Blockchain technology has shown to be a powerful and disruptive technology with uses that extend beyond the field of cryptocurrencies since its inception in 2009. The number of blockchain technology applications continues to grow, and Blockchain Development Company in Dubai is choosing blockchain technology for their software applications.
What exactly is blockchain technology?
A blockchain is a distributed record on a shared open database that is maintained by a network of computers known as nodes and is secured using encryption and cryptographic consensus methods.
How do blockchains come to be?
A set of protocols agreed upon by the nodes governs how blocks within the chain are formed. This collection of protocols is known as a consensus protocol.
There are other types of consensus protocols, but the two most used are Proof of Work (PoW) and Proof of Stake (PoS) (PoS). All blockchains, regardless of protocol, are distributed, which means that all nodes have the same copy of the blockchain. This creates a “single source of truth” on which all nodes can agree and refer.
A blockchain can be permissionless (public), which means that anyone with access to the system can generate blocks, or permissioned (private), which means that only nodes allowed in the system can contribute to the blockchain. Permissioned blockchains may be a preferable option for enterprises and other closed networks that want to reap the benefits of blockchain technology but do not want outsiders to be able to access the chain.
The blockchain nodes can utilise cryptography to validate transactions and ownership by using public key (PK) and private key (SK) cryptography. The PK serves as a public address, whereas the SK is private and only known to the owner. In a cryptocurrency application, for example, a user performing a transaction uses the public key to encrypt the information and transfer it to the receiving party. After that, the SK is used to decrypt the data, and the transaction is completed.
What advantages can blockchain technology provide?
Numerous applications can be constructed with blockchain technology, and there is an increasing demand for local, outsourced, and nearshore blockchain software development. The following are some of the advantages of implementing blockchain technology:
- Decentralization enables for peer-to-peer (P2P) transactions without the use of a third party.
- Because there is trust in the blockchain process, there is no requirement for trust in individual parties; in other words, transactions can be made even when individual parties are unknown to each other.
- Protection against fraud and security
- Contracts are automatically executed.
- Transparency, because all participants share the same data.
- Keeping track of goods, whether tangible or intangible
When a software development firm considers implementing blockchain technology, they should analyse if the project would profit from any of these benefits. They should also think about whether a permissioned or permissionless blockchain is better suited to the project.
6 Uses for Blockchain Technology in Custom Software Development
1. Blockchain and cryptocurrency software development
Satoshi Nakamoto, an anonymous individual or group, established blockchain as the underlying technology for Bitcoin in 2008. While each cryptocurrency has its own protocol, the blockchain is the technology that underpins them all.
In the case of cryptocurrencies, the blockchain data contains a ledger of cryptocurrency coin transactions. For example, one line could state that Person A sent Person B 100 Bitcoins.
Each line is checked for PK and SK, which serve as digital signatures. Digital signatures, like hash values, change based on the data and are produced in a one-way fashion. Person A cannot copy Person B’s signature, and vice versa, ensuring that all transactions are legal.
When Person A wants to transmit funds to Person B’s wallet, they submit a request to all nodes requesting that their transaction be recorded on a block. These nodes are known as miners. Miners confirm transactions by:
- Checking the signature with the PK to ensure that the transaction is truly from Person A.
- Using the PK to gain access to Person B’s address
- Trying to see if Person A has any unspent coins.
Miners select which transactions to include in a block, and then they must solve a cryptographic puzzle (typically using massive “farms” comprising thousands of specialised computer servers)—essentially determining the input (which can only be determined by guessing) that will produce the desired hash output.
Proof of Work is achieved when a miner finds the correct input (PoW). They are rewarded with coins as payment. The block is then circulated and confirmed by other nodes before being added to the blockchain. Transaction fees are another way for miners to earn bitcoin.
Blockchain addressed the issue of double spending, which occurs when a person duplicates a digital currency and spends it twice. How does blockchain assist in making double spending impossible? Assume that Person A wishes to transmit one Bitcoin to the wallets of Persons B and C. Both transactions would be distributed to all nodes for verification. Once a transaction has been validated, it will be recorded on a block. The second transaction, however, would be disallowed because the cryptocoin would have been registered in the chain. People were able to use cryptocurrencies of all kinds without fear of fraud once the double spending problem was resolved.
While bitcoin software and blockchain development are closely related, there are several more uses across a wide range of sectors and operations.
2. Smart Contracts
A smart contract’s payload is a contract written in code that can be executed automatically whenever the input demands are met.
A vending machine is a frequent metaphor used to represent a smart contract: when purchasing a soda from a vending machine, you must enter the right amount for the item you purchased. When the correct quantity of money is entered into the vending machine through cash or credit card, the soda is released. Smart contracts, like vending machines, operate automatically as long as the input requirements are met. They are also autonomous because no third party, such as a cashier to check the amount, is required for the transaction to be completed.
Traditionally, two parties agree to a contract through a third party, such as a lawyer or bank. They have also relied on third parties, such as judges, to carry out or enforce contracts when the provisions are not satisfied. Smart contracts eliminate the requirement for a third party because the contract will execute autonomously and independently. The contract cannot be altered once it is put on the blockchain. Smart contracts can also be less expensive and faster to implement than regular contracts.
Flight insurance is one example of how this might function. If you have an insurance policy that states that you will be reimbursed if your flight is cancelled and this contract is signed and kept on a blockchain, the smart contract can automatically reimburse you if the flight is cancelled.
Smart contracts could be used in any business or situation where automatic, independent, and quick implementation of agreed-upon contracts would be beneficial.
3. Dapps (distributed apps)
Dapps, or distributed apps, are applications that run on a decentralized network. They differ from standard web programmes in that the backend code is distributed throughout a network of peer-to-peer (P2P) computers rather than on a centralised server. Front end programming and user interfaces, like web applications, can be built in any language.
Ethereum was the first blockchain platform to incorporate dapps, and it remains the centre of dapp development (although there are now other platforms, such as EOS, Polkadot, and Near). Ethereum, which is powered by smart contracts, enables developers to create and execute immutable and autonomous apps on their virtual machine (EVM).
4. Logistics and supply chain management
When it comes to supply chain management and logistics, blockchain technology has a lot to offer. Permissioned blockchains are excellent in these cases because businesses will want to know and trust all participating nodes. Permissioned blockchains also provide greater privacy—for example, if participating firms are concerned about disclosing their prices or expenses, that information can be kept private, although details such as the number of items transported or received can be disclosed.
Blockchains, which function as digital ledgers, can track inventory and record data such as:
- Dates of production
- Dates of shipment/delivery
- Dates of expiration
- How much is in stock, where is it, and so forth.
Medical medications, produce, and mail, for example, might be tracked and traced because each line in the ledger records every transaction linked with the products.
Manufacturers may potentially use a blockchain to exchange their inventory lists. This would improve transparency and enable firms to make more timely and accurate decisions based on what is and isn’t in stock.
Blockchains can also be used to keep track of product orders, bank loans, and shipment tracking. For instance, if a merchant places an order with a supplier, that order is logged on the chain. The supplier may then approach a bank for a loan in order to produce the items. The bank could view the order’s verification on the blockchain and authorise the loan, which would likewise be recorded on the chain. Once the supplier supplies the product, it will be added to the chain.
If smart contracts are employed, these processes might potentially be automated.
5. Personal identity management and security
The ability to establish your identification is essential for getting services, holding property, buying and selling in the marketplace, and a variety of other day-to-day activities such as going to the doctor or driving a car. Individuals who cannot establish their identities when required are kicked out of the system and prevented from purchasing alcohol or voting.
As more of our lives move online, our personal identities become increasingly vulnerable: identity theft and hacking into personal accounts pose very real and serious security dangers. There are also rising debates regarding who owns and benefits from our personal data; for example, numerous firms track, buy, and sell personal information. In other words, personal data has value, but individuals rarely realise the benefits of that value.
Blockchain technology offers the ability to enable safe and decentralized identity that is independent of centralised entities such as governments or banks. It can also build systems that let people fully own their data and profit financially from it.
Personal health data, for example, may be stored on a blockchain. Patients may grant researchers permission to utilise portions of their data. Researchers might then use smart contracts to “buy” the data by delivering patient currencies to their wallets. These coins might then be used to pay for medical bills or services.
6. Internet of Things (IoT) application
Blockchain technology enables smart objects to interact with one another on a secure and decentralized network, which might have far-reaching implications for the growth of the Internet of Things (IoT). A blockchain’s distributed and decentralized capabilities would allow smart devices to integrate and communicate with one another more efficiently than before.
Chronicled, for example, uses IoT and blockchain to service the pharmaceutical and food industries. Smart shipping containers and sensors deliver real-time data on any shipment. The information is then recorded and tracked using blockchain technology, and because each node has a copy of the ledger, any conflicts can be readily resolved by referring back to the chain.
Selecting an IoT developer is a difficult task nowadays. Hundreds of businesses provide IoT development services, luring customers with low costs and a wide range of services framed by tempting headlines and calls to action. A potential consumer must spend time examining websites, reading reviews, and researching pricing policies before deciding on a business for hardware development. Yet, this does not guarantee that a buyer would be satisfied with an IoT gadget ordered by a knowledgeable contractor. How can you select an IoT Development Company in UAE for the Internet of Things while remaining confidence in the results?
Every new company is committed to provide professional development services. Each new outsourcing studio considers itself an expert and charges a premium for development services. Every third outsourcing company believes it has matured into an IoT development agency and has every right to raise its pricing policy by including a couple of the most recent ones on its services list.
Let’s be real. Not everyone in the information technology business is qualified. It is a major issue for a prospective customer. In other words, each company provides an interesting IoT duty in a short length of time. But, the assignment turns out to be unfinished or raw, with several flaws that are prohibited in hardware projects.
As a result, choosing a provider with actual IoT expertise and experience completing end-to-end projects is important. Available to both B2B and B2C businesses.