In this article:
#1 — What is blockchain?
#2 — How does a blockchain work?
#3 — How are blockchains used?
#4 — What is blockchain development?
#5 — What does a blockchain developer do?
#6 — What is a smart contract?
#7 — What is a dApp?
#8 — What language is used in blockchain development?
#9 — How many types of blockchain developers are there?
#10 — What does a blockchain developer create?
#11 — Can a web developer be a blockchain developer?
Whether or not you are an IT developer, you have probably heard the term "blockchain". Maybe you understand the meaning of the word well and know how to apply a blockchain in practice. But If you are unfamiliar with it and want to understand the subject, this article was written specifically for you. We will discuss what blockchain development is and what languages are used in blockchain development.
#1 — What is blockchain?
Blockchain is a sequential, continuous chain of blocks containing specific data. To put it simply, a blockchain is a database. It can be programmed to record financial transactions and virtually all values.
The development of blockchain started with the desire to reduce the centralized approach in the financial sphere. Blockchain developers believed the banking system had many drawbacks. They did not like banks acting as third parties, pilfering transaction fees, and payment validation taking up to 5 business days. Blockchain solves all of the drawbacks of banks.
This technology uses code with decentralized control and open access. Blockchain is immutable, as the data entered cannot be adjusted or deleted. Chains of information are not stored on any particular server but exist simultaneously on all computers connected to the network. Information blocks are assembled into a serial chain and protected by cryptographic encryption.
#2 — How does a blockchain work?
The advantages of blockchain are obvious. This decentralized instrument has a high degree of protection, and the principles of operation are simple and transparent. There are 4 elements a blockchain needs to function:
P2P network
A peer-to-peer network consists of computers (nodes) equally privileged and open to everyone. These nodes communicate with each other remotely. The data exchange between these nodes takes place without a central server, meaning that each computer or node can act as both a file server and a client. In other words, P2P refers to decentralized networks of interconnected computer systems.
Cryptography
This ensures secure communication between nodes. This also allows nodes to verify messages and prove their authenticity, even when malicious players are around. Forming a chain of blocks is possible thanks to the use of cryptographic hash functions. A hash function is a mathematical algorithm (complex formula) through which any data of any length can be encrypted into a unique string consisting of letters and digits.
Consensus algorithm
This is an algorithm of rules according to which the blockchain works and transactions occur. This ensures that the data on the blockchain is true and accurate and the status is up-to-date. The consensus algorithm is the key to attaining reliability and building trust between all the nodes in the network while ensuring security. There are many types of consensus algorithms, for example, PoS (Proof-of-Stake), PoW (Proof-of-Work), and POI (Proof-of-Importance). There are pros and cons to different consensus algorithms, but it is a necessity to choose one.
Punishment and reward
A reward is needed to keep people interested in maintaining a blockchain network. It is typically a token (coin) given each time a consensus has been reached, and a new block is added to the chain. Punishment is also needed to save the network from bad actors who try to trick or manipulate the system.
Blockchain was invented as an alternative to outdated financial systems. Slow transactions, high bank fees, vulnerability, and mandatory intermediaries - a fundamentally new approach was needed to remedy those shortcomings.
#3 — How are blockchains used?
The use of blockchain increases the speed of data exchange, reduces transaction times, and improves the quality, availability, and security of services. Blockchain processes are reliable and secure and prevent information tampering.
Cryptocurrency industry
Blockchain technology is at the core of the crypto industry. In today's world, digital currency has become something like the realization of Friedrich Hayek's idea of private money. For example, Bitcoin and Ethereum have become widespread and are actively involved in financial transactions on the Internet.
Another process influenced by blockchain is tokenization. A token is a digital asset backed by a real asset and tied to its value. Token issuance avoids the costs accompanying asset transactions in the traditional financial market.
Banking sector
Many banks are developing their solutions based on blockchain technology. This allows for transparency, security, and reliability of financial transactions: money transfers, securities transactions, letters of credit, customer verification and identification, back-office operations, etc.
Theoretically, blockchain can reduce costs to banks by up to 50%. This was claimed by Morgan Stanley analysts back in 2017. They believed that blockchain technology could improve internal processes, drastically reduce costs and improve banks' return on equity.
Some banks that are reluctant to embrace innovation, are putting themselves at risk by ignoring blockchain. Its mass use could remove many third-parties from the financial arena.
Cybersecurity
Blockchain implies a vast system with many participants and computer nodes. Each one stores the entire database with constant reconciliation of data between the nodes. Therefore, hacker attacks cannot harm the system, as a simultaneous attack on all participants is technically impossible.
Digital profile
A person's digital profile is a set of personal data stored in the databases of various organizations. In other words, a person's digital twin. With the help of such a profile, a person can have access to a vast list of public services. Given the pace of blockchain development, the use of blockchain-ID may become commonplace in the foreseeable future for the modern generation.
Over the past few decades, European countries have devoted many resources to finding solutions that simplify administrative interaction with citizens. One way to streamline bureaucratic processes could be blockchain technology. At the same time, data security issues should be kept in mind because in the era of digitalization, they are more relevant than ever.
Digital voting
Voting involves the anonymity of the voter and the validity of the ballot. Blockchain can enforce these two points. That's why many countries are incorporating this technology in elections.
Record Keeping
Given the benefits of blockchain technology, it makes sense to use it for electronic document management. Not only does it allow for fast, transparent, and secure exchange of information, but it also reduces the cost of human resources.
Real estate
A lengthy ownership transition process accompanies real estate transactions. Blockchain work will eliminate intermediaries from this procedure, speeding up transactions for both buyers and sellers while saving the necessary data in the appropriate registries.
Public procurement
Deliberate misrepresentation, corruption, and fraudulent practices are common in this area. With the transparency that blockchain provides, all of this can be eliminated.
#4 — What is blockchain development?
There is a great demand for blockchain development and Web 3.0 engineers. This is because there is a significant need for dApps and smart contracts. But it hasn't always been this way. Blockchain has gone through 4 stages of evolution:
- Blockchain 1.0. In 2009, this technology was introduced and focused on solving double-spending problems by introducing cryptocurrencies.
- Blockchain 2.0. In 2015, the introduction of smart contracts and the concept of general-purpose programmable blockchains was developed.
- Blockchain 3.0. In 2017, a new generation of Blockchain applications appeared - dApps.
- Blockchain 4.0. Since 2019, both the scalability and interoperability of blockchains have been improving while integrating dApps with existing business solutions and blockchain technology with other advanced technologies.
Development of blockchain refers to building, maintaining, and designing blockchain applications. But it is also used to create unique solutions, for example smart contracts.
In the blockchain industry, the demand for blockchain developers exceeds the supply. There are still few blockchain developers who are well versed in the newest technology. It takes time to train them, so we have created a free Solana development course.
#5 — What does a blockchain developer do?
A blockchain developer is a programmer who makes various products using blockchain technology: smart contracts, protocols, decentralized platforms, and cryptographic tools. A Web 3.0 developer studies a company's technology needs and creates digital solutions to meet them.
#6 — What is a smart contract?
A smart contract is a computer analog to regular contracts. A special program (algorithm) performs actions when the parties to an agreement meet certain conditions, such as sending money to a seller when goods are delivered to a buyer of proper quality. Smart contracts provide the ability to securely exchange cryptocurrencies, money, securities, and other goods and services directly between parties in an agreement without intermediaries.
Smart contracts are most often used to buy/sell cryptocurrencies because of their more suitable (simple) terms of use. But with the widespread adoption of blockchain technology, synchronization of such platforms with other commonly used software, and legislative regulation of smart contracts, they could be widely used in many other areas, for example:
- Accounting and transfer of property rights
- Securities transactions
- International settlements
- Personal identification
- Financial accounting
- Processing payments on loans
- Checks on compliance of supplied goods with established standards
- Storage of medical data
The massive spread of the Internet of Things, where technology can be controlled remotely, makes the use of smart contracts virtually unlimited.
