Every day more and more blockchain-based applications appear. And this is not surprising. Due to one of the key features of this technology, decentralization. It allows distributing the data and code execution over multiple physically remote hosts and repositories. And this is exactly what served as a base for a relatively uncommon concept – Blockchain Databases.
The blockchain database is a data structure represented by a chain of linked data blocks. We recommend to check our another article, to find more information on what is Blockchain, Blockchain databases, how and where to use Blockchain.
So what is the reason for designing a database based on blockchain? Does Blockchain databases have valuable advantages? And finally how to create a blockchain database for our own business? Let us drill into the world of Blockchain development and its tricks.
WHY WOULD ONE NEED TO BUILD A BLOCKCHAIN DATABASE?
As mentioned above, the key advantage of blockchain is decentralization. There is no sole authority or storage that retains all the data and/or regulates the operations of the system. Thus, ensuring not a single point of power to seize control. The second advantage derived from a blockchain technology itself and decentralized operations, which is the reduced cost of system maintenance. Thirdly, it is the increased efficiency, as transactions are processed by the combined processing power of participating nodes.
Much less important, but still notable is the ability to access data without the need to have a properly registered user account created by the database admin. That is possible due to the presence of the so-called proof of validity, used to apply access policies to a particular user.
And the last important benefit is the impossibility to erase or anyway adjust the data in the blocks that were validated by the consensus.
A traditional database is more or less a snapshot of itself at every given moment. Blockchain technology, in turn, allows to build a blockchain database that has a history of itself, therefore allowing us to analyze tendencies and highlight trends in the incoming data over prolonged periods of time.
From a practical point of view, the blockchain approach provides substantially higher stored information and almost complete protection from unauthorized interference as compared to relational databases. After all, even if these quite habitual databases, are stored in the trusted institutions – whether it is a bank or some other large-scale corporation – in theory, intruders can crack the internal security system (because of the centralized access) and adjust the stored data. Undoubtedly, having a large department of experienced system administrators (or specialized system security personnel), advanced security hardware and software (firewalls, VPN, antivirus, etc.), allows reducing the probability of unauthorized penetration. Yet, the attacks evolve with time and grow in complexity.
Nevertheless, blockchain by its architecture makes most traditional network attack methods and tools useless. Though, even as some new exploits such as 51% attack, Sybil attack or vulnerabilities in cryptography algorithms were discovered, the carefully designed and implemented blockchain system can withstand them and level the effects.
CREATE A BLOCKCHAIN DATABASE: SPHERES OF CURRENT APPLICATION
And now, a few words about the areas in which the blockchain databases found the practical application.
PERSONAL IDENTIFICATION
Ordinarily, verification of identity involves the need to authenticate a variety of documents. Fortunately, lately, these multi-stages nerve-wracking procedure, can be greatly simplified thanks to the implementation of blockchain databases! In particular, with the help of this technological solution, you can make sure that before you are exactly the person who owns the documents. It is done via having the single digital key, compared within the registry, where data are not subject to unauthorized changes. In practice, this not only simplifies the identity verification process but additionally provides access to transactions to those network users, who for some reason wish to circumvent government or private banking systems (for example, to ensure the complete anonymity).
ORIGIN CONTROL
Manufacture is another viable sphere for a blockchain. To be specific, blockchain databases can store structured data about conditions for each stage of the goods fabrication. Therefore, on the one hand, increasing the credibility of the brand, on the other, allowing companies to achieve and maintain the most superior possible quality of their production. Lately, such software is widely employed both by the brands that produce premium goods and famous fashion houses. The usage of blockchain ensures the originality of products. In fact, the goods are supplied with a special electronic certificate that helps buyers to check the originality and production dates. Another option is increasing the protection of the owner’s unique rights in the event of theft by registering and storing them in a blockchain database after the purchase.
TOKENIZATION OF CORPORATE ASSETS
At the time of business formation, it is rare for its resources to have any value in foreign markets. Now, thanks to blockchain technologies, businesses can make their assets liquid by implementing tokens, which after a while can be exchanged for real goods or services of a particular enterprise (the one, issued tokens). In particular, using blockchain, shares in these assets are distributed among investors (in exchange for cryptocurrency). In this manner, startups receive investments for the development of their business and their investors, in exchange, the opportunity to profit from the growth of their investments or the valuable services/goods supplied by the token issuer. To know more we recommend reading our article on tokenization of real-world assets.
SUPPLY CHAIN MANAGEMENT
The crucial challenge for many companies that they are lacking transparency during the supply of their products to physically remote sales points. To exclude the possibility of smuggling or the counterfeit goods delivery, some enterprises integrate blockchain databases into their supply chains. As in the blockchain, once transactions are recorded and stored in the current data block, they cannot be altered. Meaning that the forgery of the data at the delivery stages from the initial point to the final one becomes practically impossible.
BUILD A BLOCKCHAIN DATABASE: DEVELOPMENT
Developing a blockchain database is not a simple task. Moreover, currently, there is a rather limited number of experts on the labor market specializing in this software development niche. For our part, Inn4Science has gathered a strong team of specialists in this field. We will now review the development stages of almost any blockchain database, however, if you will have any questions, be free to contact us through [email protected] or simply use the contact form below. Our developers will be glad to provide you with a consultation.
STAGES OF PLANNING AND DEVELOPMENT
To your attention, six steps which describe how to make a blockchain database.
Step One: Decide if You Really Need a Blockchain in Your Project
Our “How to build blockchain database” tutorial is started by quite a legitimate question: does your project even need a blockchain? Matter of fact, there are a number of projects in which this concept was used completely unjustifiably (instead of trying to create a blockchain database, developers could have simply employed the usual databases – it would have been much cheaper and easier to implement). As a result, they were not viable. Some even ceased to exist as less than a year and a half after the release. Nevertheless, the above mentioned four areas of implementation still are the most viable for the blockchain databases.
Step Two: Determine the Platform
Blockchain technology develops extremely fast. Nowadays, there are a lot of ready-to-use platforms (box solutions) that allow developers not to create a blockchain database from scratch. The most popular of them is Ethereum, EOS and Hyperledger Fabric. Each solution has its benefits and is the most effective for different cases. The choice shall be made individually for each and specific project, depending on the characteristics and the capabilities. If you are unsure, what will suit you, Inn4Science team can help you to make a choice.
Step Three: Determine the Type of Blockchain
With the development of the blockchain concept and the expansion of its application areas, three formats of blockchain systems emerged:
- Public: this is the very first implementation of the blockchain, in which any internet user can join the network. Moreover, each of the joined participants can form new blocks and access blocks created by other nodes. Public projects usually use various motivating proposals that attract more and more new participants. Particular cases of public blockchains are Bitcoin, Ethereum and most of the other cryptocurrencies;
- Private: such blockchains are intended for use within companies (for example, as a part of supply chain planning systems, user databases, etc.). In addition, such databases can be changed, updated, and improved without forking, and blocks are formed only by the pre-specified participants. Among the examples of private blockchains are Hyperledger and Ripple projects;
- Hybrid: this blockchain type is a combination of the previous two. It grants certain access rights both to the public and to employees of the company or the solution deployed company itself. A typical hybrid blockchain consists of two parts: public blockchain, to which all the participants are connected, and private blockchain with limited access, in which a transaction hashes are generated. Next, the generated hashes are validated and stored in the public part. The private part allows ensuring increased network performance, the closeness of the data, and an ability to assign block access policies centrally. The most famous example of such software is the XDC project.
Step Four: Choose the Consensus Algorithm
A consensus is one of the basic concepts in the procedure for adding new data blocks into the chain.
A blockchain is a decentralized network that may include thousands of nodes. In such conditions and without the central authority the process of decision making can be quite complicated. This is what consensus (a kind of agreement that, in the absence of a “leading” link, helps the chain to make decisions) is used for.
Actually, the task of distributed consensus is not specific to blockchain and has well-proven solutions for many other distributed systems (NoSQL databases, for instance). Even the task of consensus, in which nodes can behave “in a bad way” – the task of Byzantine consensus – was first formulated in the 1980s and method for its implementation was invented in the late 1990s.
Depending on the features of a specific project, the following consensus variants can be applied:
- Proof of stake (PoS). In this algorithm, the node with the highest current value is chosen as the creator of the current block in the chain. At the same time, it receives a reward not for generating a new block but for a transaction. This method consumes an order of magnitude less energy than PoW.
- Proof of work (PoW). Blockchain nodes are performing an equal set of complex calculations and the results provided by a particular node are checked by comparing with the results of other participants. PoW has a fairly significant drawback: during its operation, too many resources are wasted (a large number of nodes simultaneously perform calculations, but only the one that finished them first receives a reward).
- Proof of Elapsed Time (PoET). This consensus algorithm is based on the trusted execution environments, which is important when the network contains massive amounts of participants.
- Federated. This consensus guarantees the use of a single transaction log in the blockchain. A block is generated only if it is signed by a specific number of network members.
- Delegated Proof of Stake (DPoS). This is a kind of PoS consensus, in which blocks are signed by the elected representatives. In particular, the owners of the largest balances choose their representatives, and each of the latter receives the right to sign blocks in the network. The council of representatives includes those who are supported by at least a percent of all the blockchain participant votes. It is noteworthy that members of the system can withdraw or change their votes at any time.
Step Five: Create the Key Components of the Application
Undeniably, besides the need to build blockchain database, you must also think about the accompanying functionality: the mechanisms for issuing user permissions, shared ledger, consensus algorithm, a virtual machine, the way to generate tokens, storage, and key generation components, smart contracts including solutions for the authentication of data using digital signatures and hashes, etc. For example, to solve these challenges developers from Inn4Science usually create separate APIs (or use the pre-built, previously created modules of known blockchain-platforms). Finally, if you chose the private or hybrid model, do not forget to think about intuitively clear administration panel, with which one could control the system without the need to know any programming languages.
Step Six: Analyze the Profitability of the Project by Developing the MVP
Since the solutions based on the blockchain mostly do not have fairly impressive budgets, in order to avoid additional unforeseen expenses, we recommend that you first develop an MVP with a focus on future scalability. Additionally, this will allow us to identify the features that would be crucial for the prospective users of your project.
This article has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
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