Your Own Blockchain: Difficult, But Very Desirable

From the very beginning, the development of blockchain projects was a matter of the chosen ones — people who not only possess expert knowledge in cryptography and programming but also know how to create something new. Such specialists were Satoshi Nakamoto and Nick Szabo, David Chaum and Adam Back, Vitalik Buterin and Gavin Wood.

Nowadays, the threshold for entering the circle of creators and developers is, of course, lower: there are manuals and detailed specifications written in accessible language; open standards make it easier to master specific technical details; forums, seminars, and meetings are being held; finally, there are special courses and classes. Technology is developing and acquiring a systematic set of knowledge and tools.

However, even now a person who wants to use the benefits of the blockchain in his own business, social activities or just for the sake of curiosity, requires specific experience and skills. In this series of articles, BNT would like to help such people and talk about some important steps that should be taken before starting, in which direction they should move to complete their blockchain project.

First steps

It is impossible to create something in the field of decentralized and cryptographic technologies if there is no basic knowledge about the blockchain, cryptography, distributed systems, their benefits, advantages, strengths and weaknesses, prospects, opportunities, and future challenges. However, regular Bitnewstoday readers should have an idea about the essence of cryptocurrencies, popular and new blockchain projects, latest news in the field of development, implementation, and regulation in the industry.

Why blockchain?

The next step is to determine what exactly the blockchain or other distributed ledger technologies (DLT) are needed for. The experience of many projects proves that there are areas of application where the benefits of implementing blockchain systems are not indisputable, raise doubts and objections, and take a long time to gain proven advantages in the evolutionary process.

At the same time, in some areas, the blockchain already has a good reputation and can be recommended for use. For example, most experts believe that distributed registry technologies are well suited for digital storage systems or authorization services.

Projects that offer various methods of accounting, transfer, storage, and distribution of assets, both digital and physical, are quite common and successfully operating. Another very important and promising direction is smart contracts, since they can be used to create a variety of flexible, reliable, and powerful services.

Platform and consensus

At this stage of creating your blockchain, you need to choose a consensus mechanism and a platform. These are interrelated steps because the chosen method of confirming transactions and recording them in the registry will result in the need to decide on a specific ecosystem to support it.

The importance of choosing a consensus mechanism is that their different types imply different requirements on the network architecture, equipment capacity, determine the timing of transactions and the cost of use.

Proof of Work — each owner of a full network node calculates a complex mathematical task (its complexity grows with the increase in the number of users), spends a lot of energy, requires payment of its contribution. In return, the entire network receives an unbreakable support algorithm and a very reliable storage structure. 10 years of Bitcoin experience is a confirmation of this.

Proof of Stake — node owners must have a certain amount of tokens in their wallet or account, no less than a predetermined number of digital coins. For such a contribution, they receive the right to confirm transactions, generate new blocks, and receive transaction fees.

There are different variations of the Proof of Stake and BFT (" the Byzantine generals problem"): DPoF, SBFT, DBFT, and many others. All of them involve lower energy consumption, different requirements for network nodes, different (sometimes controversial) reliability and levels of decentralization, but each has its supporters and opponents.

A platform such as BigchainDB uses the BFT consensus mechanism in its implementation by the Tendermint project. Hyperledger Fabric allows the user to choose the necessary consensus mechanism from the whole set. Corda uses two different ways of consensus: to confirm the uniqueness of the transaction and to verify the value. Multichain uses a round-robin load balancing algorithm that is similar to BFT. Quorum also applies a separate variation of consensus, which has common features with BFT.

Other platform features

Some platforms allow you to create closed type (permissioned) distributed ledgers only. In this case, members who have received administrator permission get access to the system exclusively. When working with others, the user has a choice - you can deploy and open (permissionless) system.

In this case, the giant blockchain industry like Ethereum stands apart. Even though most of the projects mentioned above do work using the infrastructure and mechanisms of Ethereum, it fits the definition of a separate ecosystem for creating blockchain projects itself.

Its features are: the Proof of Work consensus mechanism (with the introduction of the Casper update, the migration to Proof of Stake will begin), the type of network is permissionless (open), and a well-developed and documented system of smart contracts.

To be continued

In the following articles, BNT will continue the story about the next steps in choosing the right platform for creating your blockchain and on the further stages of preparing for its launch.

Image courtesy of: Venture Aviator