Blockchain is a fairly new technology that many people only associate with cryptocurrencies, but it is being used in many different areas especially finance. Blockchain attempted to exclude the human factor from transactions, which is why the industries that have been most successful in using it are ones that rely heavily on human intervention and suffer most from human errors.
Fintech businesses have been opening at quite a rate. They deal with a matter close to most people hearts – money. It is also with money that most fraud happens, so removing the human element from financial transactions should reduce the number of frauds that happen. Most people want to be richer, and that pushes them to do things that they would not normally risk. Sometimes these are bad things.
Should You Build Blockchain?
There are pros and cons of building blockchain, which is still a mystery to some people. If you want to attract investors, increase your competitiveness in the market or are ready to experiment then blockchain could be the way to go.
However, if you are on a tight budget, are not ready to make significant changes or only have a short-term vision, then blockchain is not for you.
For those of you not ready for blockchain, IT vendor management could be a better option. This is a function that is designed to drive innovation in bringing new and advanced technologies to business. A true vendor management strategy will align vendor success to the value of the business and create efficiency with external partners.
The Tools for Building A Simple Blockchain
To build a simple blockchain there are three tools you will need, and you will need to know a computer language. Ethereum is an open software platform designed for building decentralized applications and its focus is running the programming code of your app. Cryptonote is an open source project that allows you to create crypto coins, but to launch it you will need two nodes that will be used to run the Monero server. ZeroNet is utilized for creating decentralized websites. These cannot be censored, forged or blocked.
To understand the processes of building a blockchain you will need to know what the terms used mean.
The date of creation is current and in Unix format. It is needed for the future development of your blockchain when there are many nodes running and you add a new block. The node will use the date of creation to decide which block to use.
The nonce is a set of symbols that are unique and they are needed to add the block to build the checksum that fits its requirements. The checksum, which is sometimes called a hash value, is a simple hash. It is block data with nonce plus checksum of the previous block. This prevents the ledger from being changed. It works by the node calculating the checksum and comparing it to the new block. If they match, the block is added to the blockchain.
The data stored can be of any type from financial transactions to information. Finally, there is proof of work. This is a unique consensus algorithm in a blockchain network. Its use is to validate operations and create new chains in the blockchain network.
First of all, a class has to be created for the block. This will be a very simple class with a constructor, a method for calculating the checksum and a property that will check the validity of the block. A constructor will only accept two parameters – the previous block and the current block’s data. It will also create the time mark and set the nonce to a zero value.
Calculating the checksum is one of the most complicated parts of the process. It needs to pack the time mark, data and checksum of the previous block to one string. Then you need to add a nonce string, which will calculate the checksum of the resulting string.
Now a simple but fully functional block has been created and the next move is to create a chain of blocks. This first block is known as the genesis block and has only a checksum. This is needed because to add more blocks the checksum of the previous one is always needed.
To add a new block all its need is its data. A new block will find a correct nonce value and then will append to the chain. To validate the blockchain, all blocks are checked to make sure they are valid.
This may all sound very complicated but in practice, it is much simpler than it sounds.