Why is blockchain so widely utilized?

In recent years, mainly through cryptocurrencies, blockchain received a lot of exposure. As a result, people in many industries realized the potential it has. While the most famous cases are mainly related to NFTs (Non-Fungible Tokens), such as CryptoKitties, virtual sports collectibles, memes, there are much more cases in fintech, logistics, music industry, or even voting.

Companies are realizing the benefits of blockchain, such as the transparency and the state-of-the-art cryptography that it provides with methods like the elliptic curve digital signatures and asymmetric keys. What used to be the reason for the spectacular success of cryptocurrencies almost certainly will be utilized to move forward most major software-based businesses.

How to start with blockchain-based development?

Before we talk about the actual development phase, let’s take a few steps back. What about the basic idea and planning? We don’t want to discourage anyone, but it’s only smart to answer a few questions first.

  • How sure are you about your blockchain project?
  • How precisely can you describe the product details?
  • Have you done enough research? What’s the competition?
  • What’s your UVP?
  • How did you verify your business model?
  • Do you know the cost of blockchain app development?

If you feel like you’re not exactly ready to answer most of those questions, we highly recommend you to read an article by our CEO, Adrian - “How can a blockchain consulting company help develop your business?”. Here, we’ll continue with the more technical aspect of blockchain development.

How to choose the right blockchain?

Apart from the complex business aspect of blockchain development, answering technological questions is perhaps an even bigger challenge, especially for founders and startups with little experience in blockchain solutions. Therefore, choosing the right blockchain platform for a project is the fundamental decision, which should be made after thorough research and considering all pros and cons of potential choices. For example, one of the most popular blockchains, Ethereum (ETH), is known for high fees, especially during its peak demand, but there are similar, cheaper alternatives, such as Binance Smart Chain (BSC).

Bitcoin (BTC), on the other hand, doesn’t have as many functionalities as ETH, but most of them may be entirely redundant for BTC payment systems. Still, it comes with its own set of issues, such as high fees and long processing time (about 3 tx per second. Therefore, in those kinds of projects, it may be a good idea to choose Bitcoin SV (BSV) for its much lower fees. But, of course, the cost is one of many factors you need to look at. What else?

Characteristics of different blockchains and what your project require

From the specific usage standpoint, it’s good to set a few requirements that can help with choosing the optimal blockchain. Let’s say we’re trying to build an application that relies heavily on financial transactions. In this case, we should aim for any blockchain that’s based on the UTXO model (Unspent Transaction Outcome), which significantly improves the privacy and security of transactions. For that reason, BSV sounds like a great choice.

If we’re operating in fintech and our goal is to create a DeFi (Decentralized Finance) app or platform, there’s no other way but to choose a blockchain that supports smart contracts, such as Ethereum. A smart contract is a completely automated agreement between parties that assure safety between both sides of a contract. The safety, of course, is covered by the blockchain network and its transparency of transactions and by a programmer who implemented the contract. The latter aspect is instrumental for the process as it’s proven that poorly written code can make a contract vulnerable to attack and loss of all funds. Just like in this case.

Of course, it’s not exactly that simple. For example, the capabilities of a smart contract on a given blockchain may be insufficient or too expensive due to the amount of transferred data. The bottom line is that it definitely may take a lot of expertise to find the optimal (and the cheapest) solution, so it’s crucial to have at least part of the dev team with experience in blockchain application development. And that brings us to the next point.

How significant is the developers’ expertise in blockchain?

Good news! It’s not necessary to have a team of crypto-geeks that already made a fortune on bitcoin (they might not work anymore) or blockchain know-it-alls in order to develop blockchain software. It’s fair to say that a large part of it is just programming like any other. There are API integrations, databases, just like everywhere else. So if you’re considering building your own team for a blockchain project, make sure at least one of them has previously worked with blockchain technology. However, the fact is, it’s extremely difficult to find those developers, so it makes much more sense to find an experienced agency. Of course, having top-notch headhunting skills and a decent budget may certainly increase the chances of finding good candidates, but it’s never an easy task. The truth is, most skilled blockchain devs are already working in agencies (or owning them).

The value of an experienced team doesn’t only show in the development phase but on a broader, conceptual and business level. Knowing existing solutions and the ability to use them to your advantage can make your life easier, avoid simple errors, and drastically lower the cost of development. More often than not, problems can be solved with the available resources, not necessarily with custom-made software.

Common mistakes, misconceptions, and less-known facts about blockchain development

First and foremost, as always, the money. You shouldn’t forget that software development can be costly, especially if you’re dealing with innovative technology (which blockchain certainly is). It may be wise to rethink your budget and change the strategy. There are several ways to play it smarter. For instance, let’s say you have a fantastic project, which you’re absolutely sure of, but you’re short on funding. In this case, you may try to build MVP (Minimum Viable Product) to attract more investors. Another, even cheaper and less risky option is to create a whitepaper first. That way, you can check the potential interest without spending a significant chunk of the budget for development.

There’s also a law-related issue. As a trailblazing technology, blockchain products and investments always carry a certain legal risk. Especially in fintech, we have to be extremely cautious and aware of any upcoming attempts to regulate those legal gray areas. Long story short, you should pay in mind that your brilliant idea might be illegal in a few months. And we’re not saying you should drop it all the way, but it would be wise to hire specialized legal help to prepare for the inevitable. Let’s be honest; whether we like it or not, we have to expect things like DeFi to be regulated by governments, at least to some extent.

You should also remember that your project will be only as stable as the blockchain you’ve based it on. So make sure who’s responsible for the particular blockchain and what investors (foundations) are backing it. For example, Ethereum was the first blockchain to implement smart contracts, so it developed a prominent and reliable community. Another good example is Polkadot, which was created by the former CTO of Ethereum, Gavin Wood. Because of its management and decent funding, it’s considered safe and highly rated (which you can check on coinmarketcap.com). You can read more about the market predictions in my article “Blockchain: now and in the future. Cosmos and Polkadot”.

Are you ready to start your blockchain project?

If you're sure about your project, we highly advise you to look for blockchain development companies as soon as possible because most of them won't be able to start right away. Trust us; as one of those agencies, we can assure you that the demand is as high as ever. What used to be a technology mostly related to financial services has now been utilized, for instance, in supply chain management and even in the cannabis industry.

In the last few years, we've participated and consulted in many blockchain projects, such as Centi.ch (contactless crypto payment system) and Golem (which involved one of the first successful ICOs). In addition, we’ve also done multiple types of research and proofs-of-concept for startups.

So if you feel like you have a job for blockchain experts, schedule a meeting with our CEO, Adrian. And if you’d like to discuss more about blockchain, you can just pm me on Linkedin!