How Blockchain Is Used in Software Development

Blockchain applications can disrupt the existing business models markedly by providing lower-cost instantized solutions.

What is blockchain?

A blockchain is a digital ledger in which records are stored in chronological order in separate distributed blocks. Each block represents a node in a decentralized database, which is replicated between network participants. The information in a block is securely encrypted with a hash function. To access the data, a person uses a special secret key. It also functions as a cryptographic signature to approve a transaction.

Blockchain technology ensures that information is stored securely on a network and will not be stolen. To “hack” a block, an attacker needs to guess one out of a billion combinations. This requires large computing power. Even if a hacker gains access to one block, the others will remain inaccessible and will have to be hacked one at a time. But the members of the network will not allow this. At the stage of approval of a transaction, they will see a violation of the terms of a smart contract and prohibit the operation.

Thus, blockchain is a technology for the secure storage and exchange of data. Participants act according to consensus rules and do not allow inaccurate information to enter a block. A smart contract automatically implements the terms of an agreement. It is impossible to delete or forge information in a block because the network captures every transaction since the chain was created. The network guarantees the authenticity and veracity of the information displayed in it.

Blockchain is still considered imperfect due to poor scalability and functional incompatibility. But Gartner predicts that the blockchain that is implemented in current projects will become fully scalable by 2023.

In the future, blockchain will merge with related technologies (AI, ML, and IoT). Such a move will attract more stakeholders to the innovation and expand the range of its use.

What can blockchain technology bring to a business?

Blockchain is beneficial as it improves the performance of business apps and a company. The technology provides businesses with the following benefits:

    • Exchange of information without intermediaries.

Computers are united into a peer-to-peer network, where participants are equal in rights and simultaneously act as a client and a server. Decisions are made together by “voting”. There is no need for intermediaries to confirm transactions and organize a data exchange process. Accordingly, you will not have to pay a commission for the work of agents. Offline storage of information on distributed nodes makes such a system more resistant to attacks. A P2P network does not have a single point of entry, so it is not easy to hack.

  • Trust between network partners.

Blockchain creates trust between partners, even when they don’t know each other. It is enough that network users rely on a trustworthy blockchain mechanism. They know that information cannot be falsified. The reliability of the data is confirmed by the majority of participants.

All transactions within the network are recorded and stored in an archive. Any participant can view the history of transactions using the secret key. For example, a supplier, a consignee, and a shipper can control what stage a product is in, how many items are shipped, how many units are delivered, and so on. If a carrier loses or damages part of the shipment, they will not be able to hide the incident, because a sender will see at what stage the product was lost.

  • Reliable data protection.

Decentralization, end-to-end encryption, and the use of smart contracts and digital signatures protect the network from attacks and hacks. The combination of public/private keys and the hash function protects the information in a block, guaranteeing its secrecy, authenticity, and integrity. New data is verified by the nodes and recorded in a chain of blocks that cannot be deleted. Blockchain ensures that data is not lost or stolen.

  • Improving the efficiency of operations.

Traditionally, business partners are loaded with paperwork. They spend a lot of time documenting, approving transactions and registering procedures with the relevant authorities. They need intermediaries that set up communication between blockchain participants. For example, in the supply chain, such agents are forwarders who organize transportation and connect users or banks that approve monetary obligations between partners.

Blockchain automates manual and administrative tasks and eliminates intermediaries from the chain, thereby speeding up the exchange of information within the network. Each user instantly gets access to up-to-date information and quickly makes calculations.

Why use blockchain in software development?

Since blockchain is a safe and reliable way to store information, it becomes an ideal basis for developing mobile and web apps for various sectors of the economy.

Blockchain apps differ from standard programs because:

  • they have a decentralized database where copies of blocks are replicated in thousands of systems;
  • data in blocks do not change;
  • operations in a network are controlled by a consensus algorithm;
  • before processing, transactions are checked by user devices;
  • smart contracts automatically perform manual operations;
  • transactions are protected by a cryptographic code.

More and more enterprises are adopting blockchain frameworks, so blockchain development companies are adapting to these trends and creating software that seamlessly integrates with blockchain.

Features of blockchain app development

A typical blockchain stack has four layers (see the picture below):

  • user interface;
  • protocols;
  • overlay networks;
  • open-source blockchains.

user interface is customizable depending on the type of software and can be mobile or web. Protocols define the rules by which users exchange data. What is important for a blockchain is a decentralized protocol that helps participants connect to datasets at the same time.

An overlay network maintains a shared ledger, smart contracts, and storage. An open-source layer is used to support an ever-growing list of blocks.

Imagine a traditional supply chain (see the picture below). In classical management, suppliers function as separate entities in the supply chain. Transactions occur cyclically or sequentially.

When building a supply chain using blockchain, each node will function according to the architecture described above. A common ledger is updated after a participant checks that an entry complies with the terms of a smart contract. An archive of transactions is available to users and they see what happens at all the stages of the supply chain. Such a system provides logistics with what it lacks — transparency and security.

IT companies are taking advantage of blockchain architecture for improved ecommerce predictive analytics of

  • processes:
  • data;
  • clients;
  • advertisement;
  • transactions and other operations.

Software products collect personal information about users and statistics about customer behavior from several sources. Blockchain can become a reliable mechanism for authentication and protection of the collected data. Information is used only upon request and with the permission of network members.

Blockchain-based programs are becoming trusted tools for protecting intellectual property (IP), which many product companies are striving to achieve. Blockchain is useful in programs that link multiple organizations and require a confirmation from third parties. The technology allows the building of efficient and transparent processes. Therefore, IT companies are considering options for using blockchain technology for product development.

What does the process of blockchain app development look like?

Blockchain app development includes the same steps as the creation of traditional software, but with some peculiarities:

1.Determine the idea and goals of blockchain development.

Software development begins with defining the goals of a project. A business must clearly understand what problems a blockchain app will solve and understand whether it is necessary to implement blockchain in the existing software or create a program from scratch. Make sure that your app will be recognized by the target audience and prepare requirements for the blockchain product, according to which developers will create software. Calculate the profitability of technology implementation and select the best use case.

2.Choose a development platform and technology stack.

It is necessary to establish how the development team will create a blockchain app: from scratch or based on a blockchain platform. Developing your software means serious research and a complex process of designing nodes, APIs, blockchain instances, and so on.

If you build an app on a ready-made platform, you need to take a responsible approach to its choice. Make sure it meets business requirements, can solve business problems, and has an appropriate consensus mechanism. Then choose a programming language (C++, Java, Python, Simplicity) that is best suited for the project. If a team is building a blockchain solution from scratch, they will need a specialist with the knowledge of Solidity, an object-oriented language for creating smart contracts.

3.Create an architectural and UX design for a blockchain app.

It is necessary to think over the technical design — the architecture of the future blockchain app so that the software product is consistent with other business systems through the solution infrastructure. This will prevent emergencies and irrational use of resources.

Prepare the UI/UX design of the app so that users can comfortably interact with the system:

  • buttons are conveniently located on the screen;
  • color contrast does not spoil the appearance of the app;
  • navigation is clear and simple;
  • the app is accessible to users with disabilities;
  • transitions and animations make interaction easier, and so on.

4.Design a blockchain app and release it into production.

At this point, developers create or integrate APIs, generate key and address pairs, authenticate data, perform auditing functions with information storage, and implement other functions. QA specialists test blockchain software to prevent errors. A DevOps engineer deploys the app to production and automates the delivery of updates.

The main contribution to the successful blockchain app development is an experienced IT company. When choosing an outsourcing partner, pay attention to its achievements in the industry, completed projects, and customer reviews. An experienced software provider will be able to turn the business idea into reality and “painlessly” introduce blockchain into the work of your organization.

7 ways software companies are using blockchain

Blockchain development companies use this technology as a basis for creating different types of apps:

  • Cryptocurrency software.

The data in such an app is presented as a list of cryptocurrency coin transactions. One entry may indicate that a user wants to send 1 bitcoin to another user. They ask permission from all nodes to approve the transaction. Miners verify the authenticity of the operation and approve or reject it. When the operation is accepted, a new block is created and hashed. The block is then distributed and verified by other nodes and added to the chain.

  • Supply chain management apps.

Blockchain technology is ideal for processes that represent a chain of operations. For example, this is a good scenario for the supply chain, where information about the following issues is recorded in blocks:

  • terms of production;
  • delivery time;
  • shelf life of goods;
  • ownership rights;
  • number of goods;
  • location of the cargo and so on.

A program records every operation carried out with the cargo, so it is convenient to track its path from the shipper to the customer. Manufacturers, carriers, customers, sellers, warehouse managers, and other firms take part in the blockchain. They freely view information about the cargo, share inventory lists via the blockchain, and record orders for products or delivery.

  • Identity verification software.

Blockchain can become a digital alternative to passports, medical records, student records, and graduation diplomas. In a ledger, you can store any confidential information without the risk of its being stolen or replaced.

Digital identification is convenient when a person visits a doctor, gets a job, or buys real estate. A medical card is not tied to a specific institution. A patient can share their personal medical history with a doctor anywhere in the world. Employers will be able to verify the authenticity of a candidate’s education and work experience through a blockchain. Smart contracts will replace conventional contracts when buying real estate.

Data owners will be able to independently manage personal information, track it, and share it with others if necessary. So, the sale of medical records through a blockchain will become real. Patients will sell access to their archives to researchers and receive a reward for this. The money they earn can be used to pay for medical services.

  • Systems of international money transfers.

International money transfers are an expensive and lengthy procedure. Each bank has its centralized system, rules, and regulations. Therefore, transactions take a long time and large commissions.

Blockchain offers a viable solution to this problem. Financial institutions are in a network with a common consensus. If a person from one country wants to send currency to a friend in another country, a bank transfers money into cryptocurrency and sends the transaction to a blockchain. The participants approve the transaction and the money goes to another bank. Digital money is converted into any currency convenient for the recipient. The transaction takes place instantly and is stored in the blockchain. It cannot be changed or deleted.

  • Platforms for voting.

A blockchain-based voting system eliminates the problems of security, falsification, identification, and other flaws of traditional systems.

Votes are not stored in a centralized database, they cannot be faked or changed. Each participant views and counts them. Each vote has a unique ID, so a user cannot revote. You can cast your vote remotely from your device.

  • Platforms for NFT sales (non-fungible tokens).

A token substitutes securities and assets in the digital world. Any tangible and intangible assets can be a token: content, domain name, goods, and so on. For example, the author of a story can store it as a token on a blockchain. In this way, they will protect the ownership of the literary work and will be able to open access to it only to buyers.

  • Blockchain-based IoT apps.

The main reason that holds back the spread of the Internet of things is that users do not believe in the security of IoT devices. They are afraid of leaking personal data or that hackers will gain access to confidential information.

With blockchain, this “flaw” of connected devices will disappear. Smartphones, smartwatches, and smart speakers will be able to interact with each other in a secure decentralized network. For example, the IoT and blockchain are used together to serve the pharmaceutical industry. Connected sensors capture information about the drug container and transfer it to a blockchain. Each node in the supply chain keeps a copy of the registry, so it can easily track the status of the delivered cargo.

Conclusion

Blockchain development companies can adapt the technology to almost any business needs of a customer. It is especially important for firms that work with the supply chain, big data, or financial transactions. The main thing is to understand which processes should be optimized with blockchain to get the maximum return on investment. It is also important to find a reliable software development company that is experienced in blockchain, SaaS development services, and other relevant issues. Such a partner will help you to create a successful blockchain app that will appeal to the target audience.


bella Allen

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