5 Things to Consider When Picking Your Blockchain
The world of blockchain is full of choices. So many options, in fact, that it can be hard to know which blockchain is right for you. Each blockchain has its own unique features. Some offer smart contracts, some provide more security, some are great for DAOs, and others . . . eh, not so much. In some cases, you can even go on gut feeling. It all depends on what you’re comfortable with and what you’re trying to accomplish.
Choosing a blockchain doesn’t have to be complicated if you know what you’re looking for.
What is a Blockchain?
The blockchain can be described as a distributed and immutable ledger to record transactions and manage assets. What makes the blockchain and, by extension, Web3, distinctive is that it’s decentralized. It relies on a global network of computers to verify and validate transactions, without a central authority. This ensures that it’s trustless, democratic, and secure.
Several industries have started to gravitate towards implementing blockchain into their operations: finance, healthcare, supply chain and manufacturing, and e-commerce, to name a few. It’s predicted that the global blockchain market will reach $67.4 billion by 2026.
The demand for blockchain technology is so high that the number of chain platforms (both public and private) has topped 1,000, with over 12,000 different cryptocurrencies and virtual coins in the market. Furthermore, some of the most prominent players in the tech space have started private blockchains, including IBM, Linux, Microsoft, and Oracle.
Which begs the question; how do you pick a chain?
What to Consider
There should be a fair amount of research and thought given to the blockchain you select. Sure, you could pick Ethereum right off the bat. It’s a favorite of programmers and developers because of its potential applications, such as smart contracts that automatically execute when conditions are met, decentralized applications (dApps), and non-fungible tokens (NFTs). Forbes ranks it as the second most valuable blockchain, after Bitcoin.
But is it the best choice for you? Is it the best type of blockchain for your needs?
Types of Blockchains
There are three different types of blockchains for a builder to choose from: Public, Private, and Permissioned. They break down as follows:
- Public Blockchain - Anyone is able to join and participate in the core activities of the chain. Any user can read, write, and audit the activities, which contributes to an environment that is self-governed, democratic, and decentralized. Public blockchains are the most recognizable types and are primarily used for cryptocurrencies and DAO building. Popular public blockchains include Ethereum, Binance, Solana, Polkadot, and Cardano.
- Private Blockchain - This is an invitation-only blockchain where someone’s identity is verified as authentic by a network operator or a dedicated protocol implemented by a smart contract to approve the user. In this manner, the blockchain controls who has access to the network and which users can maintain the shared ledger. The owner/operator has the right to override, edit or delete entries on the blockchain if they choose to.
Private blockchains are not decentralized and are more of a closed database with a specific function. This form of blockchain is used primarily by organizations such as Tezos, IBM, and Hyperledger Fabric.
- Permissioned/Hybrid Blockchain - This hybrid of public and private blockchains is highly customizable. Anyone can join the permissioned network, as long as their identity is suitably confirmed. Some members are given special and designated permissions to perform certain activities on the chain. So while most activities are visible, certain permissions are siloed to a specific group of individuals. Blockchains such as this are used by some retailers, such as Walmart, using a custom version of Hyperledger Fabric.
Choosing a Blockchain
This is by no means a definitive list but a good starting point for making a decision.
1. Define Your Purpose.
The first step in choosing a blockchain is to define your purpose. What problem are you looking to solve? What do you want to use blockchain for? Are you looking to create a new cryptocurrency? Are you looking to build a Web3 tool or dApp? Are you looking to build and operate a DAO? There are many different types of blockchains with varied capabilities. Some blockchains are better suited for specific applications than others.
For example, if you're looking to create a decentralized marketplace or a DAO, you'll need a blockchain that supports smart contracts. Both Ethereum and Polygon are popular choices but are subject to gas fees. So that’s something to consider.
2. What’s The Consensus Mechanism?
The consensus mechanism is how transaction validators come to agreement on the contents of the shared ledger. The most popular consensus mechanisms are Proof of Work (PoW) and Proof of Stake (PoS). PoW is used by Bitcoin, while PoS is used by Ethereum, EOS, and TRON. Each consensus mechanism has its pros and cons, so it's important to choose one that aligns with your business goals.
These mechanisms also take time to validate the transactions. Some transactions take as little as 5 - 10 min (TRON, Ethereum, Cardano), while others can take up to and over an hour (Bitcoin, Tether). Something to keep in mind.
Scalability is an important factor to consider because it determines how many transactions the blockchain can handle per second. Bitcoin, for example, can only handle about 7 transactions per second (TPS), while Ethereum can handle 25 due to the smart contracts. However, you should also consider that Litecoin can handle 56, Cardano can do 250, and Solana can hit 29,000.
Depending on your use case, you might be ok with Bitcoin or Ethereum speeds, but the larger you get, the more transactions per second you’ll need. When choosing a blockchain, make sure its scalability meets your needs now and in the future.
Even though every blockchain is based on the same technology, how they utilize that technology and what features they offer are different. For example, if you need a chain that allows for smart contracts, DAOs, and building of dApps, then you can look at Ethereum, EOS, Aragon, and Solana for that. If you’re looking to build custom tokens and launch ICOs (Initial Coin Offering), the Waves has a relatively easy interface. Or, you can use TRON, which is a blockchain platform that is based on operating system technology, and is ideal for anyone that creates content.
Since the main purpose of each blockchain is different, the way they process data, the time it takes to do it, and what features they’re known for, should be considered when deciding where to build.
Once you’ve completed the steps above, and feel you’ve done your due diligence, then go ahead and make your choice, but note: you have to be certain of your decision and commit to it. Most decentralized apps and DAOs live on a single chain and are only aware of the single ecosystem that they're deployed on. So if you build on Polygon, then Polygon is the only world your dApp knows.
Some of the largest dApps are able to deploy the same contracts on different chains, but their smart contracts have no chain interoperability: each smart contract is still contained in their network of choice. That is soon to change, however.
There’s a push within the dApp ecosystem to build a multi-chain ecosystem that will not be limited by boundaries and will allow the exchange of arbitrary data between any set of networks. Such an ecosystem is inevitable and will change how dApps and tools are built and used profoundly.
Soon, within this chain-agnostic era, dApps will not only share liquidity across networks but will also share their business logic and operate as a single entity that spans multiple networks.
Making The Choice
Choosing the right blockchain for your venture can be difficult. With so many different options available, it's hard to know which one is right without doing extensive research. However, you can narrow your choices by immersing yourself in each platform, becoming familiar with Web3, and seeing what other builders are doing. If you need to ask questions, ask away. There are channels on Discord and Telegram, and Web3 visionaries on Twitter, who are willing to help.
If you want to join a specific community or a DAO, you should do so. The best way to determine what you need is to jump in headfirst, and the right choice will become apparent.