What is a blockchain?
Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a network. An asset can be tangible (a house, cash, a parcel or land) or intangible (intellectual property, patents, copyrights). Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.
How it works
A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. Each time a transaction is made, it is logged in the blockchain as a “block”. Cryptography is used to secure each block, and each new block is linked to the previous one, forming a “chain”. This ensures that each transaction is unique and cannot be tampered with.
The distributed nature of blockchain means that there is no central authority or middleman needed to approve or verify transactions. This makes it a very efficient and secure way to conduct business.
Different type of blockchains
There are four main types of blockchain networks: public, private, permissioned and consortium.
Public blockchains are open to anyone and are completely decentralised. Bitcoin is an example of a public blockchain.
Private blockchains are permissioned, meaning that only authorised users can access them. They are often used by businesses who need to control who has access to their data.
Permissioned blockchains are a hybrid of public and private blockchains. They are partially decentralised, with a group of authorised users able to access the data.
Consortium blockchains are also permissioned, but instead of having a single entity in charge, they are run by a group of organisations. This type of blockchain is often used in industries where multiple parties need to access and update the data, such as the banking sector.
A few advantages of blockchain technology
- Increased security: with blockchain, there is no central point of failure, making it incredibly difficult for hackers to exploit vulnerabilities.
- Tamper-proof: Once data has been recorded on a blockchain, it cannot be altered or deleted, making it an immutable record.
- Enhanced transparency: Blockchain provides a transparent and audit-able record of all transactions.
- Faster settlements: With blockchain, there is no need for third-party intermediaries, which can speed up the process of settlements.
- Reduced costs: Blockchain can help to reduce the costs associated with traditional middlemen, such as banks and lawyers.
What is blockchain development?
Blockchain development is the process of developing applications or platforms that use blockchain technology. This can include developing a new cryptocurrency, creating a decentralized application (DApp), or building a smart contract platform.
Layer 1 and Layer 2 development
Layer 1 development is concerned with the underlying infrastructure of a blockchain network. This includes the development of the blockchain itself, as well as the protocols and APIs that allow users to interact with it. This is typically done by the community of a blockchain network and involves very complex development processes.
Layer 2 development builds on top of the layer 1 infrastructure to provide additional features and functionality. This can include developing payment channels, Lightning Network applications or off-chain data storage solutions. Business can take advantage by setting up a private blockchain to host business processes on.
Both layer 1 and layer 2 development are important in order to create a robust and complete blockchain ecosystem.
Five example use cases of layer 2 blockchain development for businesses are:
- Developing a private blockchain for business processes
- Building a payment gateway on top of a blockchain
- Creating an off-chain data storage solution
- Setting up a Lightning Network for faster transactions
- Developing an application that uses blockchain technology
Blockchain developers are responsible for building and maintaining blockchain applications. They work with clients to understand their needs and requirements, and then design and develop custom blockchain solutions. In addition to developing applications, blockchain developers also need to be able to troubleshoot and solve problems that may arise.
Blockchain technology is still in its early stages, and there is a lot of potential for growth and innovation. If you are interested in working with cutting-edge technology contact us to discuss your business case!