Blockchain technology has garnered significant attention in recent years due to its potential to revolutionize various industries. From finance to supply chain management, healthcare to voting systems, blockchain has the power to transform the way we do business.
Having said that, Blockchain is one of the desirable domains to build a career for students. Any day, the best way for freshers to hone their Blockchain skills and create a good impression on future employers is to build good projects.
However, finding the right blockchain project ideas for students who are just setting out on their blockchain journey can be daunting. In this article, we will delve into 8 interesting blockchain project ideas suitable for beginners that will certainly be unique to build.
What is blockchain technology?
Blockchain technology is an advanced database mechanism that allows transparent information sharing within a business network. A blockchain database stores data in blocks that are linked together in a chain. The data is chronologically consistent because you cannot delete or modify the chain without consensus from the network. As a result, you can use blockchain technology to create an unalterable or immutable ledger for tracking orders, payments, accounts, and other transactions. The system has built-in mechanisms that prevent unauthorized transaction entries and create consistency in the shared view of these transactions.
Blockchain is a method of recording information that makes it impossible or difficult for the system to be changed, hacked, or manipulated. It is a distributed ledger that duplicates and distributes transactions across the network of computers participating in it.
Blockchain technology is a structure that stores transactional records, also known as the block, of the public in several databases, known as the “chain,” in a network connected through peer-to-peer nodes. Typically, this storage is referred to as a ‘digital ledger.’
Every transaction in this ledger is authorized by the owner’s digital signature, which authenticates the transaction and safeguards it from tampering. Hence, the information the digital ledger contains is highly secure.
In simpler words, the digital ledger is like a Google spreadsheet shared among numerous computers in a network, in which the transactional records are stored based on actual purchases. The fascinating angle is that anybody can see the data, but they can’t corrupt it.
Why is blockchain important?
Traditional database technologies present several challenges for recording financial transactions. For instance, consider the sale of a property. Once the money is exchanged, ownership of the property is transferred to the buyer. Individually, both the buyer and the seller can record the monetary transactions, but neither source can be trusted. The seller can easily claim they have not received the money even though they have, and the buyer can equally argue that they have paid the money even if they haven’t.
To avoid potential legal issues, a trusted third party has to supervise and validate transactions. The presence of this central authority not only complicates the transaction but also creates a single point of vulnerability. If the central database was compromised, both parties could suffer.
Blockchain mitigates such issues by creating a decentralized, tamper-proof system to record transactions. In the property transaction scenario, blockchain creates one ledger each for the buyer and the seller. All transactions must be approved by both parties and are automatically updated in both of their ledgers in real time. Any corruption in historical transactions will corrupt the entire ledger. These properties of blockchain technology have led to its use in various sectors, including the creation of digital currency like Bitcoin.
Suppose you want to transfer money to your family or friends from your bank account. You would log in to online banking and transfer the amount to the other person using their account number. When the transaction is done, your bank updates the transaction records. It seems simple enough, right? However, there is a potential issue that most of us neglect.
These types of transactions can be tampered with very quickly. People who are familiar with this truth are often wary of using them, hence the evolution of third-party payment applications in recent years. However, this vulnerability is essentially why blockchain technology was created.
Technologically, Blockchain is a digital ledger that has been gaining a lot of attention and traction recently. But why has it become so popular? Well, let’s dig into it to fathom the whole concept.
Record keeping of data and transactions is a crucial part of the business. Often, this information is handled in-house or passed through a third party like brokers, bankers, or lawyers, increasing time, cost, or both on the business. Fortunately, Blockchain avoids this long process and facilitates the faster movement of the transaction, thereby saving both time and money.
Most people assume Blockchain and Bitcoin can be used interchangeably, but that’s not the case. Blockchain is a technology capable of supporting various applications related to multiple industries, such as finance, supply chain, manufacturing, etc., but Bitcoin is a currency that relies on Blockchain technology to be secure.
Blockchain is an emerging technology with many advantages in an increasingly digital world:
Highly Secure
It uses a digital signature feature to conduct fraud-free transactions, making it impossible for other users to corrupt or change an individual’s data without a specific digital signature.
Decentralized System
Conventionally, transactions require the approval of regulatory authorities like a government or bank; however, with Blockchain, transactions are done with the mutual consensus of users, resulting in smoother, safer, and faster transactions.
By creating a transparent, immutable, and secure platform, beginners can contribute to the development of a voting system that ensures transparency, security, and ease of use, making it our No.1 pick for the best blockchain project ideas for students.
This project idea allows beginners to gain a deep understanding of blockchain while contributing to real-world solutions. Have a look at this GitHub repository for reference and get building!
Decentralization in blockchain refers to transferring control and decision making from a centralized entity (individual, organization, or group) to a distributed network. Decentralized blockchain networks use transparency to reduce the need for trust among participants. These networks also deter participants from exerting authority or control over one another in ways that degrade the functionality of the network.
Automation Capability
It is programmable and can generate systematic actions, events, and payments automatically when the trigger criteria are met.
Immutability
Immutability means something cannot be changed or altered. No participant can tamper with a transaction once someone has recorded it to the shared ledger. If a transaction record includes an error, you must add a new transaction to reverse the mistake, and both transactions are visible to the network.
Consensus
A blockchain system establishes rules about participant consent for recording transactions. You can record new transactions only when the majority of participants in the network give their consent.
What are the key components of blockchain technology?
Blockchain architecture has the following main components:
A distributed ledger
A distributed ledger is the shared database in the blockchain network that stores the transactions, such as a shared file that everyone in the team can edit. In most shared text editors, anyone with editing rights can delete the entire file. However, distributed ledger technologies have strict rules about who can edit and how to edit. You cannot delete entries once they have been recorded.
Smart contracts
Companies use smart contracts to self-manage business contracts without the need for an assisting third party. They are programs stored on the blockchain system that run automatically when predetermined conditions are met. They run if-then checks so that transactions can be completed confidently. For example, a logistics company can have a smart contract that automatically makes payment once goods have arrived at the port.
Public key cryptography
Public key cryptography is a security feature to uniquely identify participants in the blockchain network. This mechanism generates two sets of keys for network members. One key is a public key that is common to everyone in the network. The other is a private key that is unique to every member. The private and public keys work together to unlock the data in the ledger.
For example, John and Jill are two members of the network. John records a transaction that is encrypted with his private key. Jill can decrypt it with her public key. This way, Jill is confident that John made the transaction. Jill’s public key wouldn’t have worked if John’s private key had been tampered with.
How does blockchain work?
While underlying blockchain mechanisms are complex, we give a brief overview in the following steps. Blockchain software can automate most of these steps:
Step 1 – Record the transaction
A blockchain transaction shows the movement of physical or digital assets from one party to another in the blockchain network. It is recorded as a data block and can include details like these:
- Who was involved in the transaction?
- What happened during the transaction?
- When did the transaction occur?
- Where did the transaction occur?
- Why did the transaction occur?
- How much of the asset was exchanged?
- How many pre-conditions were met during the transaction?
Step 2 – Gain consensus
Most participants on the distributed blockchain network must agree that the recorded transaction is valid. Depending on the type of network, rules of agreement can vary but are typically established at the start of the network.
Step 3 – Link the blocks
Once the participants have reached a consensus, transactions on the blockchain are written into blocks equivalent to the pages of a ledger book. Along with the transactions, a cryptographic hash is also appended to the new block. The hash acts as a chain that links the blocks together. If the contents of the block are intentionally or unintentionally modified, the hash value changes, providing a way to detect data tampering.
Thus, the blocks and chains link securely, and you cannot edit them. Each additional block strengthens the verification of the previous block and therefore the entire blockchain. This is like stacking wooden blocks to make a tower. You can only stack blocks on top, and if you remove a block from the middle of the tower, the whole tower breaks.
Step 4 – Share the ledger
The system distributes the latest copy of the central ledger to all participants.
What are the types of blockchain networks?
There are four main types of decentralized or distributed networks in the blockchain:
Public blockchain networks
Public blockchains are permissionless and allow everyone to join them. All members of the blockchain have equal rights to read, edit, and validate the blockchain. People primarily use public blockchains to exchange and mine cryptocurrencies like Bitcoin, Ethereum, and Litecoin.
Private blockchain networks
A single organization controls private blockchains, also called managed blockchains. The authority determines who can be a member and what rights they have in the network. Private blockchains are only partially decentralized because they have access restrictions. Ripple, a digital currency exchange network for businesses, is an example of a private blockchain.
Hybrid blockchain networks
Hybrid blockchains combine elements from both private and public networks. Companies can set up private, permission-based systems alongside a public system. In this way, they control access to specific data stored in the blockchain while keeping the rest of the data public. They use smart contracts to allow public members to check if private transactions have been completed. For example, hybrid blockchains can grant public access to digital currency while keeping bank-owned currency private.
Consortium blockchain networks
A group of organizations governs consortium blockchain networks. Preselected organizations share the responsibility of maintaining the blockchain and determining data access rights. Industries in which many organizations have common goals and benefit from shared responsibility often prefer consortium blockchain networks. For example, the Global Shipping Business Network Consortium is a not-for-profit blockchain consortium that aims to digitize the shipping industry and increase collaboration between maritime industry operators.
What are blockchain protocols?
The term blockchain protocol refers to different types of blockchain platforms that are available for application development. Each blockchain protocol adapts the basic blockchain principles to suit specific industries or applications. Some examples of blockchain protocols are provided in the following subsections:
Hyperledger fabric
Hyperledger Fabric is an open-source project with a suite of tools and libraries. Enterprises can use it to build private blockchain applications quickly and effectively. It is a modular, general-purpose framework that offers unique identity management and access control features. These features make it suitable for various applications, such as track-and-trace of supply chains, trade finance, loyalty and rewards, and clearing settlement of financial assets.
Ethereum
Ethereum is a decentralized open source blockchain platform that people can use to build public blockchain applications. Ethereum Enterprise is designed for business use cases.
Corda
Corda is an open-source blockchain project designed for business. With Corda, you can build interoperable blockchain networks that transact in strict privacy. Businesses can use Corda’s smart contract technology to transact directly, with value. Most of its users are financial institutions.
Quorum
Quorum is an open-source blockchain protocol that is derived from Ethereum. It is specially designed for use in a private blockchain network, where only a single member owns all the nodes, or in a consortium blockchain network, where multiple members each own a portion of the network.
How did blockchain technology evolve?
Blockchain technology has its roots in the late 1970s when a computer scientist named Ralph Merkle patented Hash trees or Merkle trees. These trees are a computer science structure for storing data by linking blocks using cryptography. In the late 1990s, Stuart Haber and W. Scott Stornetta used Merkle trees to implement a system in which document timestamps could not be tampered with. This was the first instance in the history of blockchain.
The technology has continued to evolve over these three generations:
First generation – Bitcoin and other virtual currencies
In 2008, an anonymous individual or group of individuals known only by the name Satoshi Nakamoto outlined blockchain technology in its modern form. Satoshi’s idea of the Bitcoin blockchain used 1 MB blocks of information for Bitcoin transactions. Many of the features of Bitcoin blockchain systems remain central to blockchain technology even today.
Second generation – smart contracts
A few years after first-generation currencies emerged, developers began to consider blockchain applications beyond cryptocurrency. For instance, the inventors of Ethereum decided to use blockchain technology in asset transfer transactions. Their significant contribution was the smart contracts feature.
Third generation – the future
As companies discover and implement new applications, blockchain technology continues to evolve and grow. Companies are solving limitations of scale and computation, and potential opportunities are limitless in the ongoing blockchain revolution.
What are the benefits of blockchain technology?
Blockchain technology brings many benefits to asset transaction management. We list a few of them in the following subsections:
Advanced security
Blockchain systems provide the high level of security and trust that modern digital transactions require. There is always a fear that someone will manipulate underlying software to generate fake money for themselves. But blockchain uses the three principles of cryptography, decentralization, and consensus to create a highly secure underlying software system that is nearly impossible to tamper with. There is no single point of failure, and a single user cannot change the transaction records.
Improved efficiency
Business-to-business transactions can take a lot of time and create operational bottlenecks, especially when compliance and third-party regulatory bodies are involved. Transparency and smart contracts in blockchain make such business transactions faster and more efficient.
Faster auditing
Enterprises must be able to securely generate, exchange, archive, and reconstruct e-transactions in an auditable manner. Blockchain records are chronologically immutable, which means that all records are always ordered by time. This data transparency makes audit processing much faster.
What is the difference between Bitcoin and blockchain?
Bitcoin and blockchain might be used interchangeably, but they are two different things. Since Bitcoin was an early application of blockchain technology, people inadvertently began using Bitcoin to mean blockchain, creating this misnomer. But blockchain technology has many applications outside of Bitcoin.
Bitcoin is a digital currency that operates without any centralized control. Bitcoins were originally created to make financial transactions online but are now considered digital assets that can be converted to any other global currency, like USD or euros. A public Bitcoin blockchain network creates and manages the central ledger.
Bitcoin network
A public ledger records all Bitcoin transactions, and servers around the world hold copies of this ledger. The servers are like banks. Although each bank knows only about the money its customers exchange, Bitcoin servers are aware of every single Bitcoin transaction in the world.
Anyone with a spare computer can set up one of these servers, known as a node. This is like opening your own Bitcoin bank instead of a bank account.
Bitcoin mining
On the public Bitcoin network, members mine for cryptocurrency by solving cryptographic equations to create new blocks. The system broadcasts each new transaction publicly to the network and shares it from node to node. Every ten minutes or so, miners collect these transactions into a new block and add them permanently to the blockchain, which acts like the definitive account book of Bitcoin.
Mining requires significant computational resources and takes a long time due to the complexity of the software process. In exchange, miners earn a small amount of cryptocurrency. The miners act as modern clerks who record transactions and collect transaction fees.
All participants across the network reach a consensus on who owns which coins, using blockchain cryptography technology.
What is the difference between a database and a blockchain?
Blockchain is a special type of database management system that has more features than a regular database. We describe some significant differences between a traditional database and a blockchain in the following list:
- Blockchains decentralize control without damaging trust in the existing data. This is not possible in other database systems.
- Companies involved in a transaction cannot share their entire database. But in blockchain networks, each company has its copy of the ledger, and the system automatically maintains consistency between the two ledgers.
- Although in most database systems you can edit or delete data, in blockchain you can only insert data.
How is blockchain different from the cloud?
The term cloud refers to computing services that can be accessed online. You can access Software as a Service (SaaS), Product as a Service (PaaS), and Infrastructure as a Service (IaaS) from the cloud. Cloud providers manage their hardware and infrastructure and give you access to these computing resources over the internet. They provide many more resources than just database management.If you want to join a public blockchain network, you need to provide your hardware resources to store your ledger copy. You could use a server from the cloud for this purpose too. Some cloud providers also offer complete Blockchain as a Service (BaaS) from the cloud.
What is Blockchain as a Service?
Blockchain as a Service (BaaS) is a managed blockchain service that a third party provides in the cloud. You can develop blockchain applications and digital services while the cloud provider supplies the infrastructure and blockchain building tools. All you have to do is customize existing blockchain technology, which makes blockchain adoption faster and more efficient.
What are AWS Blockchain services?
AWS Blockchain services provide purpose-built tools to support your requirement. You can use them to build everything from a centralized ledger database that maintains an immutable record of transactions to a multi-party, fully managed blockchain network that helps eliminate intermediaries. AWS has numerous validated blockchain solutions from partners who support all major blockchain protocols, including Hyperledger, Corda, Ethereum, Quorum, and more. As a result, you can develop blockchain and ledger applications more easily, quickly, and efficiently with AWS. Some useful AWS Blockchain services are as follows:
Amazon Quantum Ledger Database (QLDB) is a fully managed ledger database that provides a transparent, immutable, and cryptographically verifiable transaction log. It has a built-in journal that stores an accurate and sequenced entry of every data change. The journal is append-only, meaning that users can add data to the journal but cannot overwrite or delete it.
Amazon Managed Blockchain is a fully managed service that makes it easy to join public networks or create and manage scalable private networks using Hyperledger Fabric and Ethereum. Get started with blockchain by creating an AWS account today.
Implementing Blockchain in Your Company
1. Why is Blockchain Important for Business?
The blockchain technology has emerged as an innovative solution with the potential to transform the way businesses are conducted across various industries. Its importance is grounded in a series of crucial benefits, including security, transparency, and efficiency.
The benefits of blockchain for businesses encompass enhanced security through robust encryption and transaction immutability, complete transparency with real-time visibility and traceability, as well as operational efficiency through process automation and significant cost reduction by eliminating intermediaries. These elements combined enhance trust, mitigate risks, and create opportunities for innovation across different sectors.
2. Evaluating Needs and Objectives
Before adopting blockchain, it is crucial to identify business issues it can solve, such as inefficiencies, lack of transparency, or high costs. Setting specific, measurable, and realistic goals is essential, including deadlines and relevant KPIs, enabling effective and adaptable implementation.
3. Educating the Team
Preparing your team for blockchain implementation involves training on blockchain principles, technical understanding, and security measures, as well as ensuring they comprehend the relevant use cases for your industry. This establishes a solid foundation for effective blockchain adoption and enables the team to contribute to the implementation’s success.
4. Exploring Platform Options
When choosing the appropriate blockchain platform, such as Ethereum, Hyperledger, or Binance Smart Chain, it is crucial to consider critical requirements like scalability, costs, and security. Ethereum is known for smart contracts and widespread adoption, while Hyperledger is a solid choice for enterprise applications. Factors such as scalability, transaction costs, security, consensus type, and support ecosystem should be assessed according to your company’s specific needs and project, ensuring a successful and efficient blockchain implementation.
5. Creating a Strategic Plan
6. Selecting an Implementation Team
Assembling a blockchain implementation team requires defining clear roles, such as project leader, blockchain architect, developers, administrator, and business analyst, each with specific responsibilities. Additionally, identifying required experts, such as security, legal, data privacy, and smart contract specialists, is crucial to address technical, legal, and security issues, ensuring a successful implementation that aligns with the company’s strategic goals.
7. Choosing the Right Approach
The decision to develop in-house or opt for third-party solutions is crucial when adopting blockchain. In-house development offers complete control and customization but requires significant resources and technical expertise. On the other hand, third-party solutions can expedite implementation and provide specialized support but may be less flexible. The choice depends on internal capabilities, project goals, and the balance between control and agility, seeking the most suitable strategy for your company.
8. Developing and Testing Applications
When creating blockchain applications, two key elements are essential. First, the development of smart contracts, which are the building blocks of blockchain functionality. They must be carefully designed to ensure they automatically execute agreements and rules securely and effectively. Secondly, security testing is crucial to identify and mitigate potential vulnerabilities. This involves a careful assessment of resistance to threats, cyberattacks, and system failures, ensuring that the blockchain application is robust and secure for use. These steps are essential to ensure that your blockchain implementation is successful, reliable, and protected against risks.
9. Starting with Pilot Projects
Beginning with pilot projects is a prudent approach when implementing blockchain, as it reduces risks and allows for gaining experience. Initially, selecting specific business areas to test the technology helps identify challenges and opportunities. As pilot projects demonstrate success and learning, gradual expansion to other areas of the company becomes feasible. This enables organic, evidence-based adoption, maximizing the benefits of blockchain while minimizing potential setbacks.
10. Evaluating Regulatory Requirements
It’s crucial to ensure that blockchain implementation is in full compliance with local and international regulations. This requires a detailed analysis of the laws and regulations applicable to your industry and blockchain technology in your jurisdiction. Collaborating with legal consultants specialized in blockchain to interpret and correctly apply these regulations is essential. Additionally, establishing internal compliance policies, such as Know Your Customer (KYC) and Anti-Money Laundering (AML), is essential to mitigate legal risks and ensure that the implementation occurs within regulatory parameters.
11. Empowering Your Team
Success in blockchain implementation relies on empowering your team. This includes providing ongoing training on blockchain, covering everything from the basics to advanced technical aspects, and ensuring that the team stays updated on the constant developments in the technology. Keeping a well-informed and skilled team is crucial for the efficient utilization of blockchain, maximizing its benefits, and staying ahead of innovation.
12. Monitoring Performance
To ensure ongoing success, it’s essential to establish clear success metrics that align with the implementation’s objectives. This allows for an accurate assessment of progress and outcomes over time. Constantly monitoring these metrics and evaluating performance is crucial for identifying areas of improvement, making adjustments as necessary, and ensuring that the blockchain continues to deliver the desired benefits.
13. Making Adjustments and Optimizations
After the initial implementation, it’s crucial to maintain a mindset of continuous improvement. This involves the ongoing identification of areas for optimization, whether in operational efficiency, security, or scalability. By making agile adjustments as needed, the company can maximize the benefits of blockchain and ensure that the technology continues to align with the ever-evolving business needs.
