Blockchain Experts

Blockchain is a technology for encrypting and storing data (a registry) that is distributed across a network of interconnected computers.

Blockchain is a digital database of information that reflects all transactions made. All records in the blockchain are represented as blocks linked together with special keys. Each new block contains data about the previous one.

Blockchain is used for storing and transmitting digital data. It can be used for both financial and non-financial assets (such as images or objects in the gaming industry). The blockchain technology allows assigning unique information about the ownership of an asset to a specific individual. This information cannot be forged, deleted, or subtly changed.

Blockchain enables every participant in the network to have access to a distributed database. In the blockchain, records of events (transactions) are stored in chronological order, rather than the actual data itself. All new records are verified for authenticity, and the majority of network participants must confirm them before they are added to the blockchain. Records are grouped into blocks, which are then linked together in chains. Once data is added to the blockchain, it cannot be changed or deleted without compromising the integrity of the entire chain of blocks.

Blockchain can operate both in a public (open) network accessible to any user and in a private (closed) network, such as a corporate network when dealing with confidential data. Private versions of blockchain can have different levels of user access and varying levels of information encryption complexity. The most well-known example of a public blockchain is Bitcoin and other cryptocurrencies. Corporations use blockchain not only in the financial sector but also in other industries, such as entertainment (ticket issuance) and healthcare (patient data protection).

There are also hybrid networks that combine properties of both open and closed networks.

Blockchain can be classified based on various characteristics:

Based on transaction objects:

• Information.
• Virtual value (value that lacks an analog in the “real world,” such as Bitcoin).

Based on network access type:

• Unrestricted (networks that allow participants to engage in any activity).
• Restricted (networks that limit the types of activities participants can perform).

Based on identification requirements:

• Anonymous.
• Pseudonymous.
• Full identification.

Based on the consensus protocol used by the network:

• Proof of Work (PoW) – the right to verify a block is granted to a participant based on their completion of a sufficiently complex task that meets predetermined criteria.
• Proof of Stake (PoS) – the right to verify a block is granted to an account holder when the amount of their funds and the duration of their ownership meet certain criteria. The formulas for calculating criteria may vary slightly.
• PoS + PoW – a hybrid of PoW and PoS, where blocks can be verified through both computationally-driven PoS criteria and PoW hashing. The goal of this approach is to increase the difficulty of recalculating the entire chain (starting from the very first block), which is possible when using PoS in its pure form.
• PBFT (Practical Byzantine Fault Tolerance), Paxos, RAFT – multi-stage consensus algorithms for blockchain networks. Algorithms in this group allow for the functioning of a blockchain with low costs and have significant throughput but are less resistant to an increase in the number of participants.
• Non-BFT (Non Byzantine Fault Tolerance) – consensus algorithms that are not resilient to behavior where some participants start working against the network. Such algorithms are applicable in closed networks with full identification.

Based on the presence of a central administrator:

There is a central administrator.

Where is blockchain applied?

Blockchain is applied in various fields where there is a need for fast data transfer with a high degree of security. The technology is used for launching and operating cryptocurrencies and digital currencies, when entering into smart contracts for the supply of goods, in the generation of non-fungible tokens (NFTs), in the banking and legal sectors, in network administration, and in the gaming industry. Blockchain technology finds applications in the work of government bodies (for example, in conducting and processing the results of referendums and voting), in the activities of public and private corporations, public organizations, and individuals.

Applications on the blockchain

If you have decided to implement an application on the blockchain, the next step is to determine the type of application. Finding an idea for a blockchain-based solution can be quite challenging. While it may seem that you can implement distributed ledger technology in almost any industry, such as banking, intellectual property, insurance, logistics services, etc., it is important to conduct in-depth analysis of existing projects before starting the development of your own. Just because logistics can benefit from blockchain capabilities doesn’t mean that there is a need for 100 identical projects today that aim to solve the same problem.

Once you have identified the niche where blockchain implementation will be beneficial to the public and profitable for you, take a moment to analyze whether you need blockchain development or if there are other ways to solve the existing problem.

Often, development teams write extensive whitepapers with impressive visual effects. However, after two or three months, the new project ends up failing. This is often because the initiators failed to justify why they are using blockchain technology. The only reason for applying blockchain in business is the inefficiency of existing centralized solutions, which are also slow, expensive, and lack the necessary level of transparency and reliability. Therefore, think twice about how you integrate the technology into your development strategy and make sure that its use is a genuinely important factor in realizing your idea.

The successful development of blockchain projects also depends on choosing the right decentralized ledger. If you are convinced that blockchain is the only, fastest, and cheapest way to solve a pressing problem, then go ahead and create it.

The first choice you have to make is whether to create your own blockchain or use an existing one. Before opting for the first option, be prepared to spend months on its development. You will need to design nodes and block configurations for numerous elements such as asset issuance and reissuance, signature locking, and many others. Additionally, you will need to create API interfaces and design for users and administrators.

If you don’t want to deal with all these intricacies, it is better to choose one of the existing blockchains.

When dealing with an existing solution, you don’t need to spend a significant amount of time programming the blockchain. This is also an important factor that influences the success of blockchain project development. What you need to do is decide which type of blockchain best suits your needs – private or public.

They are significantly different, and your choice should be based on the needs you have. Public blockchains are quite slow. For example, it takes up to 10 minutes to confirm a transaction in the case of Bitcoin. Additionally, their use is expensive and resource-intensive. However, these drawbacks don’t matter if transparency and a high level of trust are the main factors for you.

Private blockchains are faster and cheaper to use, but they don’t allow anyone to join the network, explore transaction history, or generate new blocks without proper permission.

If you have decided to use a public decentralized network to develop a blockchain solution, you need to choose a suitable consensus mechanism. This is an algorithm that allows independent participants to trust each other.

The most widely used protocol is Proof-of-Work, which is used in Bitcoin. When a specific user (node) generates a new block and wants to add it to the blockchain, other network members can easily verify whether it is appropriate to add this block or not. If everything is fine, a new block appears in the network, and all participants agree that the information contained in it is valid.

In addition to Proof-of-Work, you may prefer:

• Proof-of-Stake
• Delegated Proof-of-Stake
• Proof-of-Authority

Choosing a suitable platform

To analyze which platform meets your needs, you can start by looking for those with the highest market capitalization. All rating platforms, except for Ripple, are public and based on the Proof-of-Work protocol. This doesn’t mean that you have to choose one of them — it simply means that the choice of such platforms is much broader.

In any case, you should develop your project on a platform that aligns with your goals.

And the final aspect you should consider when building a blockchain solution is whether you plan to use smart contracts. Smart contracts are protocols that allow you to issue your own assets, transfer them, or launch specific processes. They eliminate intermediaries, speed up the process, and execute it at a lower cost.