If you’re in the process of researching how to build a blockchain app or want to know more about this emerging technology so you can hire the right blockchain developers, you’re in the right place. This post will provide you with a thorough overview of blockchain, how it works, and what makes decentralized apps so powerful. Continue reading if you want to learn how to build your first dApp that will supercharge your business.
To understand blockchain's potential, all you need to do is look at the history of technology. Every time someone makes a fantastic discovery, many people don't know how to utilize it or have no idea what to do with it. Alexander Graham Bell invented the landline phones in the 1880s. However, people didn't even begin to use this technology until a couple of decades later because there was no economical way to use them. We predict a similar story for blockchain. Like with landline phones, mass adoption of blockchain decentralized apps (dApps) is imminent and only a matter of time.
According to reportlinker.com, they expect the global blockchain market size to grow by USD 6.25 billion between 2021-2025 at a Compound Annual Growth Rate (CAGR) of 32.39%.
We are still in the early stages of blockchain app development
On January 3, 2009, Satoshi Nakamoto started the first blockchain application. As of September 2021, there were 3,635 dApps, out of which only 1,820 were active. This number does not compare to tens of thousands of Web Applications that exist today. What does it mean? It means that the blockchain app development market is still in its infancy, and you are just in time for the party. One factor that slows down blockchain adoption is that early users, like crypto traders, created many skeptics among the mainstream public who perceive that blockchain and crypto are inseparable. Crypto's early adopters involuntarily convinced those skeptics that blockchain is an overhyped engine powering a volatile and risky financial market.
Most skeptics didn't quite understand the blockchain basics and that the difference between blockchain and cryptocurrency is the same as between iOS and a mobile app, like WhatsApp. Blockchain is the platform powering the crypto, similar to how iOS powers mobile apps like WhatsApp. This confusion was quite common as both blockchain-based technology and Bitcoin were introduced at the same time. Blockchain became "the blockchain" we know today, thanks to Bitcoin. One of the main reasons for Bitcoin's creation was TRUST. Consequently, Bitcoin overcomes the lack of transparency from financial institutions. Trust is the primary driver for the creation of smart contracts and blockchain-based apps.
But what are blockchain apps or dApps exactly?
All you wanted to know about blockchain apps (dApps)
Blockchain is so much more than just Bitcoin. While the media coverage may lead you to believe that the blockchain is just about virtual cats, fidget spinners, fake politicians, and ill-advised ICOs, that's only the tip of the iceberg. The real potential lies in blockchain serving as a global operating system capable of running billions of daily transactions on any assets (not just cryptocurrencies).Simply put, at its core, the blockchain is an unalterable digital distributed ledger. It means it's impossible to modify, delete or rewrite the past records on it - you can only add new records. It's a sophisticated and versatile technology capable of recording financial transactions, tracking the flow of goods and payments through a supply chain, optimizing supply chain management, storing medical records, and much more. Think of the blockchain as a blank sheet of paper. You can write anything you want to on this page - but once you do it, no one will ever be able to erase your words.
When paired with a solid use case, blockchain’s distributed ledger technology serves as a Trust-as-a-Service to the ecosystem’s participants. It enables businesses to eliminate attorneys and third-party financial services, speed up their transactions, optimize business processes, and build trust. But how can a company introduce blockchain technology into its day-to-day operations? This is where dApps come into play.
A simple explanation of a dApp
Imagine your mobile phone and the dozens of apps you have installed on it: from Facebook to Instagram, to Binance and your conventional banking mobile app. These applications run code that a company's programmers wrote to enable you to interact with their company or brand.
A dApp is very similar to a mobile app in how it functions, except instead of reporting back to Facebook's (or your bank's) servers, a dApp reports back to the blockchain. As a result, this application enables you to interact with the blockchain. Therefore, the critical difference between dApps and centralized apps is that the latter use central HTTP protocol to communicate as opposed to dApps that skip centralized servers to transact in a peer-to-peer (P2P) distributed way. Therefore, the tech stack and programming languages used in the blockchain app development process are slightly different.
Fundamentally, decentralized apps are open-source applications built on distributed platforms with trust distributed amongst their users. As a result, blockchain-based dApps are designed to avoid a single point of failure regarding security, storing data, etc... They are more transparent and accountable than centralized applications.
Smart contracts’ role in blockchain app development
One of the most important things to remember is that you can only build dApps on smart contract networks. Smart contracts allow two or more people to make an agreement written in code so that they don't have to trust a third party to follow through and can simply trust the code instead. It means that a blockchain like Ethereum that can utilize smart contracts is perfect for building dApps. When Ethereum introduced smart contracts back in 2015, it expanded beyond Bitcoin's core functionality as a payment tool and became an ecosystem for building decentralized apps. Currently, there are six main smart contract networks, including Ethereum, Solana, Polkadot, Hyperledger Fabric, Tezos, and Stellar.
Which programming languages do smart contracts use?
Smart contracts are at the core of blockchain application development.
All of the code in the smart contract is unchangeable. Once you deploy the smart contract, you can't change any of its code. This design feature makes the code secure and trustless. Smart contracts provide an interface for executing business logic, reading and writing data on the blockchain. Anyone with access to the blockchain can access their interface. What's more, anyone with coding knowledge in a smart contract language can create smart contracts and deploy them to the blockchain network, provided that you have the required amount of the network tokens.
It's important to note that a dApp can have several smart contracts that serve different functions. For example, in a game dAapp, one smart contract handles your game's currency, another smart contract handles the ownership of the buildings or structures, and a third one does something else. A good example would be Star Atlas, built on the Solana network.
Benefits of dApps
Decentralized apps are secure
When using centralized apps, you must accept that most of your digital assets don't truly belong to you because the application owners fully control them. You also can't control how your data is stored or used by these applications. Therefore, data leaks can endanger your personal data and allow hackers to steal your digital assets. Data leaks happen all the time with centralized applications. One of the most recent Facebook data leaks happened in April 2021, with 533 million Facebook users' phone numbers and personal data leaked online. Blockchain app development happens on a blockchain network. Hence dApps are not built on a single server. Blockchain-based apps remain online even if 99% of the nodes go offline. As a result, dApps have high-security levels and are resistant to hacks and intrusions. Cryptography makes forging transactions impossible as well as ensures that the data stored on the blockchain is unchanged. On the blockchain, users have private keys that they securely store. Blockchain apps don't manage any user data. Data management is the responsibility of the blockchain network. Unlike your passwords for centralized apps that can be hacked or exposed due to human errors, your private key's safety is only in your hands with blockchain-based decentralized apps. To sum it up, decentralized apps bring back power to their users.
dApps are often open-source
Most decentralized apps' code is out there to be run by anyone and is accessible to the public for review. As a result, anyone can look at the code, building more trust in the application. You can't really look at how Facebook recommends you friends or how Google knows what you ate for dinner. However, with a smart contract, you can actually look at the code and see how it works. This is a HUGE benefit of blockchain apps over centralized applications.
dApps are decentralized and censorship-resistant
Throughout history, governments had control over their citizens' money. There were cases where Facebook or Twitter could ban certain people based on their views or opinions. Decentralized apps don't have to report to the government, a corporation, or a specific person. If the smart contract is coded to perform a particular function, nobody can stop it when it’s triggered. This feature is crucial for financial applications because this way, nobody can control your money. Therefore, a decentralized app does not allow censorship (unless it is coded to allow it during the development process), their records are unalterable, and their code is tamperproof.
dApps will never go offline
Have you ever seen Facebook or YouTube down? If you haven't, check out downdetector.com, where you will see that only in 2021, there were on average six problems or outages reported for Facebook every month. While such outages happen for a short period, technically, the government could just shut these social networks, apps, and websites down. Like the Russian government blocked LinkedIn across the country or slowed down Twitter. dApps run on a blockchain and will never go down because hundreds and thousands of computers worldwide run these apps. As a result, it would be unfeasible to turn them all off, if not impossible. A dApp will perform its function even if a single node is online in the network. Got a million-dollar app idea and you're are excited to get started with an MVP? Before you begin, let's talk about the types of blockchain and then determine whether you need blockchain technology for your app at all.
Main types of blockchain networks
Broadly speaking, we can divide blockchain networks into three categories:
Bitcoin is what brought public or permissionless blockchain into existence. The initial purpose of public blockchain was to implement Bitcoin and make it secure. Therefore, in the beginning, people mainly used blockchain for cryptocurrencies. The benefit of the public blockchain is that it is permissionless. Anyone with internet access can become an authorized node, access past records, mine cryptocurrencies, and add them to the ledger. Anyone can spot bugs, verify the transactions and propose changes because the source code is open source in most cases. The main advantage of the public blockchain is that nobody will have complete control over the network. Therefore, it ensures that the data is secure and helps maintain the immutability of the records. Also, all the nodes connected to this public blockchain will have equal authority. As a result, this public blockchain network becomes fully distributed. Bitcoin and Ethereum are some real-world examples of public blockchains. At a certain point, other industries, like finance, healthcare, education, started to look at blockchain as a possible solution for their business cases. However, the primary concern organizations had about public blockchain networks was that it is open. Anyone can be part of it and view the transactions over the public network. Some businesses wanted to have their own blockchain solutions. This is how private blockchain was born.
Private blockchain networks
Private blockchain means that the participants need permission before being part of this network. Here, all the transactions are visible only to users who are part of this private blockchain ecosystem. These types of blockchain networks are centralized and much better controlled than public blockchains. Private or permissioned blockchain networks can be governed and regulated by someone who can ensure that the governors are guiding participants. Moreover, these blockchains can have a token or may not have one based on the preference of the blockchain owner. These networks usually have a network administrator, taking care of user permissions in case any user requires additional authority on the go. Private organizations use these networks to store sensitive data about the organization and protect their data integrity - for example, IBM blockchain, Ripple (XRP), and Hyperledger. Anyone with access to blockchain developers, some cash, and technical knowledge can build their own private blockchain network.
Consortium or hybrid blockchain
In this blockchain type, we can divide the nodes into two types:
- Some nodes are public
- Other nodes are private
As a result, some of the nodes are allowed to participate in the transactions. At the same time, others are supposed to control the consensus process. The blockchain can access all the nodes, while particular data that the node accesses determines the level of information attainable to the node. Hybrid blockchain usually has two types of users:
- Users who have all of the control over the blockchain ecosystem decide the security level for a particular user.
- Users with access to the blockchain depending on their function.
It comes out to be an ideal hybrid blockchain between private and public. A good example of an existing hybrid blockchain is the Ripple network.
Do you really need a blockchain app?
Blockchain app development costs will set you back tens of thousands of dollars. Therefore, before embarking on your blockchain app development journey, ask yourself a few key questions:
- Is your current/new system lacking the trust factor? It means that you need to show your customers/partners that unbiased third parties verify and validate the transactions.
- Will you be comfortable distributing your data across many public and shared computers (unless you go for a permissioned blockchain)?
- Is your system for which you are building a blockchain app transaction-based?
- Are you comfortable with making your blockchain app open-source?
- Do you need a database to store and process large amounts of data?
If you answered "yes" to all or most of these questions and decided to build your own blockchain application, continue reading to find out what type of dApp is right for you.
Types of blockchain apps
Different dApps leverage different blockchain models. Hence, we can divide them into three categories:
Type 1: dApps with their own blockchain network. For example, Bitcoin, Solana, Ethereum, and other cryptocurrencies with their blockchain fall under this category. Not quite ready to build your own blockchain network yet? Take a look at Type 2 and Type 3 dApps.
Type 2: dApps that leverage the blockchain of Type 1 dApps. These decentralized applications are protocols and have tokens necessary for them to function—for example, the Omni Protocol. Omni is a distributed trading platform built on top of the Bitcoin blockchain as a "layer" for facilitating trustless, peerless, and effortless exchange of assets between users without involving any middlemen. Another example is Mango Markets, a decentralized trading platform built on top of the Solana blockchain.
Type 3: dApps that use the protocol of the Type 2 dApps. The SAFE network (Secure Access For Everyone) is an excellent example of a Type 3 dApp. SAFE is a decentralized communications and data storage network. It replaces servers and data centers with the computing resources of its users. SAFE is an autonomous data network, enabling the creation of censorship-resistant websites and applications. It uses The Omni Protocol for issuing SafeCoins that allow for the SAFE's functionality. There are also Semi-dApps, where the backend interacts with smart contracts on the user's behalf. Therefore, the user can't validate or inspect the transactions on the blockchain. Semi-dApps are also responsible for managing users' private keys. Examples of Semi-dApps are Kraken and Binance.
How do blockchain apps work?
Similar to traditional centralized apps, a dApp's functionality has three stages at its core:
- A dApp's interface or front-end. It is very similar to a centralized app. This is what the user sees and interacts with while using the dApp.
- Smart contracts that interact with the blockchain network. Simply put, the front-end communicates with the smart contract via an API. In real-world, this communication occurs via a blockchain wallet (it gets a bit complicated here, but we will have a follow-up article about smart contracts).
- The smart contract runs the code, followed by selecting and storing data on the blockchain network.
If you've made it this far, great job! Now you are almost ready to fully embrace blockchain technology and start building your first dApp.
Step-by-step-guide for building your blockchain app
Whether you decide to do your blockchain development in-house or outsource to a professional company, it's always best to understand the basics and what to expect along the way. Our step-by-step guide will take you through our meticulous process of building your blockchain app based on what we use with our customers in real life. We will cover:
- The seven steps we follow to make your blockchain app vision come to life.
- An in-depth explanation of each step and our reasoning behind it.
- Why and how do we involve you in our activities?
- The key deliverables at different stages of the blockchain development process that let you track our progress.
- All of that explained in simple language.
Are you ready to disrupt the system and get started with your blockchain project? Then let us begin.
Step 1: Communicating your idea
In theory, this step sounds pretty straightforward, doesn't it? So you tell blockchain app developers your idea and why you want to do it. Developers evaluate your concept, create an MVP, then build your app, and you're good to go. Well, there is a bit more to it than that. Let's start with how business needs vary wildly in the amount of research they have done about their blockchain app idea. For example, you might have an idea to build a wallet or a peer-to-peer marketplace or an app store or maybe something entirely different altogether. Of course, we've heard all of these and more. Still, I advise you to do as much research as possible because it helps you start off on the right foot, save time and money. Ok, so let's assume you've done a bit of research and have gone through a few initial probing questions with your blockchain development company. At this point, it is time for the first steps to get the complete picture of what's next.
Blockchain app development project discovery workshop
First up is the project discovery workshop. There, we go through your company background, vision, goals you have for your idea, and how you want to market it. Then, listening intently to your story and background, we learn about who you are, what motivates you, and how to get that across in your product. When working with remote blockchain development teams, communication is key. There are no stupid questions or unnecessary details. We also define what type of blockchain network you need for your app, which smart contract network suits your idea, and what type of dApp would be best for you, what tech stack and blockchain development tools you might need, etc. Next, it's time for target group exercises to understand what features the app will need.
Lastly, we research the market and the technology required:
- The demographic and psychographic profile of your audience
- Baselining the technology (a geeky way of saying, getting to know where we're starting from a technology standpoint)
- Doing a competitive and comparative analysis of your idea
At the end of this step, you will receive a foundation document. It includes your product vision, your brand statement, the targets and personas your app focuses on, as well as its features and goals. It is the cornerstone of all the work that will follow because it also includes the development plans, timelines, and next steps. Now, it is time to move on to fleshing out your idea.
Step 2: Designing the UX
In this step, we design your app's visual identity. We take you through another set of activities, where we dive deep into user personas and user flows to let your brand come to life. It will create a robust wireframe that we will use to build your blockchain app's frontend.
- First, we gather and deliver an identity questionnaire to drill down on our target user persona.
- Next, we collect insight into which visual identity the app needs to have. It enables us to build a cohesive brand for you.
- We also go through a UX visualization and website buildout, gathering a questionnaire that defines the website's goals and the stories behind the end-user.
At the end of this step, you receive a visual style guide and a preliminary wireframe of the product. Consider this second step, like drawing the design of a house. Now you know what it will look like, and we move on to building it.
Step 3: Deciding on the app's architecture
After we understand the blockchain app's functionality, target audience, how it is supposed to work, and why it needs to work this way, we can recommend a set of technologies to build it. In addition, this process provides the developers with a detailed plan to follow, minimizing the room for potential errors and laying the foundation for future-proofing your product. Think of it like this: the architect drew up your house's design. Now it's the engineer's job together with you to decide which materials to use for building it and why you'll use wood here, steel there, and no brick and mortar at all. Software engineering and building an app are very much like that.
Step 4: Developing your app
It's time to hand over the construction plan to the people who will build your app – the software developers. They code your blockchain app's frontend and backend, connect it to a smart contract network, and turn it into the finished product. The beauty of the detailed groundwork laid in the previous actions is that breathing life into your idea happens quite quickly at this point.
Step 5: Testing your app
Apps are fragile and can break easily during the development process. We set up automated processes that scan for bugs and fix glitches after developers have finished coding. Our quality assurance team tries to "break" your app by running automated tests to guarantee that everything is functioning as planned, including going through every screen and feature in the app and fixing possible problems before delivering the product.
Step 6: Deploying your product
Finally, your app is ready to be packaged into a real-world product that your clients can see, feel and experience. Since a robust blockchain app is more than just code, we also take care of setting up your frontend servers, API servers, message sending, and databases. This means having fast loading times and instant responses for your users. Because a user-friendly app is a quick app.
Step 7: Upgrading your app
A perfect app doesn't exist. Constant improvement is the key to keeping your users happy and growing your customer base. If your users suggest new features or have other requests, you can start the process over again to develop version 2.0 and 3.0 of your app. Thanks to all the groundwork that has been laid, updates happen remarkably quickly.
Many people tend to think about blockchain technology in terms of cryptocurrencies such as Bitcoin and Ether, but there is so much more to it than just crypto trading. Blockchain provides a decentralized public ledger for any kind of data, offering transparency and security. It truly is a revolutionary way to store and share anything from money, creative work, real estate to medical records…there really are no limits to what you can do with blockchain technology. According to our experience, two things are essential in blockchain app development:
- Defining whether you need blockchain for your use case.
- Understanding what type of blockchain you require.
- Defining your blockchain app's purpose and function.
- Choosing a smart contract network for your dApp.
- Finding a blockchain development company with a thorough, well-defined process built on industry expertise.
- Getting involved in the development process to ensure you get the results you need.
With so many healthcare apps, DeFi apps, and supply chain management tools built on blockchain, this technology is entering our day-to-day life faster than we think. Ask yourself, why would Spotify acquire a blockchain company Mediachain Labs, or why would TikTok partner with blockchain-based music streaming platform Audius? These tech giants know that blockchain is the future.