Embarking on Blockchain Networks: Understanding and Their Transformative Applications

Blockchain
Once again, decentralized finance is in the eye of public opinion and at DexKit we want to teach you everything about it. We want to delve deeply in the concept of «blockchain» in terms of the infinite number of use cases, the clarity with which decisions are executed and the best part: the zero intervention of centralized entities.

We refer to blockchain networks, defined as digital systems “without a single owner” that allow a secure, transparent and immutable exchange of data or assets. These networks are designed to allow multiple parties to trustlessly interact with each other without the need for a central intermediary, such as a bank, government agency, or third-party service provider.

Conceptual overview

At its core, a blockchain network is made up of three main components: nodes (also known as miners), transactions, and blocks. Let’s get to know them:

  • Nodes are the backbone of a blockchain network, serving as the essential participants in its decentralized architecture. These computing entities are responsible for critical functions such as validating and verifying new transactions, ensuring their integrity before adding them to the blockchain ledger. Furthermore, nodes play a pivotal role in maintaining consensus among all participants, ensuring the network’s stability and security without the need for centralized oversight. At the same time, some nodes, known as “non-mining nodes” or “full nodes,” focus solely on validating and relaying transactions, maintaining a copy of the entire blockchain, and participating in the consensus process without engaging in the computational work required for mining.
Nodes
Nodes represent the heart of decentralized systems
  • Transactions represent individual exchanges of value or data between parties on the network, which may include the purchase/sale of assets (e.g., cryptocurrencies), sending payments, transferring ownership of digital artifacts, or executing smart contracts.
  • Blocks are essentially collections of validated transactions that have been pooled and verified by nodes in a decentralized manner. Each block contains a unique identifier called a hash, which is generated based on the content of the transaction data within the block and serves as a means of preventing manipulation or alteration. Blocks also contain references to their predecessors (i.e. previous blocks in the chain), forming an unalterable historical record that allows nodes to verify the integrity and authenticity of the entire ledger.

One of the key features that distinguishes blockchain networks from traditional centralized systems is the use of consensus algorithms, which allow participating nodes to collectively agree on the state of the ledger. These algorithms, such as Proof of Work (PoW), Proof of Stake (PoS), Delegated Proof of Stake (DPoS), and Practical Byzantine Fault Tolerance (PBFT), govern how nodes collectively agree on the state of the ledger. In a blockchain network, there are no “single points of failure” or intermediaries; rather, all nodes work together in a decentralized manner to maintain security and ensure that new transactions are processed correctly, penalizing nodes that have data mismatches with respect to previous ones. This decentralized approach ensures reliability and transparency, fostering trust among network participants and promoting widespread adoption of blockchain technology.

Examples of Blockchain networks other than Bitcoin and Ethereum

  • Polygon (formerly Matic Network): Polygon is a Layer 2 scaling solution built on the Ethereum blockchain. It enables fast, low-cost transactions by reducing gas fees associated with running smart contracts on the Ethereum mainnet. By leveraging sidechains and optimistic rollups, Polygon provides improved transaction performance while maintaining the security of the underlying Ethereum ecosystem.
  • Optimism: Optimism is an open source platform that allows developers to build decentralized applications (dApps) on top of the Ethereum blockchain using a technique called “optimistic rollups.” This enables faster, more scalable dApps with lower gas fees by processing transactions off-chain and verifying them only when they are included in the Ethereum ledger. Optimism is designed to improve the user experience (UX) of Ethereum-based applications while maintaining security and integrity.
  • Base Network (BASE): Base is a Layer 2 scaling solution built on the Ethereum blockchain. It aims to provide enhanced security, stability and scalability for various applications running on the Ethereum ecosystem while enabling integration with other interoperable chains such as Coinbase.

The DexAppBuilder DApp creator, DexKit’s flagship product, is fully compatible with multiple blockchain networks (such as those mentioned above), allowing users to interact with various blockchain networks in their projects. The DexAppBuilder opens up a range of possibilities for the cryptopreneur or anyone interested in blockchain to create projects using this technology.

Blockchain Use Cases

  • For smart contracts: Blockchain networks enable the creation of self-executing programs called smart contracts, which can automate various processes such as asset transfers, payment processing, identity verification, and more. Smart contracts are particularly useful in industries where trust between parties is often lacking or difficult to establish (e.g., real estate transactions, insurance claims). The networks mentioned above (Polygon, Optimism, and Base) are built on Ethereum, the leading blockchain for smart contracts, inheriting its capabilities to host and execute smart contracts. Therefore, you have the flexibility to choose the best network to deploy your project according to your needs and goals.
  • For supply chain management: Blockchain networks can provide greater transparency, traceability and security for supply chain management systems by creating an immutable record of all transactions along the entire value chain. This allows businesses and users to more easily track products from production to delivery, detect fraudulent activity (e.g. counterfeit products), and ensure compliance with industry regulations and standards. Amazon allows the management of supply chains through blockchain and offers that service to its customers.
Supply chain actors
Supply chains can operate more efficiently thanks to Blockchain
  • For artists: The blockchain can make it possible for artists to earn royalties for their creations more easily by lacking intermediary entities (record labels, representatives, agents) that reduce the artist’s earnings. Projects like Arpeggi make it easier for musicians to make musical arrangements and compositions and subsequently create NFTs.
  • For games: The blockchain gives players ownership over the items obtained in a certain game built on it. This represents incredible progress for the video game industry and an injection of confidence for players who often spend thousands of hours playing a game without any palpable or irrevocable reward. In the past, we published a post on our blog on this topic, and we invite you to read it. 
Axie Infinity battle
Axie Infinity is a popular game on the blockchain that allowed thousands of people to generate income through scholarships
Coin League game
DexKit is a pioneer in the Play2Learn game mode, in which players are taught how to trade while competing with others.
  • For healthcare: Blockchain technology has potential applications in healthcare by enabling the secure sharing of medical records between healthcare providers, improving data privacy, reducing administrative costs, and streamlining clinical trial processes. For example, the MediLedger Project aims to create a blockchain-based system to track pharmaceutical supply chains and prevent counterfeit medicines from entering the market.
  • For Finance: Blockchain networks can facilitate faster and more secure cross-border payments, reduce costs associated with traditional financial intermediaries, and enable new forms of financial services (e.g., decentralized lending platforms). Ripple, a blockchain-based payment protocol, exemplifies one such use case that has gained traction among major banks and financial institutions.

Future developments in Blockchain networks

As adoption of blockchain technology continues to grow, we can expect to see more innovative use cases and applications emerge across various industries. Some possible future developments include:
  • Decentralized storage systems: Blockchain networks could provide an efficient way to store data securely and decentralized on a global scale. This could allow users to manage their digital content without relying on centralized cloud storage providers such as Amazon Web Services or Google Cloud Platform, which could reduce costs and increase privacy. Currently IPFS is an example of decentralized storage operating through interconnected nodes around the world.
  • Digital Identity Management: Blockchain technology can be used to create secure, tamper-proof digital identity systems that allow individuals to control access to their personal information across multiple platforms. This could lead to better data protection and greater user autonomy in online transactions. As an example we can quote Worldcoin, which is a decentralized digital identity and financial network that aims to provide universal access to the global economy for everyone, regardless of their country or origin.
Orb device for retina verification
Through this device called Orb, the Worldcoin project verifies its users. There are already several installed around the world.
  • Asset Tokenization: The use of blockchain for asset tokenization (i.e. representing real-world assets as digital tokens) is expected to expand, allowing for more efficient trading and liquidity for various types of assets, such as art, commodities and real estate. This could also open up new possibilities for fractional ownership or crowdfunding in these sectors, democratizing access to high-grade assets for small investors.
  • Regulatory frameworks: As blockchain technology continues to advance, governments and regulatory bodies will need to develop clear guidelines and frameworks for its adoption and use across industries. This may involve addressing issues such as privacy, security, interoperability and consumer protection. World governments are already beginning to work on regulatory laws for this industry that combat money laundering and other dark financial operations.

Conclusion

Blockchain networks represent an innovative approach for the secure exchange of data or assets in a decentralized manner without the need for central intermediaries. These networks have already demonstrated significant potential in various industries, including finance, healthcare, supply chain management, and more. Despite the diverse applications beyond cryptocurrencies, blockchain’s journey is still evolving, with certain sectors in early adoption phases.

As adoption continues to grow, we can expect to see new and exciting applications emerge that take advantage of blockchain’s unique features and capabilities. To explore the potential of blockchain technology, discover DexAppBuilder by DexKit. With DexAppBuilder, you can easily create decentralized applications (DApps) on Web3, harnessing the power of blockchain technology effortlessly. Join us in shaping the future of decentralized innovation!

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