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INN4SCIENCE BLOG

INN4SCIENCE BLOG

Blockchain

How to Create a Blockchain Database: Our Experience of Development and Scope of Use

Every day more and more blockchain-based applications appear. And this is not surprising. Why? One of the major features of the technology is the decentralization. This allows distributing the data and code execution over multiple physically remote hosts and repositories. And this is exactly what served a base for a relatively uncommon concept – Blockchain Databases. In this article, we will review the idea in details and provide a basic guide on how to create a blockchain database.

Blockchain Database – What is this?

The blockchain database is a data structure represented by a chain of linked data blocks. A copy of such database is stored on each of the individual member hosts. The principal difference from traditional databases is the way how additions or changes to the stored information are authorized. This procedure assumes the participation of several decentralized nodes. Therefore, any modification of already stored information or the insertion of blocks with new data will require confirmation from several nodes at once for each block. Thus, the data is protected from third-party interference.

Why Would One Need to Build a Blockchain Database?

The main advantage of blockchain is decentralization. There is no single authority or storage that keeps the data and/or regulates the operation of the system. This ensures that not a single point of power can seize the control. Second advantage derived from a blockchain technology itself and decentralized operations is the reduced cost of system maintenance. Third – increased efficiency, as transactions are processed by a combined processing power of participant 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. This is due to the presence of the so-called proof of validity, which is used to apply access policies to a particular user.

And last but not least benefit is the impossibility to erase or anyway change the data in the blocks that were validated by the consensus.

A traditional database is more or less a snapshot of itself at the every given moment. Blockchain technology allows to build a blockchain database that has history of itself which allows to analyze tendencies and highlight trends in the incoming data over prolonged periods of time.

From a practical point of view, blockchain approach provides an order of magnitude higher security of stored information and almost complete protection from unauthorized interference as compared to relational databases. After all, even if these databases, which are quite habitual to us, are stored in trusted institutions – whether it is a bank or some other large-scale corporation – in theory, intruders can crack the internal security system (because the access to it is centralized) and adjust the stored data. Undoubtedly, the presence of a large department of experienced system administrators (or specialized system security personnel), advanced security hardware and software (firewalls, VPN, antiviruses, etc.), allows reducing the probability of unauthorized penetration. Yet, the attacks evolve with time and grow in complexity.

Nevertheless, blockchain by design makes most traditional types of network attack methods and tools useless. Sure, some new exploits such as 51% attack, Sybil attack or vulnerabilities in cryptography algorithms were discovered, but carefully designed and implemented by tried experts blockchain system can withstand them and level the effects.

Create Blockchain Database: Spheres of Current Application

How to create a blockchain database

And now, a few words about the areas in which the blockchain databases found the practical application.

Personal Identification

Usually, verification of identity is accompanied by the need to verify a variety of documents. Fortunately, more recently this multi-stage procedure, which can be quite nerve-wracking for the most individuals, 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 is exactly the person who owns the documents. It is done by means of the single digital key, which is compared with the register, the data in which is not a subject to unauthorized changes. In practice, this not only simplifies the identity verification process but also 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. In particular, blockchain database can store the structured data about conditions that accompany each stage of the goods fabrication. On the one hand, this increases the credibility of the brand, on the other – it allows companies to achieve and maintain the highest possible quality of their production. Lately, such software is widely employed by brands that produce premium goods and famous fashion houses. The usage of blockchain allows to ensure the originality of products. In fact, the goods are supplied with a special electronic certificate that helps buyers to ensure the originality and production dates. Another option allows to protect 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 systems, 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, which provides them). In particular, using blockchain, shares in these assets are distributed among investors (in exchange for cryptocurrency). Thus, startups receive investments for the development of their business and their investors – the opportunity to profit from the growth of their investments or the valuable services/goods supplied by the issuer of the tokens.

Supply Chain Management

The main problem for many companies that supply their products to physically remote sales points is the lack of transparency. In order to exclude the possibility of smuggling or the delivery of counterfeit goods, some enterprises introduce blockchain databases into their supply chains. With their help, once transactions are fixed and stored in the current data block, they cannot be altered. And this means that the forgery of the data at the delivery stages from the initial point to the final one becomes practically impossible.

Build Blockchain Database: Development

Build a blockchain database

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 (obviously, the hourly rate of such specialists is higher than programmers of different orientations). Do you want to know what development stages such projects have to go through? Let us review them in detail.

Stages of Planning and Development

So, we present 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? In fact, there is a number of projects in which this concept was used completely unjustifiably (instead of trying to create 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 fast as less than a year and a half after the release. Nevertheless, four spheres of implementation described above are the most viable for the blockchain databases.

Step Two: Determine the Platform

To date, there are almost completely ready-to-use platforms that allow developers not to create a blockchain database from scratch. The most popular of them are Ethereum, EOS and Hyperledger Fabric. Make a specific choice, based on the characteristics of your project and the capabilities of platforms.

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 kind of blockchains is a combination of the previous two types. It grants certain access rights both to the public and to employees of the company or companies which deployed the solution. 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. Private part allows to ensure increased network performance, 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 which 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 solution appeared in the late 1990’s.

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 same set of complex calculations and the results provided by a particular node can be checked by comparing with results of other participants. PoW has a fairly significant drawback: during its operation, too much 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 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 the specific number of network members.
  • Delegated Proof of Stake (DPoS). This is a kind of PoS consensus, in which blocks are signed by the selected 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

Obviously, 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 these purposes, developers 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, including those used to create the platform itself.

Step Six: Analyze the Profitability of the Project by Developing the MVP

Since the solutions based on the blockchain more often than not have fairly impressive budgets, in order to avoid additional unforeseen expenses, we recommend that you first develop an MVP with a focus to future scalability. Additionally, this will allow to identify the features that would be crucial for the prospective users of your project.

Our Experience and Examples of Finished Projects

Our company, as you may have noticed already, has a great expertise in developing varying solutions based on the blockchain. Our record of accomplishments contains dozens of successfully implemented projects for various business areas. Here are a few examples of these.

Dacxi Exchange

If you want to exchange currencies bypassing traditional state-controlled exchanges, Dacxi Exchange will be a great help! It is noteworthy that this tool also includes automation mechanisms that allow converting the currency and conducting transactions with it right away.

Coin Аrabia

Coin Arabia digital wallet provides users with easy access to the assets of the project, which they have purchased with their own cryptocurrency. Also, this tool serves to store digital money in a secure environment.

Vipcoin

Vipcoin is an innovative cryptocurrency platform created by UAE founders. All transactions conducted with vipcoins are recorded through twenty servers distributed all over the world.

Peer tо Cash

This is the open-source cryptocurrency exchange, which provides bountiful mechanisms for ensuring the transaction transparency.

In this article, we tried to reveal the advantages and provide a brief manual on how to create blockchain database. Do you want to entrust the implementation of your blockchain-based solution to tested experts? Contact us today and we will gladly take up your project!

DO YOU HAVE ANY QUESTIONS?

LET'S DISCUSS! BOOK A CONSULTATION WITH OUR SPECIALIST


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