Blockchain has become a very hot topic. While mainly associated with cryptocurrencies, it is much more than digital money. It is actually the underlying technology behind them and its inherent qualities, such as immutability, transparency, and the secure nature of handling data and transactions, can potentially revolutionize numerous industries, including finance, supply chain management, healthcare, and many others. With its rising popularity, many businesses are exploring its applications and the possibility of incorporating it into their products and services.
Below, we will discuss what blockchain is exactly, how blockchain apps differ from traditional apps, which apps it is suitable for and why, and, more importantly, how much you will have to invest in blockchain app development.
What are blockchain and blockchain apps?
Blockchain is a distributed ledger technology where the data is organized in a chain-like structure, with each block of data built upon the previous one. This technology enables the creation of transparent, immutable, and decentralized records of transactions or data that can not be deleted or altered. These records are stored across a network of computers or nodes, with each node having a copy of the ledger, ensuring that no single entity controls the entire system. Consequently, a blockchain app runs on this distributed ledger. Unlike traditional apps, blockchain apps do not have a server as a mediator between users who exchange any type of data, information or money. All participants in the blockchain network are users and mini-servers simultaneously responsible for verifying and sending data.
Blockchain-based apps are broadly divided into two types, namely:
Cryptocurrency-based solutions: facilitate transactions involving cryptocurrencies, i.e., they allow users to sell and buy cryptocurrencies and conduct other transactions with them. They include various apps such as wallets or cryptocurrency exchange platforms.
Non-cryptocurrency-based solutions: leverage blockchain technology but do not primarily deal with cryptocurrencies. Instead, they use distributed ledger systems to enhance business processes in various industries.
How do blockchain apps differ from traditional apps?
Decentralization:
Blockchain apps: Operate without a central authority or government, relying on a distributed network of computers (nodes) to maintain integrity and security. All peers in the network collaborate to verify and validate information stored in the blockchain ledger.
Traditional apps: Data is stored on a central server, controlled by a single entity.
Data Integrity:
Blockchain apps: Use a data structure that can only be appended to and not altered or deleted, ensuring immutability.
Traditional apps: Data can be altered or deleted by those with the appropriate access rights, which can lead to potential security vulnerabilities.
Security:
Blockchain apps: With data distributed across multiple nodes, there is no single point of failure, making it harder for hackers to compromise the system.
Traditional apps: Centralized storage means a single point of failure. If the central server is hacked, all data can be compromised.
Efficiency:
Blockchain apps: Transactions are approved by the network of nodes, eliminating the need for a central authority. It can make the process faster and more efficient for certain transactions.
Traditional apps: Transactions often require approval from a central authority, which can introduce delays.
Transparency and Collaboration:
Blockchain apps: Often open-source, allowing for collaboration among developers, and forcing innovation.
Traditional apps: Tend to be closed-source and proprietary, making it difficult for outsiders to understand how they work or contribute to their development.
Smart Contracts:
Blockchain apps: Often utilize smart contracts, which are self-executing contracts with the terms directly written into code. It allows for complex transactions to be carried out safely and securely.
Traditional apps: Typically lack this capability, relying instead on traditional programming logic, which can be less secure and more prone to human error.
What are blockchain apps use cases?
Decentralized nature of blockchain makes it exceptionally secure. Besides, it is tamper-proof, as once data is entered into the system, it cannot be changed or deleted. These advantages make it suitable for apps that require a high degree of security, such as financial services or healthcare, or for apps where data integrity is critical, such as supply chain management or voting systems. Here are some specific technical features for blockchain apps in key business domains:
Healthcare: Ensures secure management of patient health records, clinical trials data, immutable medical records, and secure data sharing among providers.
Supply Chain: Offers transparency and real-time traceability of products from any industry, for instance for healthcare medicines, from origin to end-user, reducing fraud and preventing counterfeiting.
Real Estate: Provides secure and transparent property transactions, immutable records, streamlined title transfers, and ownership verification.
Media and Entertainment: Manages content ownership, rights, royalty payments, distribution, piracy prevention, and help fan engagement through tokenized assets.
Finance and Banking: Enhances security, efficiency, and transparency in transactions, reducing costs and risks in cross-border payments, remittances, and identity verification.
What factors impact blockchain app development cost?
The price of creating a blockchain app can differ greatly based on a variety of aspects, including the complexity of the solution, type of app, development approach, etc. Here are some major elements that influence the overall cost of development.:
Complexity of the Project: The complexity level of the blockchain app is a significant cost factor. Simple applications with basic functionality are less costly than more complex, feature-rich apps with more advanced requirements.
Low-complexity blockchain apps usually have minimal features and integrations with basic Smart Contract and basic UX/UI.
Medium-complexity blockchain apps have more advanced features and Smart Contracts, Enhanced UI/UX design and additional Integration with external APIs and services.
High-complexity blockchain apps involve complex data handling, regulatory compliance, and advanced blockchain features and multiple smart contracts.
Development approach: Development team, its location, and the level of expertise of the developers will also greatly impact the cost. Like with any other software, there are three main development approaches. Building an application with an in-house team provides full control but comes with high costs for salaries, benefits, workspace, and management responsibilities. Hiring freelancers is cost-effective and flexible, providing specialized skills for specific project needs, but managing multiple freelancers can be challenging due to coordination issues, varying quality, and availability. Working with a development agency provides a comprehensive solution with experienced teams handling the entire development process.
When attracting professional software development companies, the cost, in its turn, will also depend on the team you choose and their location. In 2024, the approximate hourly charges for software development across different regions are as follows:
North America (USA, Canada): $75-$125 per hour
Western Europe (Poland): $45-$100 per hour
Eastern Europe (Ukraine): $25-$55 per hour
Asia (India, China): $20-$60 per hour
Latin America (Argentina, Brazil): $20-$60 per hour.
Blockchain Type and Platform: Blockchain apps can be built on different platforms, each with its own unique characteristics suitable for different use cases. Such platforms provide the underlying infrastructure for developing and deploying blockchain apps. They can be:
Public: Accessible to anyone without restrictions, ensuring transparency and decentralization.
Private: Controlled by specific organizations or groups, restricting access to authorized participants.
Hybrid: Combine characteristics of both public and private platforms, allowing for flexibility in access control and transparency.
Custom: Developed from scratch to meet specific business or application requirements.
Some popular Blockchain platforms are IBM Blockchain, Ethereum, Hyperledger Fabric, Corda, Tron, Stellar, OpenChain, Multichain, and EOS. Which blockchain platform you select will impact the development costs. For instance, established platforms like Ethereum have a strong developer community and extensive support, often making development more cost-effective. At the same time, custom-built or less common blockchain platforms, although providing a tailored solution and more control, may require specialized skills and can be more expensive to develop and maintain.
Blockchain app type: Different types of blockchain apps come with varying levels of complexity, security requirements, and development time, contributing to the development cost. Here are several of the most common types of blockchain apps:
NFT marketplaces: solutions acting as public blockchain platforms for users to buy and sell NFTs.
Decentralized apps (DApps): operate independently through the use of smart contracts, which run on blockchain or a distributed ledger.
Decentralized Autonomous Organizations (DAOs): operate without any governing body, with all members working collectively toward the success of a single entity.
Cryptocurrency wallets: allow users to buy and sell cryptocurrencies, store them, and effectively manage transactions.
Cryptocurrency exchange (trading apps): allows users to exchange multiple cryptocurrencies and buy and sell digital or fiat currencies.
Level of decentralization: While blockchain technology inherently supports decentralization, the extent to which an app is decentralized can differ. Some apps use a fully decentralized approach, where control and data are distributed across many nodes. Others might have partial decentralization, where some components are centralized while others use blockchain for specific functions. A higher level of decentralization involves more nodes and a more complex consensus mechanism (like Proof of Work or Proof of Stake). It requires more computational power, storage, and sophisticated architecture, which can increase development costs. For example, a blockchain app with many nodes and complex consensus protocols will need more resources to operate than one with fewer nodes or simpler mechanisms.
Smart Contract Development: A smart contract is a self-executing program that automatically carries out the terms of an agreement when certain conditions are met without needing a middleman. For example, if you agree to pay for a service, a smart contract can automatically release payment when the service is delivered. Developing secure blockchain smart contracts is essential for automating and enforcing agreements on the blockchain. Although not all blockchain apps require them, they are a crucial component for many blockchain apps, especially those involving automated transactions or decentralized finance (DeFi). The complexity of smart contracts, their security requirements and the necessity for testing and auditing could significantly impact the total cost. More complex smart contracts with complex business logic, multiple conditions, and interactions with other contracts or systems require more time and expertise, which increases the cost.
Integration with External Systems: Integrating a blockchain application with existing business software, third-party systems, or APIs increases development costs due to the need for customization, compatibility testing, and the creation of integration tools like APIs or middleware. Ongoing maintenance to adapt to updates in the blockchain app or the external systems further adds to the overall cost.
App Design: While the primary function of a blockchain-based app revolves around blockchain and smart contracts, a well-designed UI/UX is crucial for user adoption. Complex UX/UI design and the need for responsive design across various devices can lead to increased development costs.
It is worth mentioning that, just like with any other app, developing a blockchain app is just the beginning of the journey. It's equally important to consider maintenance and updates and not to overlook marketing expenses. Support and maintenance costs typically add about 10-15% to the overall cost of a blockchain app development annually.
So, how much will it cost to build a blockchain app?
Creating a blockchain app may cost between $15,000 to $300,000.
Based on the app's complexity, here are some rough estimates:
Basic blockchain app: $40,000 to $60,000. These can be solutions like simple payment apps developed around existing cryptocurrencies, basic Smart Contract development.
Moderate blockchain app: $60,000 to $150,000. These apps are developed on existing blockchain platforms with moderate decentralization and incorporate both centralized and decentralized elements.
Complex blockchain app: $150,000 to $300,000+. These can be solutions like highly complex healthcare apps developed on top of existing blockchain platforms or modern Web 3.0-based decentralized apps.
Based on the type of the app, the average cost range is:
NFT Marketplace apps typically range from $50,000 to $130,000.
DApps development may cost from $35,000 to $150,000.
DAO app development can range between $15,000 to $30,000.
Cryptocurrency Wallet app development varies from $30,000 to $200,000
Cryptocurrency Exchange app development typically falls between $50,000 to $200,000.
Based on the Blockchain Type and Platform, the average cost range is:
Public: $15,000 +
Private: $25,000+
Hybrid: $50,000+
Custom: $100,000+
Bottom Line:
While traditional apps are well understood, developing blockchain apps brings both challenges and opportunities. This technology offers significant benefits that can transform various industries by providing cost efficiencies, increased security, and fraud prevention, making it worth considering for your next app development project. Developing a blockchain-based app can cost from $15,000 to $300,000 or more, depending on the factors discussed earlier in this blog.
