Before starting a Blockchain Startup
Imagine leasing out un-utilized space on your laptop’s hard drive to businesses and people around the world can use it .And you making profits in return.
Blockchain has opened up many new possibilities and what we have seen so far in the blockchain tech is just the tip of the iceberg.
Welcome to the world of dApps!
You must be already wondering, “Well, what are dApps?” For starters, Decentralized Applications are a new type of software applications that are not owned by a central authority, but shared and synchronized among the members of a decentralized network. and more importantly cannot be shut down by anyone.
The applications built on the Ethereum are Dapps most likely.
Ethereum proposed to utilize blockchain technology not only for maintaining a decentralized payment network but also for storing computer code which can be used to tamper-proof decentralized financial contracts and applications.
Dapps on Ethereum are web applications backed by Ethereum smart contracts. Instead of using a centralized server or database, these applications rely on the blockchain as a backend for program logic and storage. This leads to potentially unstoppable applications. anyone can deploy a copy of the frontend, and freely connect it to the public Ethereum network. these are the open sourced application with a revenue model.
How decentralised applications works …?
In order to understand how a decentralised application works, let’s first look at how a web application works in the internet we know.
To access the web application, you would use a web browser that would communicate with a web server over the Internet. The server contains all of the code and data of that particular web application.
You would find Client side files in HTML, CSS, and JavaScript. Back end code responsible for the application’s business logic on the server.
This server is a centralized entity that full control, over the every aspect of the web application. Anyone with full access to the server can change any part of the code or the data at any time.
Traditional websites: Front End → API → Database
but the when it comes to the Dapps these applications works quite differently, All the code and the data of the web app does not lie on a centralized server. Instead, it is distributed across the blockchain.
The frontend of a decentralized application represents what you see, and the backend represents the entire business logic. This business logic is represented by one or several smart contracts interacting with the underlying blockchain. The frontend, as well as files like a photo, a video, or audio, could be hosted on decentralized storage networks such as Swarm or IPFS.
Decentralized applications are similar to a traditional Web application. The frontend uses the exact same technology to render the page. It contains a “wallet” that communicates with the blockchain. The wallet manages cryptographic keys and the blockchain address. Public-key infrastructure is used for user identification and authentication. Instead of an API connecting to a database, wallets ware triggers activities of a smart contract, which interacts with a blockchain.
Decentralised web applications : Front End (including wallet) → Smart Contract → Blockchain.
Source: ‘Ethereum Stack exchange
Types of decentralized applications
Based on the blockchain model that is leveraged, decentralized applications can be classified into three categories:
Type 1:
These dApps have their own blockchain, for example, Bitcoin. Other alternative cryptocurrencies with their own blockchain also fall under this category.
Type 2:
This breed of dApps leverages the blockchain of Type 1 apps. These decentralized apps are protocols and have tokens necessary for their functioning. The Omni Protocol is the best example of a Type 2 applications. Omni is a distributed trading platform developed on top of the Bitcoin blockchain as a ‘layer’ to facilitate ‘peerless, trustless, and effortless’ exchange of assets between parties without involving middlemen.
Type 3:
Type 3 dApps use the protocol of the Type 2 application. The SAFE Network (Secure Access for Everyone) is an example of a Type 3 dApp. It is a decentralized data storage and communications network that replaces data centers and servers with the additional computing resources of its users. It is an autonomous data network that enables the creation of censorship-resistant websites and applications.
Steps to Build a blockchain start up
The dApp development process is not as straightforward as the process to build a centralized application or traditional software. The steps to create a decentralized app are discussed in the following sections:
Step 1
The first step in the dApp development process is to identify the right business use case. The best way to start is to identify the problem and analyze if decentralization is the best way forward or not .
Lets pick a “Healthcare sector to understand it more clearly. assume that we have an idea of software which stores the patient data of medical records and medications and dealing with their medical insurances . “
Here the Blockchain has five benifits to deal with
- Encryption
Immutability
Distribution
Decentralization
Tokenization
If you are thinking of a problem that you want to solve, atleast two of the above components should be a part of your solution. Do you need encryption? Do you require immutability? Do you want the information to be decentralized or distributed? This is how you need to think about the problem you are solving.
Step 2
The second step is to create a proof of concept (POC) so that stakeholders understand the idea. Once you have established the POC and demonstrated it to the right people, you need to create visual and technical designs.
You should keep the POC small if you have to create a smart contract or user interface to demonstrate how the end-to-end cycle works.
Step 3
After the POC is completed, start working on the visual and technical designs and identify how the platform will look like. The technology side of the dApp development is crucial as there are multiple Distributed Ledger Technology (DLT) platforms available. You have to ensure that you have picked the right platform based on your requirements of speed, scalability, consensus mechanism and public or private network functionality.
Step 4
Once the development is completed, first launch it on the test network, scrutinize the code rigorously, and fix any bugs or errors before going live.
Step 5
Launch your dApp on the production server after you have tested the code and functionality and when you are sure that it will function as per your expectations. Remember, there is no room for errors in the production environment, unlike a traditional app for which you can write the code, deploy the app and then modify it again whenever needed.
In the case of a public blockchain, every action executed on a live smart contract has a certain gas fee associated with it. Therefore, it is essential to ensure that the codes are written efficiently and have no errors.