As benefits of blockchain technology come to the foreground, companies worldwide are looking at how they can implement it into their existing business models. According to IDC’s Worldwide Semi-Annual Blockchain Spending Guide, the total spending in this particular technology domain will reach a figure of $9.2 billion by 2021, with a five-year CAGR of 81.2%.
Although the technology holds huge promise, many people are still struggling to understand how to build a blockchain solution into their existing infrastructure. This article will look into jus that.
Step 1: Identify the problem that needs to be addressed
Before understanding how to build a blockchain solution, it is imperative to know why such a solution should be built. It is important to understand the types of solutions that blockchain technology can be applied to. It is not that every problem can be solved using the distributed ledger technology. Many companies are developing systems more out of curiosity, rather than driven by the idea of delivering customer value. So, look into the use case and assess what the potential solutions might be. Will implementing blockchain help your company omit tedious processes that cost you significant time and money today? Will it offer a competitive advantage for your firm? Most importantly, will it satisfy your customers?
Step 2: Define the architecture to address the use-case
Companies implement the solution with either inside or outside help. So, now is the stage to determine your budget, deadline and whether you will use internal resources or outsource the work to other tech companies. It would be wise to set up an exploratory group or an advisory panel to look into such decisions. The team should include lawyers who are well-versed in the legalities of blockchain implementation.
Step 3: Define the consensus mechanism
According to your business model, the ideal consensus mechanism has to be chosen. Today, there are multiple distributed ledger systems with varied consensus mechanisms, such as Proof-of-Concept, Proof-of-Stake, Proof-of-Elapsed-Time, Byzantine Fault Tolerant, Federated Consensus, Delegated Proof of Stake and so on. Your choice will depend on your identified use case. Remember, most consensus mechanisms fail because of over-ambition. You cannot change the entire company through blockchain, so start small and expand applications over time.
Step 4: Decide on the platform
After you choose your consensus mechanism, you need to identify the suitable platform on which the project will be built. Free and open-source code base platforms include Ethereum, HydraChain, Corda, Credits, Stellar, Multichain, Openchain and more.
Step 5: Create the nodes
Decide whether the nodes will run on-premises, on the cloud, or both. For example, if you have chosen a proof of concept model, then it is best to use cloud computing. If multiple branches of your company are using the proof-of-concept model with you, having the entire system on cloud will simplify implementation. The requirement of hardware will be minimal in this case.
To build an on-premise system, you will have to decide on hardware configuration issues like processors, memory and disk size. You also need to decide access levels. Is the blockchain permission-less, private or hybrid? The Bitcoin blockchain is permission-less. An example of a hybrid blockchain solution would be a group of banks that share a KYC platform. If you are giving asset-backed tokens, it will need to be a public blockchain.
It is important to note that the testing phase would usually involve a private blockchain, even if it is done in a cloud venue.
Step 6: Conduct the field trial
This is the time when company data will come into production – the testing phase. You will get to see how the software operates in the simulated environment with real data. Of course, it won’t impact your consumers yet. It is usually seen that when companies get comfortable with the software, they switch to on-premise hardware from cloud venues. Decide if this is what you want.
There are some blockchain platforms that come equipped with pre-included APIs, while others don’t. Performing audit-related functions should be among the major categories of APIs you can choose to get. Other APIs include smart contracts, digital signatures and hashes to authenticate data, generation of addresses and key-pairs and data retrieval.
When your systems are working according to your satisfaction, you will need to design the admin and user interface, using various programming languages. You can further enhance the power of your blockchain by including AI, biometrics, bots and such like.
A full-volume production roll-out would be the final stage. Once you are sure of how to build a blockchain solution, make sure you have the right team for successful development and implementation.