3 Industries That Will Benefit from Blockchain Software Development More Than Others
Blockchain is one of the most popular technologies of the last decade. Some enterprises believe that innovation will improve the way they do business and plan to develop blockchain software. Other organizations are still considering whether they should use this technology. Anyway, blockchain is rapidly penetrating all areas of the economy and, according to Gartner, by 2030 its added value will grow to $3.1 trillion. If you want to take your business to the top, learn about the peculiarities of creating decentralized applications (dApps).
Key features of blockchain technology
Blockchain is an electronic ledger in which each entry is in a separate block and shared between network participants. It turns out that each user has a copy of the common database, which is located not on the central server, but on the nodes (computers) of a network.
Network members cannot arbitrarily delete or edit data in blocks. Relations in the chain are regulated by a consensus, and there are smart contracts to fulfill the conditions. To make a new entry, you need to get permission from 51% of network users. They confirm the authenticity of the claimed transaction and approve its execution.
So, new blocks are added to a common chain. Each one stores a timestamp and is encrypted with a hash. To view the transaction history and initiate a new record, you must have a public key and a private key. The first one defines the identity, and the second one confirms the authenticity. If the public and the private keys match, the smart contract automatically executes the transaction.
In this way, blockchain provides a decentralized, transparent and secure environment for storing and exchanging data and transactions.
How blockchain apps differ from web apps
A dApp, like a web application, consists of a front-end component and a back-end component. The main difference is in servers. In traditional software, a server has a centralized structure. A network has a master node that processes and stores data. To receive a response to a request, a client must be connected to a centralized server. For attackers, this means that there is a single point of failure that can be used to attack.
The back-end of dApps is built on blockchain. An application has many distributed nodes (computers) that store copies of a database. Each of these nodes is both a client and a server at the same time. dApps distribute the transaction load across thousands of machines. If a scammer breaks one block, the rest will remain protected. To attack the blocks, you need a huge amount of money, energy, and special equipment.
Web apps communicate with the main servers using the HTTP protocol. dApps are connected to a blockchain through smart contracts. They automate the execution of an agreement about conducting operations between network participants.
Benefits of blockchain app development
Such distinctive features as decentralization and security determine the benefits of dApps for businesses:
- Transparency. Each network member is allowed to view the transaction archive. It is impossible to fake data, and transactions are approved by 51% of users. This principle of network organization gives participants confidence in the fairness of transactions.
- Fault tolerance. Since there is no single point of entry into the system in a blockchain, decentralization makes such a network resistant to attacks. To change block entries, an attacker needs to simultaneously hack thousands of nodes and gain control of 51% of the power. It is difficult to carry out such a task: for that, scammers need powerful computers and a lot of time and money.
- Confidence. Even though network participants do not know each other and cannot guarantee the honesty of a partner, they trust the blockchain mechanism. Users act within a consensus framework, and its implementation is monitored by smart contract algorithms when a participant initiates a transaction. A transaction is successful if 51% of network users confirm its authenticity. Under such conditions, it is impossible to deceive partners, forge data, or falsify a transaction.
- Data security. It is not possible to delete information from a database. An archive of records from the first block to the last one is stored on the network. A chain is protected by end-to-end encryption: each block has a unique hash and refers to the hash of the previous one. To decrypt it, you must use a secret key.
What industries will benefit from blockchain apps?
First of all, the financial sector profits from blockchain, because the technology worked well in cryptocurrency. The industry remains a leader in the use of dApps. But businesses in other industries are considering how to use innovation to securely store and manage data.
Manufacturing, energy, healthcare, government, and other sectors are interested in blockchain. According to Blythe Masters, a co-founder of FinTech Motive Partners, blockchain can be used in any multi-party process where sharing information is necessary to complete transactions, coordinate actions, and exchange values.
Let’s consider the most popular blockchain use cases:
Blockchain is useful for companies that work with big data (insurance, construction, healthcare, logistics, and so on). On a network, manual operations are automated by smart contracts. There is no need to manually draw up documentation to fulfill the conditions or contact intermediaries to carry out a transaction.
Government organizations collect a large amount of data about people and businesses. The information is kept in separate storage, which complicates the collection and tracking of information from other government agencies. If data is collected in a centralized repository, hackers can easily steal it. Blockchain unites government organizations into a common network where information is securely stored in blocks, and each participant has access to data
Gartner found that by 2023 blockchain will improve data management and quality by 50%.
Classic authentication methods using login and password do not always protect users against attacks. Enterprises regard blockchain app development as a more secure identity management solution. Hashing, private and secret keys to access blocks, and participants’ voting to approve the authenticity of transactions make it difficult for a fraudster to crack such software.
For example, if a government agency needs to identify a person, it requests access to their identification card (driver’s license, digital certificate) kept on a blockchain. Network participants confirm the transaction, authorized people make sure that they see the right person and provide access to the authorized user.
Blockchain is involved in business processes that represent a chain of operations. One of such industries is logistics. A product travels a long way through the supply chain, which includes manufacturers, carriers, customers, forwarders, and other parties. In the supply chain where partners don’t know each other well, data can be faked, or damaged goods can be delivered. All this provokes confusion.
For a complex supply chain, blockchain means honesty and transparency. Operations with goods are recorded in a blockchain at each stage, it is impossible to falsify the data. This allows organizations to resolve disputes, better monitor the movement of goods and track the quality of food.
DLT.sg, a company from Singapore, created a blockchain app for supply chain management. Companies that join the platform track product flow and automate the execution of invoices.
Even though only 15% of companies are actively using this technology, the rest are still interested in or launching blockchain software development projects. Organizations are rethinking the way they do business and want to get the benefits that blockchain provides.
However, not all businesses have this opportunity. To implement this technology, you need to understand its essence and trust it, and be aware of how to apply it in your company’s business processes. And finally, you need to find a reliable and experienced IT partner – a blockchain software development company.