Blockchain Application Development

Blockchain technology is transforming industries by enabling applications to run on secure, distributed ledgers rather than centralized servers. From cross-border payments to peer-to-peer transactions, decentralized applications (dApps) provide immutability that makes data tampering and unauthorized access significantly harder. In this article, we’ll break down the blockchain app development process, explore different blockchain types, and examine the key factors that influence development costs.

Blockchain App: Key Components

A blockchain-based solution is a decentralized application that operates within a distributed network of nodes, instead of relying on a centralized server. The blockchain app can store data on a shared and immutable digital ledger, which presents a major difference from the traditional software that preserves information all in one place. 

Prior to discussing the overall blockchain-based application development, defining its core elements is a must to understand how they’ll interact within the solution. 

Uncover facts and misconceptions about blockchain.

Frontend

The frontend is the user-facing layer of a dApp that enables clients to interact with the blockchain, execute transactions, and work with the smart contracts through an intuitive interface. Maintaining a seamless user experience and accessibility via a well-constructed interface are essential factors that highlight the importance of the frontend. 

For instance, the simplicity in user interaction with private keys or crypto wallets, understanding transaction details, and clarity in the navigation of DeFi protocols will affect the audience coverage, making a Web3 application accessible not just to developers and crypto enthusiasts, but also to merchants and everyday users.

Backend

The backend in the blockchain application development represents the server-side layer responsible for managing the off-chain logic, integrating with blockchain nodes, and when applicable relaying or broadcasting transactions to the smart contracts. 

Smart Contracts

A smart contract is a self-executing program stored on the blockchain, designed to run when one of its functions is invoked via a transaction. By embedding the agreement’s logic directly into code, smart contracts eliminate the need for intermediaries and enable automated, transparent, and trustless execution of operations.

Nodes

Blockchain nodes are software instances that maintain a copy of the distributed ledger, validate and propagate transactions across the network. While they don’t run decentralized applications themselves, nodes are essential for accessing on-chain data, executing smart contract code as part of transaction validation, and submitting transactions to the network.

The Interaction of Blockchain Components

What Problems the Blockchain Solves?

Distributed ledger technologies move from cryptocurrencies to reshaping industries. Nowadays, more and more companies integrate decentralized software solutions or invest in a custom blockchain app development to streamline their operations and reduce the issues. Below are the sectors where blockchain technology is already solving critical operational challenges.

Real Estate: Bureaucracy & Intermediary Dependence

The real estate industry encounters the influx of paperwork associated with ownership verification and contract approvals, which, consequently, can take up to a few months. These in-depth checkups are vulnerable to human errors, leading to reputational and financial damage. The real estate blockchain solution is about storing property titles, ownership records, and transaction history on the tamper-proof digital ledger, promoting instantaneous verification, excluding the attendance of the government offices. 

Blockchain reduces dependency on third-parties such as lawyers, brokers, and government clerks, enabling decentralized peer-to-peer connectivity for the client and the owner. Through the smart contracts the ownership rights can be programmed to be transferred once the payment is complete. Finally, blockchain can accelerate time for identity verification throughout the automated KYC/AML checks and blockchain-stored property records. 

Accounting: Tax Misreporting & Deduction

Traditional accounting faces the dilemma of possible tax miscalculation, purposeful deduction that, consequently, leads to misreporting. Blockchain software for accounting can circumvent financial manipulations based on the tamper-proof and immutable nature of each transaction. This means, once recorded, the transaction cannot be altered. Additionally, programming smart contracts for automatic calculators of the owed tax in accordance with the jurisdiction rules and applying only eligible deductions, can prevent human errors and significantly minimize purposeful deduction. 

Banking Industry: Time & Cost-Intensive Cross-Border Payments

The banking industries can execute cross-border payments, which, however, rely on the correspondent banking networks (e.g., SWIFT), so the transaction passes through various intermediaries, which charge a processing fee so the settlement can take 2-5 days. Blockchain solution for banking represents recording transactions on the shared, distributed ledger that sending and receiving banks can access effortlessly. Funds and settlement instructions occur in a near-instant time, so that the transaction commission is low. 

Source: Electro IQ.

Logistics: Counterfeiting & Shipment Disputes

In logistics, luxury goods are prone to counterfeiting implying the manipulation over the digital documents. Integrating blockchain can solve the issue by assigning unique digital identities (e.g., via QR codes, NFC chips) to the product. After that, each handoff is recorded on the blockchain, so the clients can check the order and history in no time. 

Another challenge a blockchain in logistics can solve is bringing objectivity to the shipment damage. It’s quite challenging for the logistics company to prove innocence with the damage of perishable items and fragile goods. Implementing blockchain with IoT sensors that record humidity, location data, temperature, and storing sensor readings on the blockchain can enhance the proof of shipment conditions, reducing liability for damage. 

Choosing the Blockchain Strategy

Choosing the right blockchain type is a strategic decision that defines who can access the network, how transactions are validated, and level of control the system will have. The choice will shape its governance structure, security, and app's scalability.

Public Blockchain

Public blockchains are characterized by permissionless participation, implying an absence of access restriction. This means that any user who has Internet connection can take part in validating transactions, through mining for Proof-of-Work and token staking for Proof-of-Stake and send transactions without restrictions. Public blockchains are open-source, enabling any user to contribute to their codebase. 

Benefits of Public Blockchain:

• Decentralized Operability: the blockchain is resistant to censorship and inclusive to all participants thanks to the network of independent nodes. 

• Security: consensus mechanisms like PoW and PoS increase the ledger’s tamper-resistance by making it cost-demanding for the attackers to manipulate and alter the transaction history.

• Potential for Interoperability: the open-source nature promotes the collaboration between ecosystems and development of the cross-chain solutions, enabling different platforms to connect and exchange data.

Private Blockchain

Private blockchain are permissioned and restricted networks governed by a single organization or a closed group. Access to transaction data is controlled and the participation is limited to the approved members, which makes private blockchain a perfect option for the enterprise-grade use. 

Benefits of Private Blockchain:

• Confidentiality: with its restricted access, only authorized users can operate via the blockchain network, making the operations visible only within the enterprise. 

• Streamlined Control: private blockchain provides more flexibility in operating with consensus mechanisms and network rules, as only the authorized parties can take part in decision-making, accelerating operations and adapting them to the business needs.

• Regulatory Compliance: it’s possible to design enterprise-level private blockchain to comply with industry-specific regulations, including HIPAA for healthcare or GDPR for data privacy, ensuring secure data management.

Consortium Blockchain

A consortium blockchain benefits companies that require both the privacy of a permissioned network and the collaborative governance of a shared ledger. While access remains restricted to authorized participants, control is distributed among multiple organizations rather than a single entity, making it partially decentralized. This structure enables trust and cooperation between independent parties while maintaining security and performance.

Benefits of Consortium Blockchain:

• Co-Governance: consortium blockchain facilitates collective decision-making, enabling the involved parties to jointly control the flow of operations via the network. 

• Cost-Effectiveness: the presented type of blockchain helps the involved parties economize on financial input compared to launching a private blockchain independently from scratch.

• Improved Speed: based on the relatively decentralized nature of the consortium blockchain, it keeps a fast transaction pace, as compared to the public blockchain.

Blockchain Network: Selection Factors

Having explored the main blockchain types, the next step is to choose the most suitable network within these categories. Businesses should make decisions based on the network’s performance, cost, and ecosystem factors that align with their objectives.

TPS (Transaction Per Second)

TPS is about measuring the amount of transactions a blockchain can process per second, so this factor will be paramount for the businesses that require fast performance such as DeFi and gaming. Solana and Polygon offer high theoretical throughput, while the real performance will depend on the network’s load and architecture. 

Cost

Cost or average fee refers to the transaction or gas fee the network charges for executing the transaction. If the business focuses on microtransactions or high volume transactions, low fees will be a paramount factor. Solana and Polygon hit the lead in this factor with its <$0.01 per transaction. 

Community

Refers to the size and maturity of the ecosystem supporting a blockchain platform. A strong community provides better tooling, developer support, and available talent. Ethereum is a leader in the ecosystem maturity and developer resources, making it a superior option for projects that require robust support.

How to Develop a Blockchain Application

Developing a blockchain application is a tough challenge, isn’t it? Unlike the traditional software, architecting a decentralized application imposes some tricky steps that require scrupulous attention to its overall market research till the practical development and the ongoing support. 

Market Research & Concept Validation

Market research and concept validation are the most critical steps in blockchain app development as it aims to define whether a project is viable and has a clear path to success. To ensure the further efficiency in development, business representatives have to perform the following actions. 

Problem Definition

First and foremost, each application whether a blockchain or a traditional one has to provide a solution to the core client’s pain point. In this phase, it’s essential to underline what major issues or inefficiencies the application will resolve. For instance, the supply chain business may lack transparency in record-keeping. Defining the pain point is the first step to tailoring the product B2B and B2C markets will adopt. 

Landscape Analysis

Once the problem is defined, it’s important to understand what landscape the final product will be entering. Here are a few aspects to consider: 

• Industry Trends: defining trends is a paramount factor to both embedding the app with the essential and in-demand features, and underline the competitive edge of the final product. For this, it’s important to check whether there are new regulatory trends or latest changes/additions in the blockchain technology. 

• Target Audience: the future of the app’s design, features, and marketing strategy will depend on whether the business aims to address the crypto-native users or bring traditional clients to the new space. Target audience analysis requires an ICP creation by assessing the client’s behavior, needs, and level of blockchain technology awareness. 

• Competitor Solution: an in-depth competitor analysis can be helpful in identifying their core strengths, weaknesses, opportunities to grow, and areas of improvements. Covering these enables your blockchain application to have a competitive advantage and unique value proposition.

Validating whether Blockchain Is Necessary or Nice-to-Have

This is one of the leading factors in concept validation as business representatives will have to answer whether blockchain technology is a must in solving the defined problem or it’s just an addition to the app’s core functions. To be precise, it’s essential to validate whether threef blockchain principles (decentralization, immutability, transparency) will be integrated to solve the challenge. 

UX/UI Design

UX/UI design plays a central role in simplifying the complexities associated with taking blockchain-specific actions. The decentralized application imposes a set of new concepts like gas fees, private keys, and irreversible transactions, which might be confusing for the crypto-novice users. UX/UI task is to ensure the app’s functionality is clear, intuitive, and user friendly. 

User Flows, Wireframes, and Interface Mockups

The overall UX/UI design starts with understanding of how the user interacts with the application. Designers elaborate on the user flows to map out every possible path the client might take from the initial account creation to completing a transaction or checking the portfolio. 

Then, the design team creates wireframes or the low-fidelity blueprints of each screen’s layout and functionality. This sub-step refrains from adding visual design elements. Wireframes enable designers to test and refine the application’s structure. 

The final sub-step is creating an interface mockup, or adding visual design elements, like color, typography, graphics, animations, all to create a high-fidelity and polished app’s representation that’s ready for the upcoming development. 

Wallet Integration, Transaction Visibility, and Mobile-Friendliness

These are the paramount design areas for any blockchain applications development.

• Wallet Integration: the design has to cover the user’s need of connecting their crypto wallets (e.g., MetaMask) in a secure and seamless manner. This must be a straightforward process, which may involve the single button or a QR code scan. The design should also reflect which wallet is connected and what permission is granted. 

• Transaction Visibility: as blockchain transactions can be slow and irreversible, the major tasks of the design team to notify users what’s going on on each step. The design has to contain a real-time status update, clearly displaying whether the transaction is pending, confirmed, or failed. Additionally, the design should display all the transaction details, including the recipient status, amount, and the network fees to prevent errors. 

• Mobile-Friendliness: the design has to contain the mobile layout as, since the clients can use a mobile-first approach to managing and operating their digital assets. This means the importance of including a large, tappable button, and a design optimized for one-hand use. Mobile-friendliness can also include the elements like biometric authentication (Face ID, Touch ID) to boost security for identity verification. 

Usage Factor

This is the central element of the blockchain application development, since its ultimate goal is to be accessible to all users, especially those, who’ve never had any crypto experience. Accessibility can be achieved through:

• Simple Language: it’s important to avoid jargon or complex blockchain terms to minimize cognitive load and retain the user.

• Contextual Help: the UX/UI can include guided tours and micro-copy on clarifying tech concepts, such as gas fee or recovery phrase. 

• Double-Confirmation: clear warnings and confirmations on the irreversible actions will build user confidence and prevent accidental loss. 

Application Development

This layer is responsible for the overall blockchain app’s functionality and architecture, encompassing the backend, smart contracts, and frontend.

Backend

The backend of the decentralized application handles the off-chain business logic and processes that don’t have to be stored on the blockchain itself. Here are some of the critical components need to be tailored: 

• Business Logic: this refers to the core rules and calculations like user authentication, data processing, and state management that don’t require transparency and immutability. 

• Dashboards: this is about tailoring the administration-level panels to handle app settings, monitor user activity, and operate analytics. 

• APIs: they are developed to ensure the communication between the frontend, database, and the blockchain itself. They enable the frontend to request and obtain data or send transactions to the blockchain.

• Database Connections: this refers to storing user profiles, cached data, logs, which are more efficient and cost-preserving to keep it on the backend rather than the blockchain.

Smart Contract Development

When it comes to smart contracts, they’re self-executing pieces of code that operate and are stored directly on the blockchain. 

The developers will have to make smart contracts handle trust-sensitive tasks, as their primary purpose is automating and enforcing rules of an agreement without a central authority. Smart contracts perform the following strategically important tasks:

• Payment & Token Transfers: is about automatic P2P transfer of digital assets or tokens.

• Escrow Services: Hold the funds until the predefined conditions are met. 

• Decentralized Logic: Handling the core business logic of the decentralized application, such as the rules for the decentralized exchange.

Explore tips and tricks of developing smart contracts.

Frontend

Devs should craft the frontend, since it's a user-facing part of the blockchain app. Frontend provides the interface, through which users will perform actions on the blockchain. Here are the following elements that should be developed for the frontend. 

• Connection with Wallets: frontend has to connect with the client’s crypto wallet (e.g., MetaMask). The application, then, can check the client’s blockchain address, balance, and let users sign transactions.

• Data Display: frontend showcases real-time data retrieved from the blockchain, which can include user’s token balances or transaction history. 

• User Interaction: the frontend provides buttons and forms that trigger functions in smart contracts or backend services. For example, when a user clicks the “Send” button, the frontend uses a blockchain library to prepare the transaction details and prompts the user’s wallet (e.g., MetaMask) to sign it. After signing, the wallet broadcasts the transaction to the blockchain network for processing.

Security & Compliance

While blockchain is about decentralization and immutability, these features do not automatically grant full security and regulatory compliance, requiring developers to perform a set of actions to ensure the blockchain app’s safety and compliance. 

Audits, Testing, and Role-Based Permissions

Audits and testing present the foundation to ensure that the application and its corresponding smart contracts are secure. 

• Security Audits: the independent third-party auditors analyze every line of code to detect logical flaws, vulnerabilities and attack vectors. This sub-step is critical before the blockchain app’s deployment. 

• Penetration Testing: this refers to simulating the external real-world attacks, which attempts to find weaknesses within the system and test the application’s and its infrastructure’s resilience.

• Role-Based Permissions: if the business selects a private blockchain type, the role-based permissions model restricts access based on the user’s defined role, ensuring that only authorized individuals can perform transaction validation or viewing sensitive data.

KYC/AML Inclusion

The regulated industries like fintech who deal with blockchain applications are obliged to comply with KYC and AML to prevent money laundering and identity manipulations. 

• KYC (Know Your Customer): the developers should integrate KYC functionality to verify the client’s identity. It typically involves collecting and verifying personal info, including government-issued ID or driver’s license.

• AML (Anti-Money Laundering): this refers to transaction monitoring to detect and flag suspicious activities, including the unusually large transfers, small deposits, accompanied by the large deposits.

Ensure GDPR/FinCEN Compliance Where Relevant

Although, developers have to ensure compliance with the relevant data protection regulations to protect sensitive data, they have to prevent any of the financial crimes associated with digital assets. 

GDPR

The developers have to implement strategies like storing sensitive data off-chain in a separate and encrypted database and place only non-identifiable hash on the blockchain. This matters to avoid the conflict between the blockchain’s immutability and GDPR’s user right ‘to be forgotten.’

FinCEN

As blockchain applications are classified as a Money Services Business (MSB), it is fundamental to implement the robust AML program that should include 

• KYC Procedures: liveness check, government-issued ID analysis. 

• Transaction Monitoring: on-chain analytics, rule-based alerts, Enhanced Due Diligence.

• Reporting: Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs) to FinCEN when required.

Additionally, compliance with the Travel Rule is a must to ensure meeting FinCEN requirements. VASPs (Virtual Asset Service Providers) are required to collect and share specific info about the originator and beneficiary if the transaction surpasses the current $3,000 threshold between financial institutions. 

Testing & Quality Assurance

Testing and quality assurance are the paramount steps in the blockchain app development, since the non-identified errors on testnets might lead to the irreversible and costly, and reputation-damaging consequences when the app is deployed. 

Test on Blockchain Testnets to Avoid Real Losses

A testnet simulates the blockchain mainnet environment and uses fake cryptocurrency that allows developers:

• To deploy smart contracts and dApps.

• Execute transactions and interact with the protocol. 

• Test the functionality and correctness of the new features.

Functional Correctness

Functional testing refers to analyzing whether each of the blockchain application’s components work as intended. These cover user interface, backend logic, and the overall interactions between them. To be more specific, functional testing checks:

• Transaction Validation: functional testing verifies that transactions processing and validation is correct per the rules of the network. 

• State Management: aims to check whether the application’s state and data are updated in a correct manner after the transaction completion.

• User Flow: test whether the users can complete critical app-related actions, like wallet creation or assets sending/receiving.

Smart Contract Vulnerabilities

Immutability and direct control over assets make smart contracts vulnerable to cyber attacks. Ignoring rigorous testing on smart contracts can lead to catastrophic reputational and financial damage. Developers have to:

• Perform Unit and Integration Testing: aims to check individual contract’s functions and their interactions. 

• Conduct Static Analysis: apply automated tools to scan the contract code to check its vulnerability to the vulnerabilities like reentrancy attacks.

• Execute Formal Verification: apply mathematical proofs to make sure the contract’s logic is correct and works as intended under various conditions.

Transaction Speed and Cost

Speed and cost are the central performance factors as they are tied to the blockchain networks. The developers should test:

• Transaction Latency: aims to check the time it takes to confirm and finalize the transaction on the blockchain. 

• Gas Consumption: developers have to optimize contract code to minimize gas fees and enhance affordability to the end users.

• Network Load: checks how the application performs under various levels of network congestion to make sure it remains stable during the peak usage.

Deployment & Monitoring

Deployment and monitoring is a penultimate stage required to develop blockchain applications to make sure they are reliable and functional to the target audience. 

Launch to Mainnet or Production Environment

After the in-depth and intensive testing on a testnet, the application is deployed on the production environment, which represents the official blockchain and so the digital assets have the real monetary value. This step considers:

• Final Code Audits: these include performing the final smart contracts and application’s codebase security audits to spot and resolve the last-minute issues. 

• Smart Contract Deployment: the audited smart contracts are deployed on the mainnet, meaning they become immutable and all actions performed are irreversible.

• Application Frontend & Backend Deployment: the frontend applications (web & mobile) and any related off-chain backend services are deployed in the production-ready hosting environment and configured to communicate in a secure fashion with the mainnet.

Real-Time Performance Tracking, Gas Usage Assessment, and User Analytics

While referring to the post-deployment monitoring, developers must check the overall status of the application and smart contract to detect issues, solve them, and prevent their occurrence in the future. These involve:

• Real-Time Performance Tracking: developers check the network’s status and application’s performance. These can include transaction throughput (TPS), block confirmation time and node health. 

• Gas Usage: developers keep monitoring gas costs of smart contract functions to keep affordability. Additionally, the development team provides clients with the accurate gas fee estimation to prevent pending transactions.

• User Analytics: the development team track metrics associated with the number of active wallets, transaction volume, and popular dApp features beneficial for future development decisions.

Post-Launch Support & Updates

Post-launch support and ongoing maintenance are of no less importance for the further efficient, secure, and reliable functionality of the blockchain and smart contract. 

Monitor and Feedback

Developers have to implement a robust system for tracking the blockchain app’s performance, which would perform:

• Bug & Vulnerability Monitoring: the app’s off-chain components such as frontend and APIs are not immutable unlike smart contracts. So, developers must continuously monitor the application for bugs and security vulnerabilities to prevent system compromising.

• Scalability Issues Analysis: developers have to identify the potential bottlenecks associated with the slow transaction processing time or high gas fees to scale up the app’s performance per growing user base.

• User Feedback Collection: gathering and analyzing feedback is critical for identifying the pain points, areas of improvement, and strengths to gain more understanding in the user behavior to clarify the aspects for future improvements.

Feature Enhancements and UX Improvements

As the blockchain landscape is extremely dynamic, continuous updates and feature improvements and UX enhancements are a must to respond to the clients’ needs and keep on track. These include: 

• Integrating New Features: adding new blockchain networks, supporting new tokens, and integrating new functions like staking. 

• Optimizing User Interface: streamlining blockchain interactions to improve app’s intuitiveness and accessibility.

• Performance Improvements: streamlining off-chain data processing and on-chain code of the smart contract to reduce gas costs and optimize the transaction speed.

Long-Term Upgrades (via Smart Contract Versioning Strategies)

Upgrading smart contracts is one of the most challenging post-launch activities since they are inherently immutable. Nevertheless, developers can apply advanced versioning practices:

• Proxy Patterns: developers deploy a new logic contract with the updated code and point the proxy to this new contract by preserving the original address and user data. 

• Modular Architecture: with a modular design the developers can update specific parts of the smart contract without affecting the whole system.

• Governance-Based Upgrades: when it comes to DAOs, the on-chain governance manages the upgrades. The community votes on proposals and if it passes the upgrade is automatically executed. This facilitates the decentralized approach to the post-launch maintenance and upgrades.

Cost of Blockchain App Development

Blockchain app development cost​ will differ significantly depending on the purpose and the overall level of complexity. The approximate final price can range from $20,000 - up to $300,000. Let’s illustrate the core nuggets of info related to the costs of the blockchain app development. 

The Approximate Cost of the Blockchain App Development

Team Selection: Outsourcing vs In-House

Team selection will impact your cost strategy significantly in terms of its alignment with business goals, anticipated budget, and timeline. 

In-House Team

In-house team represents a group of employees who dedicate their time exclusively for the business owners’ project. Either in office or remote, the team works cohesively, usually, on a contract basis that underlines their defined roles, responsibilities, working hours, and organizational perks (e.g., sick leave policy).

The in-house team is the best option for businesses that need direct oversight of the development processes and clear real-time communication with minimal time delays. For instance, blockchain apps for the healthcare industry might require the in-house team involvement to respond to the potential real-time cyberattacks.

Outsourcing 

Outsourcing represents a model of cooperation when the business relocates product development to the external third-party IT service provider, as pertains to a dedicated team. Another option is integrating lacking talent directly into the in-house team to work on the specific and predetermined professional responsibilities, while the cooperation will be over when the service has been provided. This contributes to cost-effectiveness and time economy, since hiring third-party IT professionals business representatives will allocate their financial resources strategically based on the cost of living in the experts’ countries. 

When it comes specifically to blockchain app development, the in-house team will have the full control of the smart contract logic and blockchain architecture. That’s due to:

• Development of all features, elements, characteristics within the organization.

• The business representatives decide coding standards, consensus mechanisms, node setup, and deployment strategy themselves.

In the outsourcing team, however, full control over the smart contract logic and blockchain architecture is possible, yet challenging, since it requires business precision in architectural decisions. If vague or ambiguous, the development team can decide on their own what strategies, coding standards to implement. This does not affect the quality of the final product, yet may cause misunderstandings and limited stakeholders’ oversight.

Gain insights into the models of outsourcing by engagement time, contract, and location.

Let’s clarify some benefits and drawbacks of an in-house team and an outsourcing counterpart when developing blockchain applications.

Summary

Development of the blockchain application is a complex process, which requires an in-depth and thorough marketing analysis to approach the engineering process proactively. Regardless of the blockchain type or industry that’s going to invest in an app, the development process will be the same in terms of steps required to take to gain a fully-fledged and efficient product. Finally, team selection can contribute to the overall development speed, quality, and financial investment.

Interested in tailoring a sophisticated blockchain app? Contact us in no time!