Building a cloud-based blockchain business

Looking to build a cloud-based blockchain business? DigitalOcean has experience working with multiple blockchain customers, and we understand the unique needs of blockchain businesses. Read on for more details on the basics of blockchain, use cases, and more.

Understanding the basics of blockchain

In a recent TechRepublic Research study, 64% of professionals said that they expect blockchain to affect their industry in some way, with most expecting the impact to be positive.

Blockchain has the potential to completely change how people do business, and innovative startups are taking notice. Blockchain founders aren’t approaching the application of blockchain as incremental change but are interested in fundamentally changing how business is conducted.

The opportunities are endless. Organizations use blockchain to actualize ideas like digital verification systems that ensure creators are properly paid for their work, safer and more efficient data transfer systems, and technologies supporting fast and secure digital identity verification. With these visions, startups and SMBs around the globe are prepared to usher in a new era of digital innovation.

Blockchain vs. cryptocurrency

The most well-known use for blockchain technology is cryptocurrency, and people often use the terms synonymously. Blockchain and cryptocurrency, however, are not the same. Blockchain is the technology that enables cryptocurrency, but that’s far from its only use.

Cryptocurrencies use a distributed ledger but are based on a digital store of value and primarily exist as a source of electronic currency. Cryptocurrencies like Bitcoin rely on distributed ledger technology to keep anonymity. While anyone can look at the ledger and see that a transaction took place, no one will know who or what was involved. Alternatively, businesses who use blockchain keep careful internal records allowing for the transparency of transactions through the distributed ledger while keeping the individual data secure with the block’s encryption.

While blockchain has gained notoriety through cryptocurrency, the technology is used by many businesses across industries. Any type of data can be stored using blockchain, and fields from finance to healthcare and retail operations to supply chain management all benefit from the security, transparency, and efficiencies blockchain technology provides.

For details about the cloud computing needs of Blockchain and insight into how to make the right decisions for your business, download our free guide: Unlock the power of blockchain.

How blockchain works

Blockchain enables record-keeping in a secure, immutable way. The data is encrypted within blocks. Each block contains the data itself, a hash that’s unique to the block, and the previous block’s hash. New blocks are created by generating a new hash, and these new hashes are validated through consensus mechanisms, often called proofs. When validated blocks are accepted to the network, the block is added to the blockchain.

If anyone tampers with the data in one block, the hash changes. Thus, all the hashes in subsequent blocks are rendered incorrect. Since the validation mechanisms are distributed across multiple computers and owned by different individuals, it’s nearly impossible to tamper with the data in a blockchain.

Top use cases for blockchain

Because of its distributed ledger and stringent consensus mechanisms, blockchain is an excellent solution for secure information exchange. While the creation of new blocks and the process of adding them to the chain allows for complete transparency, the data inside the blocks is encrypted, making blockchain an extremely safe and secure way to store and use important data. Some of the most popular use cases for blockchain are:

• Secure transfer of medical data
• Real estate processing
• Supply chain management
• Smart contracts
• Music royalty tracking and other copyright management
• Logistics tracking

Build your blockchain business on DigitalOcean

DigitalOcean’s simple, low-cost Droplet virtual machines have proven to be an excellent match for the needs of blockchain businesses. If you are starting or already running a blockchain business and are in need of a low-cost, reliable, and developer-friendly cloud solution, try DigitalOcean today. Our range of products and industry-leading pricing can enable the growth of your blockchain business, and you can get started today in just a few clicks. Contact our sales team today to learn more.