database. Well, both networks have different data structures. Blockchain stores data in a set of blocks. Once new data enters the web, a new block is created. This way, you get all the data in chronological order.
The best thing about blockchain is that it is decentralized. No central authority has control over all the data. Users on the network collectively retain information.
You cannot change the data inside a blockchain network. The irreversible data structure makes it secure for users around the world.
Now, How does Blockchain Network Work?
Distributing and recording information is easy with blockchain. Well, editing previous entries is impossible within the blockchain network.
Describing blockchain is one thing altogether. But how does it work?
As of now, you should know blockchain is a chain of information. All information is stored within a box. Or, at the very least, it’s easy to assume all the data stays inside a box.
Numerous tech experts claim blockchain is a secure way to store and distribute data. Not to mention blockchain helps you to create a decentralized data transfer system.
Before going through the details, we will explain blockchain in two segments. First, how blockchain stores data. And second, we are going to discuss the transactions process.
Data Storing Blocks
Blockchain has an attractive property. Once data is stored inside a block, it’s tough to alter it. To understand the reason behind its security, we need to have a good look at the blocks.
Any block on the blockchain distributed ledger consists of three different parts. First, we have a specific date or set of data. What type of data is stored inside depends on the kind of blockchain. We will discuss the different kinds of blockchain later on in this content.
Now, a block has a hash. Well, a hash is always unique for each block. It’s more like a biometric entity for the block. When anyone is trying to change the block, the hash will change. There is another element called the hash of the previous block. This hash helps you create a chain of information.
The very first block inside a blockchain network is called the genesis block. It doesn’t have a hash of previous blocks. But as you make transactions through the blockchain network, you will create more and more blocks.
It is the main reason why we call them a blockchain. Once you make a transaction or want to store information, a block is created. Thus, blockchain stores data inside a block.
Second, the Transaction Process
Blockchain distributed ledger saves tons of transactional data across different computers worldwide. If you have understood blocks better, you can easily understand the transaction process.
Let’s assume you want to make a transaction. Now, let’s think there is only the genesis block inside the blockchain network. When you are making a transaction, you are creating a new block.
When you make a transaction, the network across different computers calculates and verifies the transaction. After verifying and confirming a transaction, a new block is created.
Each time you make a transaction, you get a new block. Every time a transaction will create a long history of all the transactions. Every transaction is permanent, and nobody can alter the previous transaction.
Then We Have Miners
Each time you complete a transaction, a new block is created. But how can a new block be confirmed? Well, miners are responsible for creating new blocks.
Mining is not an easy task. Remember what we said about hash? You have a hash of a block and a hash from the previous reference block. Miners need to use special software to calculate complex mathematical calculations. Thus, they can calculate nonce that generates an accepted hash.
Now, why calculating a hash is difficult? Well, a nonce is 32 bits, and a hash is 256 bits. Multiplying them will give you an idea about the calculation. You will get more than four billion nonce-hash combinations for just one transaction. After clustering through all the possibilities, you get one right result. This is called the golden nonce. Once you find the Golden nonce, a new block is added to the blockchain network.
If you want to make a change to any previous block, you need to re-mine. That’s why blockchain is impenetrable. Mining takes an awful lot of time and computing power.
The main success behind blockchains success: Decentralization
Blockchain is an entirely decentralized system. For a blockchain network, every data is shared among a node of computers. Blockchain doesn’t allow data to be stored inside the central database. Thus, it ensures the fidelity of the data.
Yes, cryptocurrency is the most popular mode of data transaction. However, you can also use blockchain to record legal contracts, identification documents, and other things.
Keeping data in one central database is risky. Anyone can understand the risk factors regarding a central database. If any bad actor can crack the central database, you lose all your data.
But a decentralized network distributes data into different computer network nodes within a blockchain. Thus, hacking all the data requires hacking the computational power of the blockchain network.
When a new entry in the blockchain occurs, most of the computation power needs to agree with the transaction. No bad actor can create a bad transaction or double spend. Just we said, once you create a transaction, it will be irreversible.
For security, blockchain uses a consensus mechanism. And this mechanism uses Proof of Work (PoW) and Proof of Stake (PoS) to ensure security. Thanks to this mechanism, any network can work without a single central authority.
Benefits of Using a Blockchain Network
Blockchain has changed traditional finance and recordkeeping. But why do we consider blockchain revolutionary? There are multiple reasons behind it, and we will discuss them here.
Blockchain Creates Transparency
The Blockchain network is revolutionary for its security measurements. Just think about traditional finance, for instance. You have to rely on a central management system or authority. So, your payment or transaction depends on a secured intermediary.
So transparency is a huge deal for the blockchain network. There are no central authorities in the blockchain ledger. Each member in a blockchain network receives its own nodes. They can easily create transactions on their own node. But everybody can gain access to the information.
Anyone having a personal node can view all the information. Also, anyone can use the blockchain explorer to view all the history. No matter the node, each node has its own copy of the whole chain. The information is updated when a block gets confirmed. So, you can keep track of every bit of data.
Now, why are we calling it a transparent model?
No matter what type of financial or data system you create, hackers are active. In the past, hackers have hacked a system and gathered valuable data.
When hackers steal data, they are bound to spend or transfer it somewhere. And you can keep track of the transfer within a blockchain network.
Not just that, every data on a blockchain network is encrypted. Only the owner can decrypt the data. So, hacking a blockchain network is somewhat impossible.
Blockchain is secured
Every data inside a blockchain network is stored linearly and chronologically. Each time a transaction is made, a new block is created. A new block is added at the end of the chain. After a new block is added, it’s challenging to go back; you can do it if the majority of the network nodes agree with the changes.
We discussed the different parts of a block. Every block has a hash, and each hash is unique. Once a new block is created, the new block will have a hash from the previous block. So, the chain has a connection with each other.
Now, altering just a single block will change the chronological order of the chain. Converting just one hash is not going to help. In order to make such alteration successful, the hacker needs to change almost 51% of the hash.
Yes, now we have computers that can calculate every hash within a few seconds. That’s where Proof of Stake comes into play. There are plenty of security measures involved in securing the blockchain.
Also, completing such a feat would require plenty of money. The blockchain network is a vast chain of data. Well, new blockchains do need to take cautious steps. Moreover, hacking a blockchain network is somehow insurmountable. Investing a considerable sum of money and resources on hacking a blockchain network is not good. Also, someone will notice that the blockchain network is being attacked.
In terms of security, a blockchain network is a real deal.
Automation in the Capital Market
Blockchain can simplify the whole capital market. Furthermore, blockchain networks can store data of just about any value. All parties inside the trade will have the same data.
Anyway, how will blockchain help the capital market? First of all, you can reduce infrastructure costs. Not just that, data management is more manageable, offers a faster transfer rate, and makes the whole trade transparent.
Thanks to blockchain, business firms can easily monitor shares and trade data. Finally, a blockchain network will cut short any middleman or central authority. Thus, the capital market can gain a massive advantage.
Easier Cross Border Payment
Making a cross-border payment is always hard. A blockchain network can simplify cross-border payments. Also, blockchain can speed up the transaction process. Last but not least, it makes money remittances affordable.
Traditional finance charge a lot of remittances. Technology has advanced in recent years. Still, you have to pay for the processing service. However, conventional remittance fees are within 5 to 25%. But blockchain can reduce the cost by up to 2-3%.
Blockchain for Better Digital Identity
Identity theft is a huge problem online. Blockchain networks can improve digital identity. For starters, you can help people have control over their identity. Anyone can decide how they identify themselves. Also, users can control how others can gain access to their individuality.
Any user needs to register on a blockchain. But users don’t need to register every time for all the services. Blockchain networks can maintain personal data and also ensure data safety.
Blockchain Technology Development: The Basic Framework
Blockchain enables bilateral data transactions. Developing and maintaining a blockchain network is distributed, open, and shared. But why is blockchain useful?
Blockchain can reduce the cost of transactions.
Thus, blockchain can move modern finance to a radical shift. Yes, it’s a peer-to-peer network standing at the top of the internet. But why?
First, we need to assess how every business works. Almost every business needs to keep track of every transaction and business record. Otherwise, the companies are bound to go bankrupt. Keeping previous records can help devise new strategies and plans. Business records can highlight the internal function of a company and the outside relationship.
Most companies have to distribute data internally. Such a procedure would take plenty of time. Blockchain is still not at its peak. Yes, the potential is there, but it’s still not the perfect model yet.
When we say perfect, don’t get us wrong. Blockchain development is the key to this perfection. Just like any development program, blockchain development needs to assess two different dimensions.
First, blockchain development needs to create new applications, and second is to create complexity represented by the level of an ecosystem.
Now, creating a new application is complicated. You cannot deny the old, and you have to add more ideas. But advertising the novelty of the development is also a part of the program. But why complexity? A complex structure ensures diverse parties can work together to produce value in the technology.
We can get a general framework in just about any blockchain development considering the two dimensions together. For the general framework of a blockchain development industry needs to asses the following things:
Usability is a core part of blockchain development. Yes, you have to think about the user experience. However, low-novelty and low-coordinating software are the best. Why though? It’s because this software creates less costly, highly focused solutions.
At the very first of the development, any new program will appeal to a minority of people. Consider Bitcoin, for instance. Only a few people used Bitcoin as an alternative payment system. But look at it right now.
When developers are assessing low-novelty features, they have to consider the primary trademark of the technology. Alongside the basics, they will add more features.
For example, you can develop a new crypto exchange. You have to add all the basic features. And you would add some high-end add-ons to make your new software appealing to the target audience.
So, at first, you need to consider a single user. A single-user experience is vital for blockchain development. When the single user experience is firm, you can think about mass. So, usability pretty much relies on a single user experience. After that, thinking about a group is important.
Blockchain technology takes hold of a wider audience via usability. Almost every blockchain developer is trying to make their development usable.
Localization is another important framework for a blockchain development program. For blockchain app development, localization is the key. Every app does offer novelty. However, localizing the software can enable users to connect with the technology more.
Localization includes marketing strategies, plans, and other essential things. Yes, blockchain enables any business to connect with cross-border transactions.
However, getting a limited audience to create immediate value isn’t impossible. There are private-based blockchain applications in the private sector. So, blockchain offers plenty of opportunities for multiple organizations to connect through various ledgers. And this makes it possible to create a local private network.
Furthermore, blockchain developers need to have experience on a global scale. But it’s not wise to adopt every tech. Instead, adopting according to localization is essential.
Smart contracts are the most transformational phenomenon for blockchain. It has changed the traditional finance, economy, and even the political situation.
A tremendous degree of clarity and coordination can improve blockchain programs. Blockchain developers are helping the technology evolve. This is another framework that is vital for blockchain.
Blockchain development is not about creating a blockchain network. Now, how to create a blockchain? That discussion is for another day. But blockchain development includes creating blockchain and blockchain-related applications.
There are plenty of blockchain developers out there claiming their superiority. Plenty of blockchain development company is undertaking blockchain projects.
However, only a handful of the projects are getting the success they deserve.
Pretty easy if you ask us. You can blame the project owners for that. Most of the time, people usually onboard a company without understanding a company.
But you have to understand the industry better. Understanding any sector is not just about checking company background. It’s about learning the base structure of that specific industry. Before learning How to create your own blockchain, you need to understand blockchain technology development first.
What is Blockchain Development? – Considering the Main Attractions
The high importance of blockchain technology is evident. That’s why many companies and organizations are trying to implement blockchain technology. Thus, blockchain development enabled new sturt-ups and opened up new job posts. Blockchain has claimed its place from payment solutions to medical documents worldwide.
Now, what is blockchain development? Just creating a blockchain network is not the fundamental part of the concept. Blockchain has provided us with numerous opportunities.
So, when we say blockchain development, it’s associated with blockchain apps or dApps, blockchain network integration, and many more.
So, blockchain development is adding different layers using blockchain infrastructure. It’s more like web development. However, the whole development program is different from a standard web development program.
It’s not like the coding or development process is very different from each other. It’s more like the function is pretty different.
Recently, many people have been considering the career of a blockchain developer. Becoming a blockchain developer is no easy task. There are many self-proclaimed prophets inside the blockchain industry. Only a handful of them can acquire the skills to become proper developers.
Let us remind you, this guide is not for someone looking for an answer to how to become a blockchain developer. Instead, we want you to view the blockchain development industry closer.
However, we will tell you about the responsibility and skills of a blockchain developer. For now, blockchain technology development is a trending and vital program for the future of data science.
What does a Blockchain Developer do?
This brings us to the following question: What does a blockchain developer do? A blockchain developer is the one who is responsible for blockchain technology development.
To tell you straight, a blockchain developer will develop blockchain technology.
Anyway, when we have a serious look at the responsibilities of a blockchain developer, there is plenty of work to do. Before going through the details, we should look at the different types of blockchain developers here.
So, what are the different types of blockchain developers? Well, there are two types of a blockchain developers.
Different Types of Blockchain Developer
Core Blockchain Developer: First, we have the core blockchain developer. A core blockchain developer will take security measures and build the base structure of a blockchain network. In essence, they are responsible for laying the foundation. And others will design according to their preference.
Blockchain Software Developer: Blockchain app development is a hot topic among most people. Currently, a lot of people wants to become blockchain developer. Most of them never understand that they are trying to become a blockchain software developer. These developers usually create decentralized apps or dApps and also develop different web varieties.
A list of what blockchain developers do
Here is a list of what blockchain developers do:
- Developing and deploying blockchain infrastructure
- Creating decentralized apps or dApps
- Create smart contracts
- Application and data science engineering
- Develop mobile apps and web applications
- Making Fintech applications
- Innovation in blockchain
- Creating digital currencies
- Adopting regulatory frameworks
- Designing blockchain protocols
- Designing network architecture
Top Blockchain Developer Skills
Blockchain is evolving thanks to different blockchain development projects. Blockchain technology development is introducing tons of new projects per day. But just as we said, only a few projects are shining. Mainly, the blockchain developer companies should be responsible for the results.
We are not discussing blockchain projects. Blockchain application development or blockchain development mainly includes the developer. Usually, it would be best to have an entire team for blockchain development.
But the developers need to possess some skills. What are they? Anyone trying to invest in the blockchain should know about these skills. Even anyone seeking a career in the blockchain industry should take them as a mark point.
So, what are the top skills for a blockchain developer?
Blockchain is secure from bad actors partly thanks to cryptography. The study of security protocols keeps hackers away from the blockchain. Familiarity with cryptography is a must for a blockchain developer.
For instance, cryptographic hashing and generating private key is part of the deal. We discussed hash earlier. So, you can understand hash is vital for blockchain security and transparency.
Also, public-key cryptography can help create crypto wallets. Cryptography also allows developers to enable authentication for real-world applications.
Vast knowledge in cryptography is a must for any blockchain developer because it helps keep your blockchain data safe.
Second, Smart Contracts
It was Ethereum that introduced smart contracts to the blockchain industry. After that, the popularity of smart contracts is rising. Every blockchain solution wants to adopt smart contracts for the potential benefit it has to offer.
But why are smart contracts so popular? It’s because smart contracts can help two people exchange information without any intermediary.
Well, smart contracts are coded with some conditions. And when two people wanting to exchange information meet those conditions, they can complete the transaction. So, smart contracts work on If-then conditions.
A lot of people consider smart contracts a powerful tool for crypto exchanges. But it is used in a variety of industries. Mainly, smart contracts can cut off any middleman.
Blockchain developers need to be familiar with smart contracts. And anyone willing to invest in blockchain should also understand smart contracts. Otherwise, they cannot detect whether the blockchain development company offers a skilled set of blockchain developer.
Third, Data Structure
A blockchain developer needs to have extensive knowledge of data structure. It’s because blockchain developers always work with normal to complex data. This way, they can develop networks and implement them according to the plan.
Aside from that, the entire blockchain network is a data structure. Even a block inside a blockchain is essentially a data structure. Every data is clustered inside a block. A block usually clusters transactions for the public ledger.
Here, the public ledger is the blockchain. So, blockchain is a container data structure. Learning data structure is the basic for blockchain development. Understanding data structure helps you to understand advanced concepts.
Combining cryptography and data structure can help devise the best blockchain network.
However, just like said, blockchain is evolving, and we might see far better advancement.
When Should you Create a Blockchain?
Blockchain is a revolutionary tech, of course. There are plenty of ideas revolving around blockchain technology. But no matter how you say it, you need to understand when to create a blockchain.
In order to create your own blockchain, you need to know when. Yes, before doing anything else, you better know when to think about adopting a blockchain for your start-up or business.
Here is the limit case when you can start building your blockchain network.
Do you need to store data?
Just as we said, blockchain is a data structure. So, it’s obvious you are storing data inside it. If your business solution doesn’t work with plenty of data, you don’t need a blockchain network.
When you want to create new crypto, you need a blockchain network. However, if you are thinking about making a coin, you need a separate blockchain. For a token, you have other existing blockchain networks.
But blockchain is not about cryptocurrency. There are many more to it than just crypto. Blockchain can help you manage massive data with a single distributed ledger. Also, you get a transparent view of the updated ledger.
Who are the Participants?
Just like we said, who are the participants for your business? Do you have multiple groups or companies working for you? If nobody wants to become the central authority, you can use blockchain.
Now, there are many groups out there. But do every company needs to adopt blockchain? Of course, not. If the group requires to share data across workflow for every participant, you can rely on blockchain.
Do You Need Faster Data Sharing?
Need to Speed up your Data Transaction?
If your database is slow, you can easily choose blockchain. Modern times need to asses faster data solutions.
Steps to Build a Blockchain Solution
How to create a blockchain from scratch? As a business, you would require professional help. There are plenty of blockchain development companies out there. But Before onboarding a good company, you need to prepare your plan.
Creating a blockchain from scratch is not easy. You may get help from professionals, but you have to complete most of the work.
Now, here are the steps you can follow to create a blockchain.
Identifying a Suitable Use Case
Creating business sense is vital before making a blockchain solution. Now, blockchain can help you with data management and authentication. Furthermore, blockchain enables your business for intelligent asset management. You really need to create a use case that provides proper business sense.
Understanding Consensus Mechanism
Bitcoin uses proof-of-work as a consensus mechanism. But as we said, blockchain is evolving. So, there is plenty of new consensus mechanisms available.
You have proof of stake (PoS), Federated Byzantine Agreement, Byzantine fault tolerant, Deposit based consensus, Proof of Elapsed Time, Redundant Byzantine Fault Tolerance, Simplified Byzantine Fault Tolerance, Federated consensus, Delegated Proof of Stake, and Round Robin.
Before you can decide which consensus is the best for you, you should rely on the use case. This way, you can devise the best consensus mechanism for your blockchain.
Design the Nodes
There are two types of blockchain networks - permissioned and permissionless. You can say blockchain can become a private ledger solution, or hybrid, and even public. So, you have to decide the nodes based on the use case.
Now, how will the nodes operate? Will they run based on cloud storage or any physical hardware? Deciding the hardware setup is also part of the plan. You also need to decide on the base operating system.
Designing the Blockchain Instance
Blockchain is a data structure, and you need to do proper planning. Any business needs to make a planned configuration on some vital elements such as:
- Permission configuration
- Asset issuance
- Asset re-issuance
- Key management programs
- Parameters of the blockchain network
- Atomic exchanges
- Address formats
- Native assets
- Block Signature
Building the APIs
Many blockchain platforms come with pre-made APIs. On the other hand, some don’t include APIs. However, you need some major APIs for your blockchain solution. Here is a list of some of them:
- Performing audit-related functions
- Data strage and retrieval functions
- Generating addresses and key pairs
- Smart contracts
- Smart asset life-cycle management
- Data authentication using hash and digital signature
Designing the UI
Designing admin and user interfaces are crucial. Choosing a front-end programming language is a must. Well, a blockchain programming language is not that complex.
Thinking Future Technology
Blockchain can add new possibilities for existing technologies. Enhance your blockchain solutions using artificial intelligence, Internet of Things, Bots, Cloud, Cognitive services, Biometrics, Data Analytics, and many more.
How to create a blockchain? You can onboard a blockchain developer company. But that discussion is for another day.
Creating a blockchain solution is not hard. You have to stay focused on your plan. After devising your plan, you need to consult professionals. They will help you with further improvements.