How to create a blockchain

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The first step is to decide what purpose the blockchain will be used for, how it will be used, who will control it, and what level of anonymity is required. The answers to these questions directly determine the choice of blockchain architecture and the complexity of the project. It could be the creation of a new decentralized cryptocurrency, an open public registry of property rights, a closed corporate network (like a bank) or something else.

Types of blockchains

There are three types of blockchain based on the degree of openness.

Public. For example, Litecoin, Ethereum, Bitcoin. All users have equal rights. Everyone can access the network, see the history of transactions, and participate in the consensus algorithm. Anonymity is conditional (80% of network clients can be calculated). It is a fully decentralized blockchain with no privileged nodes. The best basis for new coins.

Hybrid. For example, Bitshares, R3 CEV. Users have different rights. Only selected nodes can make changes, which are assigned by developers (sometimes can be chosen by voting). History can be viewed by all, but there can be hidden entries. Suitable for corporate networks which want to protect the privacy of their clients.

Private. For example, Mijin (fork of NEM). All users have equal rights, but a limited number of people have access to the registry history. Permission is granted by a central organization, which may consist of one or more validators. A closed network is characterized by fast transaction processing, as there is no unnecessary burden in the form of mass viewing of transaction details. Suitable for corporate projects. Makes it easier for classic financial institutions to enter the world of crypto technology.

How to create a blockchain openly on a smartphone.There are 4 main types according to the consensus algorithm.

Proof-of-Work 

The proof-of-work principle allows a block to be completed and rewarded to the node with the largest computational contribution. Characterized by high commissions and power consumption, slow speed of transaction processing. Requires powerful specialized equipment to support miners.

Proof-of-stake

 According to the share proof principle, the user with the largest amount of blocked funds in the protocol becomes the transaction validator (blocking time is also taken into consideration). It is considered the most environmentally friendly, since it does not require computing power on an industrial scale. High transfer speed, low fees, easy scalability.

Proof-of-authority

 In case of proof-of-authority, nodes with high merit and rating become validators. Good for private blockchains due to high degree of centralization, no need to stack coins, solve complex tasks to validate transactions.

Proof-of-burn


Proof-of-burn implies that the node that destroyed the most coins gets the right to verify the transaction. By burning the currency, the user demonstrates commitment to the network, gaining the right to mine. This is essentially a greener and less energy-intensive version of the PoW algorithm.

Step-by-step development plan

The plan will vary greatly depending on the goals, tools chosen, and additional features. However, the initial stage will be the same for all. It will be considered.

Write a class to process the blocks at the moment of starting the nodes.

Configure local chain synchronization.

Configure the blockchain display in the browser.

Write algorithms for generating new blocks and connecting them with previous blocks.

Prescribe requirements to the block hash structure if the PoW algorithm is used.

Implement consensus algorithm.

An example of the hashing algorithm for the blockchain.After that you can directly engage in the development of cryptocurrency solutions, smart contracts (technology NEM, Ethereum, Stellar), integration with mobile applications.

Team Recruitment

Cryptoprojects can have up to a hundred employees, most of whom work remotely, but to start is enough to hire 6 people.

Here are their positions.

Programmer. System programming skills, knowledge of Java, C/C++. You can speed up and simplify development by taking an existing coin, like Ethereum, as the basis. Then, to write smart contracts in EVM, you need experience in Solidity development. Look for such employees on GitHub, ask for contacts from the projects that have already successfully implemented ICO/IEO.

Marketer. Must be able to find new partners and audiences, as the market is already too crowded, supply outstrips demand. Proficient in lead generation, including Yandex.Direct, Google Adwords and their analytical sections. Obligatory knowledge of foreign languages (at least English). Understanding of the market conjuncture, knowledge of the leading projects, their features and weak points.

Bounty Manager. Develops partner, bonus programs for all wishing to promote the project earning on it. He is to attract opinion leaders from the social networks, professional journalists and offer them special partner conditions for advertising. All bonuses are usually paid in coins or tokens of the launching project, so there is no need for additional budgeting.

Whitepaper copywriter. Must comprehensibly describe the concept of the project, all of its technical, economic, marketing details. The quality of the whitepaper directly affects the number of interested users, the level of initial trust. The more detailed and structured is the presentation, the easier to sell the idea. The copywriter should go into all the subtleties of cryptoeconomics, so it is better to hire a journalist with financial experience.

ICO/IEO manager. Any public project sooner or later comes to the stage of initial coin offering. This is an important stage of external financing, on which the development of the startup in the next year depends. A correctly held IEO will not only fill the company’s accounts, but also create a large community of adherents of the project, who will support and promote it free of charge. The tasks of the manager include support at all stages, from sketching a whitepaper to listing on the stock exchanges.

Market Analyst. The specialist must predict the movement of cryptocurrency rates. Thanks to him, the startup will adjust its ICO/IEO strategy, reinvest the funds received from investors to get more profits in the future. The minimum experience is 5 years.

This is the backbone around which the project will develop. In the future, there will be new employees, including tech support, pr manager, security specialists, content manager, community leader, etc.

What kind of budget is needed

Hourly rate of blockchain programmer varies from 2000 to 10000 rubles/hour. You will have to pay from 300,000 to 10,000,000 rubles for the development and execution of the ICO (only blockchain and personal investor account are included). You will need to allocate a separate budget for marketing and legal support.

The minimum amount for launching the simplest blockchain project is 1,000,000 rubles. But you should understand that low-budget projects have no chances for fast takeoff, listing on top exchanges, multimillion-dollar fees on IEO. But it may be enough to start a small private network, which will support the effective work of the company of two dozen employees.

To start developing projects with a view to the global scale (like WAVES) will require from $700 000. If you have a weak product, not recruited a team, no successful previously implemented projects, track-record, it is impossible to become a prominent player in the crypto-world with a budget of $100 000.

Marketing

Professional blockchain marketing is a set of activities that ensures the implementation of the project from A to Z. It includes the following areas.

Creation of economic model of the project on the basis of certain business logic.

Development of a business plan.

Development of a roadmap with all technological features.

Working through the Whitepaper, documents for seed and public investors.

Analysis of potential competitors, market situation. Elaboration of the target audience.

Preparation of the startup financial model, IEO-strategy.

Creation of a demo version of the site, copywriting the main texts of the project.

Thorough analysis and elaboration of all items takes from 3 to 6 months of work in close contact with the founders.

Attracting developers

For a startup with a modest budget you can invite beginners without an impressive track record. The main qualities are responsibility, passion, and talent.

Professionals with great experience and a big name will have to be enticed away from major projects. At the same time their current employers will do their best to keep them in their current positions. Only ambitious tasks, a wide range of powers and money can interest them, so only rich companies can afford such headhunting. The salary of a lead specialist is as high as $5,000 a month.

Perspectives on New Blockchains

New blockchains are becoming faster, easily scalable, and offer unlimited possibilities for the development of dApps and the development of the DeFi sphere. Among them are the following projects.

Avalanche. Allows developers to release public and closed blockchains, customizable programming language, convenient virtual machines for developing smart contracts. Handles 4,500 operations per second, and soon the number will be brought up to 20,000.

Fantom. Solves the scalability problems of ethereum. Uses two consensus algorithms (aBFT, PoS) at the same time. Conducts 300,000 transactions per second. Fantom can easily integrate into any other blockchain as a consensus module if needed. It is compatible with EVMs.

Elrond. A platform for launching smart contracts, developing fast DeFi-sector applications. Special sharding technique allows to increase network speed up to 15,000 transactions per second. Future plans call for an increase to 250,000.

When modeling the new blockchain system, it is important to determine right away which of the current serious problems it will solve. Just another Bitcoin or Ethereum clone will not interest anyone.