How does one build a better blockchain?
Very carefully, logic dictates. The old woodworking adage comes to mind, “measure twice and cut once“ and Vytautas Kašėta, president of Crypto Economy Organization and advisor to the Swace startup, shared with Traders Magazine eight keys to building a successful blockchain application.
Why?
Kaseta pointed to a recent study that reported 92% of blockchain projects fail, and the average lifespan of a blockchain startup is 15 months. However, blockchain technology doesn‘t seem to to lose its hype. So, what should blockchain developers know to be among the 8% of successful startups?
First, he said is to find the problem you want to solve.
“You must have a clear picture of the market you want to disrupt and the challenges it is facing. This is where you will find the problem your project will help tackle,“ Kaset told Traders Magazine in an interview. “Make sure that the product you are creating is exactly what your users need now or will need in the future.“
Second, start with the people you need the most. He explained that the people you hire are your biggest treasure.
“Start with recruiting the best CTO (Chief Technology Officer) in town. Such a person will know how to solve the problem and will have the skills to do it,“ he said. “Also, you should have a developer on board as soon as possible. Of course, you shouldn’t stop there.“
Thirdly, Kaseta said one must become a blockchain expert.
“These days, everyone wants to incorporate blockchain technology in new projects,“ he said. “Do you have a clear understanding of the exact way blockchain will benefit your product? Everyone on your team should be in line with the answer and know the background of blockchain. If you’re still searching for the answer, read some books about distributed systems, digital and crypto economy, distributed ledgers etc. If you’re an entrepreneur or CTO, you can start with “Blockchain Revolution” by Don Tapscott and “The Business Blockchain” by William Mougayar. If you are a developer, look into the GitHub of your preferred blockchain.“
Fourth, choose the ledger format wisely – especially when selecting between public and private ledgers. At the outset, he recommended deciding what distributed ledger features will possibly be needed in your solution.
“Will you use any programmable business logic and smart contracts or just state and transaction records and metadata,“ he asked. “ Knowing what you need will make it easier to choose from this vast variety of ledgers and infrastructures. There are at least 4–5 corporate private ledger solutions that can be easily adapted to your business case, such as Hyperledger, NEM. In the private ledger, you will setup some nodes and keep them running and synchronizing, so the costs of infrastructure will be on you, but you can choose to make all the transactions free for the users. If you choose an existing public infrastructure like Ethereum, Bitcoin, NEM, EOS etc., you will be free from taking care of the infrastructure or so-called consensus layer, but some transaction fees will arise. Somebody has to maintain the public key infrastructure and ledger in sync.“
Next a firm must identify its role in the ICO ecosystem and have in mind that ICOs are expensive when compared to regular venture capital investments.
“You need to have something more than a whitepaper. You need to clearly identify whether you are bringing value to this developing crypto economy, improving technology, or dealing with a distributed or sharing economy where you need a blockchain to help,“ Kaseta said.
Next – be serious about what he termed “tokenomics.“ If a firm is building a closed economy platform, a marketplace, or releasing a token that allows access to its services, one must be sure to build a serious token economy.
“What will your token do, what is it for, and if you take the newly created token out of your product, will it work,“ he said.
Also, a firm must have a clear commercialization strategy. Know your competition, he warned, and be sure to provide added value. And of course, make sure prospective users are ready to pay for your product.
Lastly but not least important is security. Your system must be secure from cyberthreats.
“The biggest mistakes with distributed applications are programming and coding mistakes, so audit is a must,“ Kaseta concluded.