What is a blockchain? Here’s what you need to know

In recent weeks, Bitcoin has reached an incredibly low level. At the time of writing, cryptanalysts, who strangely enough are usually wrong about crypto, say that it has broken resistance and will go lower.

Some say that it can even reach the 20,000 mark. So it is fair to say that interest in cryptocurrencies, along with confidence in the lunar hype, has waned. What has not diminished, however, is the interest in the blockchain.

People may be less interested in buying crypto today than a year ago, but most people who are interested in the blockchain 12 years ago are still interested in it.

If you are one of them and believe that the internet of the future will be built on the blockchain, congratulations. You’re probably right. All the signs of Web3’s capacity to eat Web2 are already there, and it’s probably smart to start working on that assumption.

To plan for that future, you may be interested in building something on the blockchain. It can be a Dapp, it can be a protocol – it can be something completely new. But since Web3 is still a rather vague concept, since many people still do not know what they mean when they refer to it, it is difficult to find sources of what people need to know if they build in it.

Therefore, we will go through some of the things you should know if you think it is worth building on the blockchain.

Related: Web 3.0 is coming, and here’s what it really means to you

Do you need a blockchain?

This is probably the first question you need to answer. Before you dive into the very complicated business of building a Dapp or a protocol, you need to know if it is crucial to your business.

If your business requires a central authority, speed over security and does not require a database, auditable history or an untrustworthy environment, it may be better to stick to traditional systems.

Of course, this means that the blockchain is definitely for you if you want to build businesses that are designed to be trustworthy, secure, decentralized and data intensive.

Personally, the main reason you should build on the blockchain is that you are looking to build a decentralized and secure business. These are the main comparative advantages of the blockchain, and if they are not a cornerstone of your business philosophy, you should probably stay away from the blockchain and Web3. Of course, there are other places where the blockchain excels, such as privacy and cost-effectiveness, but they are not nearly as important as decentralization and security.

Although the blockchain is a breakthrough in computer programming, it is not the answer to all problems. Make sure that the use of blockchain technology is actually the best approach for your business by weighing the options carefully and not trying to use it within its limits and not as a “solution in search of a problem.”

Related: 5 Reasons to Get Started with DeFi

Know your industry and its problems

An important part of building on the blockchain is to understand what solutions already exist. Even though you may think you are building something completely new, it is important to understand if it has already been built.

This is important, especially if you are building a Dapp. Right now there are over 3000 Dapps on different blockchains. Ethereum alone has over 2500 Dapps.

For example, if you build in DeFi, you need to understand that it is probably the most populous industry on the blockchain. This means that there are many players on it who are trying to solve the most important problems. Today, the biggest solutions DeFi need are over-mortgaging and liquidity.

Although much progress has been made in resolving these issues, they are quite persistent and in dire need of disruption. If you are building a DeFi Dapp and do not want to solve this problem, you need to get ready for an extraordinary gate. Because you will simply be one of the crowd of Dapps who solve secondary problems, and you will still fight for their share of the market instead of building solutions that will increase the market size.

Of course, this does not mean that several companies can not solve the same problem. It just means that a company that solves a problem that has already been roughly solved by another, may have to take comfort in being a difficult competitor. While another business solving a new problem will be in a whole new territory and will have access to a whole new market.

The key question you need to ask yourself is whether you are ready for it or whether you prefer to go back to the drawing board to solve the most important problems.

Related: 4 ideas for starting a blockchain business

You can not do it alone

You do not build a blockchain, you build on the blockchain. This means that you need two important partners to be with you on the journey.

The first is a blockchain. There are dozens of viable blockchains you can build on, with different pros and cons. Once you have decided which blockchain to build on, you will also need to find a technical partner like Ankr to provide you with the technical toolkits you need to access blockchain infrastructure.

If you know if your business needs to be on the blockchain, understand the core issues of the industry you are building in, and have the right technology partners, you are probably already halfway there.

Okay, maybe you’re done a third. You still have to build a team, raise money and miss a million nights of sleep. But at least you’re on the right track.