How to Make a Blockchain: A Full Guide in 2024

From a buzzword to an invaluable business tool, blockchain has rapidly become a game-changer across all industries. FinTech, supply chains, healthcare, and even government tax monitoring — these sectors surely benefit from shared, digital ledgers.

Despite common misconceptions, blockchain is not just about cryptocurrencies and shadow money transfers. In fact, this technology is projected to become a $94 billion market by 2027. So, if you’re interested in how to develop blockchains, where do you start?

In this blockchain development guide, we’ll explore the process of making a blockchain, debunk some of the myths around this technology, and share insights based on our experience providing blockchain development services. With numerous blockchain-related projects under our belt, Unicsoft is here to answer your burning questions.

What’s inside the blockchain?

Imagine a chain of blocks, with each containing data that is impossible to change. This is your blockchain. Physically speaking, a blockchain is a chain of computers linked together to substitute a more traditional server. 

Each block in a blockchain contains:

Data – all details about the block and information to be stored

a hash – a unique digital “fingerprint” that identifies a block

A hash of a previous block – the one that creates a digital block and secures the whole blockchain

Blockchains can be:

• public (anyone can access them), 
• private (authorized users send invitations to join), 
• consortium (usually used by a network of business organizations, which is highly popular in the finance sector).

Apart from blocks and chains, you should know three more keywords in the blockchain basics — transaction, node, and miner.

• A transaction is the smallest block of records inside a blockchain.
• A node stands for one user or one computer inside the blockchain system.
• A miner is a node responsible for block verification (before this block gets added to a blockchain structure).

How can blockchain help my business?

As blockchain is very much transaction-oriented, so its key benefits are also about transactions (financial and not only). Blockchain makes transactions:

• More transparent
• More traceable for all the participants involved
• Cheaper and quicker

There are some other solid reasons why use blockchain, like:

• No risk with unreliable parties: all transactions are validated by the network, making it more secure and reducing the risk of fraud or errors
• Reduced commission costs: there’s no need for intermediaries, such as banks, resulting in lower transaction fees and commission costs
• Privacy: secure, encrypted transactions protect the privacy of all parties involved

Not to sound too abstract, let’s have some real-life examples.

First and foremost, blockchain is used for money transfers and other asset exchange purposes. It is secure, quicker (instant, actually), and much cheaper than any alternative transfer method.

Medical institutions use blockchain applications to send and receive sensitive medical information.

Blockchain helps artists instantly receive royalty payments for their creative work. Spotify is probably the best-known example of this arrangement.

Enterprises and charitable organizations work on blockchain to organize and perform secure and anonymous auctions to sell valuable assets.

The list could go on and on.

In a nutshell, if you need to set up online transactions that are transparent and secure, blockchain is always a solid option to consider.

What is a blockchain proof of concept?

When learning how to build blockchain, you don’t want to miss the blockchain proof of concept (PoC). It’s a crucial step in blockchain development that allows you to test your initial project idea and determine its feasibility.

A proof of concept is essentially a small-scale demonstration of what you’re planning to build. It must show that the proposed blockchain solution will work as intended. Other benefits of making a PoC before developing a full-fledged blockchain include:

• Reducing the risk of developing a solution that ultimately fails to meet the needs of its intended users
• Saving time and resources by identifying and addressing issues early in development
• Helping define the development team’s goals and tasks more clearly

Ultimately, a good PoC paves the way for successful full-scale blockchain solution development and implementation.

What are the main types of blockchain solutions?

As we mentioned earlier, there are many real-life examples of blockchain solutions across industries. Let’s look at some more applications in different sectors:

• Healthcare. Organizations use blockchain to securely store and share sensitive medical information, track pharmaceutical supply chains, and enable faster and more accurate diagnoses.
• Education. Educational establishments leverage blockchain solutions to create secure and tamper-proof student records, verify academic credentials, and facilitate secure payments for tuition and other fees.
• Real estate. Companies may use real estate blockchain-based solutions to streamline real estate transactions, reduce fraud, and enhance transparency in property records.
• Agriculture. Some common use cases may include tracking the origin and journey of produce, enabling greater transparency and accountability in the supply chain, and helping prevent food fraud and contamination.
• Banking. Blockchain facilitates faster, cheaper, and more secure cross-border payments, streamlines Know-Your-Customer (KYC) and Anti-Money Laundering (AML) compliance, and enables peer-to-peer lending and other financial services.
• Supply chain management. Some blockchain solutions in this industry might help to record all transactions and procedures, ensure the authenticity of goods, and enable real-time tracking of shipments.
• Enterprises. Companies can create transparent and secure supply chain records, improve inventory management, and automate contract execution, owing to blockchain solutions.
• Factoring. Blockchain can automate and streamline the factoring process, enabling faster and more secure invoice financing.
• Payments. Organizations can use blockchain to reduce transaction costs, create decentralized payment systems, and enable fast and seamless cross-border payments.
• Insurance. Organizations in this niche may leverage blockchain-powered solutions to automate claims processes, reduce expenses, and verify the authenticity of claims.
• Gaming. Companies can delve into developing decentralized gaming platforms, allowing players to trade in-game assets and securing all transactions.

What are the key steps in a blockchain development process?

If you want to implement one of the blockchain solutions, learn how to create blockchain infrastructure first. After determining key objectives and formulating subtasks, move on to the following critical steps:

Step 1. Feasibility study

You don’t want to initiate blockchain development before defining whether it will actually yield profits for your business. That’s why you should analyze your requirements and the market, as well as identify the potential risks.

How to figure out if blockchain is feasible? If you deal with a continuous supply of assets and sensitive documents, have loads of accounting-related tasks, or simply don’t want to depend on third parties — the development will likely benefit your company.

Step 2. Blockchain conceptualization

After ensuring blockchain software development is a good idea for your business, proceed to the conceptualization stage. This process involves the following:

• Choosing a blockchain architecture (a private, public, or consortium blockchain)
• Choosing a consensus mechanism (there are many, from Proof-of-Work and Proof-of-Stake to Proof-of-Authority)
• Choosing a blockchain platform (you can develop your own from scratch or modify an existing one; this process is also called forking)

Other considerations include development methodology and tools, programming languages, and project timelines.

Step 3. Blockchain development and QA

Once you’ve conceptualized your blockchain solution, the development team will build it. They will create smart contracts, design the user interface, work on the back end, and integrate the blockchain with external systems, if necessary.

You also need to ensure your blockchain solution’s flawless operation. So here comes the QA stage. Your team must carry out extensive quality assurance testing to ensure the developed blockchain meets the specified requirements.

Step 4. Full deployment

At this stage, your blockchain is ready for deployment. All you need to cover is configuring the blockchain network, deploying the smart contracts, and connecting your blockchain solution with the required nodes.

What tools are available for blockchain development?

Even if you already know that you will be outsourcing the whole blockchain development process, you still need to know the jargon and the key tools for blockchain development.

Solidity and Go (also known as GoLang, where Lang stands for “language”) are the two most common stacks used in blockchain development technology. Both are perfect for smart contracts and Ethereum blockchain platforms. Some developers would insist, though, that Python is the preferred language for smart contracts.

Geth — an Ethereum client that is used to run the nodes. It works equally well with Mac, Windows, and Linux. Once you have it downloaded and installed, you can create a new blockchain or link yourself to an already existing one.

When a blockchain runs on Ethereum, it needs a place to store tokens. The most well-known wallet is Mist; the Ethereum developers themselves once created it. Tresor and Ledger are often the most frequently mentioned alternatives.

Truffle Suite is a development environment and a testing framework for Ethereum works. Amazon, Microsoft, Airbus, and Starbucks — all these companies are using blockchains developed in Truffle.

Other critical blockchain development tools include those that help streamline DevOps processes, such as Docker, Kubernetes, and GitLab.

What are the hidden pitfalls and challenges in the blockchain development process?

Like any other sophisticated project, blockchain development might fail due to several misunderstandings or estimation mishaps. The most typical of them include the following:

• Building on a public blockchain instead of developing a private one from scratch
• Assuming that blockchain is a complete business solution in itself
• Using blockchain simply as cloud storage, disregarding its transaction properties
• Ignoring potential legal and governance issues
• Finally, banal FOMO — the fear of missing out and launching a blockchain project without a clearly written objective just because every competitor is doing it

Ever heard of the “blockchain trilemma”? These are the three other biggest problems businesses may encounter during blockchain development:

• Decentralization. While being one of the most sought-after reasons for building a blockchain, blockchains pose a significant challenge for the development team. Decentralization requires the network to reach a consensus on each transaction, and all nodes must validate each block of data added to the chain, making it a hard-to-implement feature.
• Scalability. As the number of users and transactions on a blockchain network increases, the system’s performance can degrade, causing delays and higher transaction fees. Blockchain developers face yet another challenge, deciding whether to increase block size without compromising processing speed.
• Security. Although blockchain is seen as a secure technology owing to cryptography and consensus mechanisms, it’s still vulnerable to hacking, data breaches, and fraud. Thus, developers must take robust security measures to ensure the blockchain network’s integrity.

How much does blockchain really cost?

The cost of a blockchain always depends on two key factors — the complexity of a project you have in mind and the way in which the blockchain would be developed.

You can organize blockchain development in at least three ways:

• Hiring developers in-house (usually recommended for data-sensitive projects)
• Hiring freelancers
• Hiring a blockchain technology development company

Speaking about the project-related factors that influence the cost, you should definitely consider the following:

• Blockchain architecture type (private, public, or consortium)
• Consensus mechanism type used
• The number and complexity of functional modules (dApps, smart contracts)
• The number and complexity of web/mobile applications used
• The number and complexity of integrations via APIs

Very rough estimations of a blockchain budget, as of 2022–2023, range between $30,000 and $250,000.

Costs are lower in the cases of public blockchains that heavily rely on open source code. However, only a few businesses would find this solution comfortable enough for their purposes.

Core layers of blockchain architecture

Blockchain architecture consists of several layers, but you don’t need to program all of them to set up your solution. Some layers are entirely optional, like an incentive layer that distributes rewards earned by hashing the nodes. 

We’ll focus on the six most critical layers.

Physical layer

Blockchain infrastructure is an unalterable, decentralized peer-to-peer (P2P) ledger distributed across computing devices (i.e., computers, servers, IoT devices), known as a node. These nodes make up the physical layer and are usually equipotent, meaning they are equally privileged participants in the network.

Transaction in a blockchain network requires a lot of computing resources. That’s why the physical layer consists of nodes that share their processing power to, for example, validate transactions. Having many nodes helps deal with sizeable blockchain hardware requirements.

The physical layer makes blockchain technology much more crisis-resistant than traditional financial systems. Each node maintains an independent copy of the entire blockchain ledger. This way, you can quickly restore your entire network if something happens to your database.

Data layer

The data layer regulates how the network stores, processes, and hashes the transactions in a network. It consists of two components:

• Data blocks. These data structures combine and distribute sets of validated transactions across nodes.
• Merkle trees (binary hash trees). This technology groups transactions into pairs and encodes them with a cryptographic hash. One transaction in the pair (the leaf node) contains a data block hash, and the second one (the branch node) has a fragment of the previous node’s hash.

In simple terms, data blocks and Merkle trees apply digital fingerprints to groups of transactions. This helps users verify operations in a data block without downloading the whole blockchain network (which can measure in the hundreds of gigabytes).

Network layer

This layer regulates access and interaction with information in the blockchain: how nodes connect to the blockchain, transmit data, and verify transactions. The available network types include the following.

• Centralized networks use a single point of contact for storing and processing information. Having a single contact point slows access to resources and reduces the resiliency of the blockchain because the network owner maintains all copies of the database.
• Decentralized, non-distributed networks allow multiple owners to have a copy of the resources. However, parts of the blockchain are still stored in one physical location, so speed and resiliency are not optimized.
• Distributed networks collocate the whole infrastructure across multiple computing devices.

Non-distributed networks have clearly defined command chains and authorization levels, simplifying deployments and maintenance. But it’s the distributed network that’s primarily associated with blockchain, as it provides the most flexibility, best performance, and highest protection against data loss.

Consensus layer

Consensus mechanisms ensure that all blockchain nodes and transactions follow the same rules. This helps the network maintain uniformity and mitigates the risk of fraudulent activity; it’s almost impossible to tamper with information if it’s identical across multiple nodes.

You can use different consensus models based on your blockchain infrastructure requirements. Here are the most common ones:

• Proof of work (PoW). In this consensus protocol, participating nodes validate transactions by solving cryptographic (hashing) puzzles using their computing power. It’s widely popular for cryptocurrency mining, as the nodes are rewarded proportionally to their input. On the downside, PoW requires enormous computational resources and energy, which must increase as new nodes join the blockchain.
• Proof of stake (PoS). Node owners stake cryptocurrency to validate transactions, and those with larger positions (more coins) have higher odds of winning. It doesn’t require solving complex computational tasks and, therefore, is much less resource intensive. However, node owners must have significant capital to become validators, and smaller blockchains are more susceptible to a 51% attack.
• Proof of burn (PoB). Users validate nodes by sending their cryptocurrency to an inaccessible address. PoB promotes regular activity in the network and consumes few resources. Still, this option requires long-term commitment, as node owners must sacrifice their short-term wealth for long-term profit.
• Proof of authority (PoA). Users validate transactions personally, putting their reputation on the line. PoA is one of the least costly options with minimal computational requirements, which makes it an excellent option for private blockchain infrastructures.

There are many more consensus protocols, with new and evolving algorithms emerging as the technology matures. Therefore, you should weigh the advantages and shortcomings of each mechanism before you set up a blockchain infrastructure.

Contract layer

A smart contract is a self-executing algorithm that controls, documents, and executes activity in the network. This component of blockchain architecture allows conducting transactions without a central authority or other external enforcement mechanisms.

Smart contract algorithms help users trade and exchange cryptocurrencies in real-time or can act as independent custodians by releasing digital assets from storage based on customizable criteria. Smart contracts can also be programmed to only perform actions under specific conditions (like trying to validate data integrity when critical issues occur).

Application layer

he application layer has tools and software that let your application communicate with a blockchain network (or with multiple networks). The components of this layer include:

• A user interface for your application’s end-users
• Security measures (such as firewalls, network logging tools, and intrusion prevention systems)
• An application server to host your business logic and optimize the application’s performance
• An application programming interface (API) for third-party services integration

And here’s something exciting: Developers can build their software on the application and contract layers, and then connect it to existing blockchain networks. This option lets you get around the most challenging part of blockchain development.

Key challenges of blockchain infrastructure development

Blockchain technology has many aspects that make development much more complicated and costly than the development of traditional financial systems. Here are some factors to consider as you plan your project.

Blockchain security

Despite its resiliency, blockchain technology is vulnerable to hack attacks and exploits. As noted in Deloitte’s 2021 Global Blockchain Survey, 68% of companies surveyed consider data security and privacy as the biggest obstacles to blockchain adoption.

Your blockchain is only as protected as the smart contracts underlying it. What’s more, you can’t modify your smart contract algorithms after releasing them to the blockchain. As a result, any bugs or vulnerabilities in the contract layer can be exploited to disrupt your network or steal your users’ data or cryptocurrency.

An experienced team can help you build bug-free and secure algorithms for your blockchain solution. You also need to introduce additional safeguards, such as a multi-signature scheme for executing administrative functions on smart contracts and timelocks to restrict operations if necessary.

Interoperability problems

The choice of programming language and framework is a vital part of blockchain infrastructure development. Your smart contract’s code may not be compatible with all networks. In addition, the more layers you have, the more complex it becomes to implement your solution with other blockchains.

One remedy would be to use a flexible tech stack that works with the most popular blockchains. For example, many projects are built on the Ethereum Virtual Machine framework and Solidity to integrate with the Ethereum-based networks. 

You can benefit from less resource-intensive options, like Polkadot or Solana. Another alternative is to use a Hyperledger Fabric framework for advanced supply chain tracking, incentives, and financial asset management.

Governance and compliance

Distributed P2P transactions and cryptocurrencies are still largely unregulated, making them prone to infrastructural mishaps. According to Deloitte’s 2021 survey, 57% of companies struggle with industry-specific regulations (like FDA, GLBA, and HIPAA), while 48% are concerned about complying with regional laws (the US Patriot Act and GDPR in the EU).

Compliance and transparency are vital requirements of your blockchain infrastructure. You should implement tools that log blockchain-related activities and access attempts. You should also set up security policies and procedures that alert your IT team and risk managers about system anomalies.

Complex infrastructure management

Blockchain applications depend on real-time processing and hashing requests. Therefore, a critical stability issue or sudden server unavailability may interrupt a critical cryptographic process.

You should apply effective infrastructure management practices to maximize your network’s uptime. Leading companies apply DevOps practices to infrastructure provisioning, like database load balancing, maintenance automation, and configuration management.

Additionally, you can segment blockchain pilots on dedicated racks designed for specific purposes. This lets you test network behavior and configurations on different applications without disrupting the system.

High blockchain infrastructure costs

Commercial ledgers that don’t use the PoW consensus model might not require as much computing power as cryptocurrency blockchain. But establishing uniformity and trust in your network still requires significant resources if you’re developing several layers of your blockchain (including the data, network, and consensus layers). At the same time, your database and infrastructure maintenance costs grow as you add nodes to your network.

That’s why you need to factor in many costs as you plan your development, including:

• Computing resources, input/output, and OPEX costs (like floor space, cooling equipment, and energy)
• Storage capability and increasing load on your network
• Processing capacity and extra network expenses required to integrate your enterprise applications with the blockchain
• Ownership and license costs for monitoring, logging, and troubleshooting software

Considering all these blockchain requirements, creating an entirely new network may be prohibitively expensive for many businesses. But there’s a less costly and equally reliable option.

Setting up blockchain infrastructure with Unicsoft

Most companies don’t need an entirely new blockchain infrastructure, which would require way too many resources and too much time. Instead, these companies can opt for an application that communicates with existing networks.

Composability is a massive advantage of blockchain technology. Composability means you develop an application layer (front-end), develop a contract layer, and then enhance it with publicly available services via APIs. This way, you get an immutable and risk-tolerant database without spending a small fortune on expensive components like hardware, a network of nodes, and sophisticated consensus algorithms.

So, how can we help you? Unicsoft focuses on blockchain projects of varying complexity, from application-level solutions to private networks. Our team was recognized as a top blockchain developer by TopDevelopers, Gartner, and Goodfirms. 

Take our AlphaWallet project — a crypto wallet for digital asset management. Our team made sure the application supported the TokenScrip standard to create customized interfaces for different tokens. We then integrated the app with popular decentralized crypto exchanges. Finally, AlphaWallet works with a wide variety of Ethereum networks and cryptocurrencies, and non-fungible tokens (NFTs). 

We made a development roadmap for the NFT marketplace. This required us to compose the system architecture and ensure everything followed legal requirements. The platform was designed to be integrated with Solana blockchain for its fast payouts and minimal fees. Our team also made sure it could integrate with proprietary digital wallets, price data providers, and NFTs created on other networks.

Conclusion

Although creating a blockchain might be challenging, it will drive your business forward with the right team and approach. Hopefully, this blockchain development guide has helped you figure out how to revolutionize your company with this cutting-edge tech.

And if you still have questions or doubts, let us clear them out!

If you aim to elevate your business to the next level, look no further. With Unicsoft, a leading provider of blockchain development services, you can enhance transparency, security, and efficiency in your transactions. Don’t hesitate to contact our team to learn more about how blockchain can benefit your business.

FAQ

Is blockchain easy to develop?

Due to its decentralized structure and the demand for advanced cryptographic algorithms, blockchain application development might be challenging. It also presents development difficulties like the need to ensure security and scalability. Nevertheless, with the help of experienced developers and proper tools, it’s possible to build top-notch blockchain apps.

How much does it cost to develop a blockchain?

The complexity of the project and the engineering team’s experience dictate the cost of blockchain development. As a result, the final price ranges from $30,000 to $250,000 and above.

How long does it take to develop a blockchain?

Again, this depends on the complexity of the project itself. Developing the proof of concept usually takes from two weeks to two months. The launch might take up to three months. The timing can be extended if you hire several freelance developers working from different places. In most cases, hiring a readymade team from a blockchain technology development company would be the fastest option.

How can blockchain implementation help my business?

Blockchain development offers several benefits for businesses, including increased transparency, improved security, reduced transaction costs, and faster transaction processing times. It also helps companies ensure privacy and eliminate risks with unreliable parties.

What is the difference between a public and a private blockchain?

A public blockchain is open and accessible to everyone, while a private one is restricted to a specific group of participants. The use cases of public blockchains are typically limited to cryptocurrencies. Conversely, ‌private ones are commonly used in enterprise settings where data privacy and control are a priority.