Cost of Making Blockchain Application: What Are The Cost-Driving Factors?

Blockchain technology has been around for nearly a decade now, but it has only recently become a household name. Engineers are using this decentralized technology to build more transparent, connected, and distributed apps as the world transitions to a decentralized internet – the blockchain application. The enterprise mobility sector can benefit significantly from blockchain, which goes far beyond cryptocurrencies. Using data from Fortunly, it can be seen that 74% of IT specialists believe blockchain technology has the potential to be a game-changer in the future. 

To keep up with the changing market demands, mobile app development companies use blockchain technology for advancement. But before you dive headfirst into building your own blockchain application, you need to know what it will cost—and what factors could make it more or less expensive for your business.

What Is A Blockchain Application?

A blockchain application is any software program that bases most of its features on the concepts of blockchain technology. While also saving time and money, this tool has the power to increase fairness and accountability. Companies specializing in blockchain development set up and build applications on various platforms to meet the needs of different user groups. Blockchain applications can be highly beneficial in various business sectors, including healthcare, e-commerce, fintech, supply chain management, and more.

Popular Applications of Blockchain 

1. Money Transfer

The use of cryptocurrency transfer apps, which was first made possible by Bitcoin, is currently booming. Because technology may help financial organizations of all sizes save money and time, blockchain is particularly well-liked in the banking industry. Blockchain technology can significantly reduce third-party costs for the biggest banks while decreasing administrative red tape and making ledger systems real-time.

2. Smart Contracts

Smart contracts are similar to regular contracts, but instead of an intermediary, the rules of the contract are enforced in real-time on a blockchain, adding degrees of accountability for all parties involved that are not feasible with conventional agreements. This ensures compliance from all parties involved while saving businesses money and time.

3. Internet of Things (IoT)

The subsequent logical explosion in blockchain applications is the Internet of Things (IoT). With so many IoT applications and security issues, there are more opportunities for hackers to steal your data from devices ranging from Amazon Alexa to smart thermostats as IoT use rises. By exploiting the transparency and supposedly indestructible nature of the technology to keep things “smart,” blockchain-infused IoT offers an additional layer of security to avoid data breaches.

4. Non-fungible Tokens (NFTs)

The most popular blockchain application since cryptocurrencies has been non-fungible tokens (NFTs). These digital products, which are already sweeping the globe, began becoming more prevalent in 2021. NFTs are digital assets sold on a blockchain, allowing a single owner to assert full ownership rights. Now that blockchain technology has been developed, users can claim exclusive ownership of some of their most sought-after digital assets available online.

5. Government

Blockchain technology has some unexpected uses in bettering the government. Certain state governments are already utilizing the technology to secure official records, which can also increase bureaucratic efficiency and accountability and lessen budgetary burdens. Blockchain technology can potentially reduce the amount of paperwork that must be done every year by millions of hours, hold government officials responsible through smart contracts, and promote transparency by keeping a publicly available record of all transactions. By enabling voting on mobile devices while maintaining a high level of privacy and incorruptibility, blockchain-based voting could also improve civic engagement.

Cost-Driving Factors Of Blockchain Application Development

The cost of developing a blockchain app might be difficult to assume as it depends on several factors. Cost estimation is a crucial task that involves considering several aspects of a Blockchain program – from the project goals to acquiring a Blockchain development company. 

The following are the various aspects you should consider when developing a different blockchain application:

1. Niche And Blockchain App Category

Different sectors may have different needs depending on the application, the stakeholders, and the end goals. You may need to invest between $50,000 and $150,000 to build blockchain software for a healthcare enterprise, and you might also need to invest between $40,000 and $100,000 for other industry categories. Determining the criteria specific to your sector is advisable before contacting a blockchain developer or an app development company. Deciding on the category of blockchain app also affects the cost of the development process. 

The two main categories of blockchain application are:

1.1 Cryptocurrency-based solutions

These solutions rely on cryptocurrencies, as suggested by their names, to the furthest extent possible. Wallets, cryptocurrency exchange solutions, DApp, and ICO with DApp solutions are included in this.

1.2 Non-cryptocurrency based solutions

These programs/solutions are unrelated to cryptocurrency and are heavily used in inventory management systems. Non-cryptocurrency-based solutions are also based on distributed ledger technology.

2. Developer Experience

Blockchain is advancing technology. Years of work on blockchain projects haven’t stopped people from learning new ideas that have been added to the technology. Consideration of prior experience addressing relevant topics is always a brilliant idea. The more expertise you bring to the table, the more expenses you could incur when building your blockchain application.

2.1 Freelancers

Although freelancers may be the most affordable option for developing blockchain applications, 80% of firms encounter problems with freelancers’ availability, reaction times, and quality in some situations. If your project is not too big, you can engage a freelancer, as the project gets bigger, the risk factor goes up.

2.2 Agency

Outsourcing an agency for development may be a good choice. They provide development services full-time and have expertise in cutting-edge methodologies like DevOps and Agile.

The price of app development provided by agencies is less compared to an in-house development team. Before they begin working on your project, they approve a contract that lists deliverables and deadlines. As a result, you may rely on them and concentrate more on your primary business skills. 

3. Application Complexity

Application complexity is a measure of the size and number of components that make up an application. It’s the sum of all the parts, including everything from the number of lines of code to the number of files, classes, and functions. Before deploying blockchain, businesses should take the following into account:

3.1 Consensus Mechanism

Every blockchain system uses a unique consensus algorithm that enables transaction authentication for all users – for instance, Proof of Work (PoW) (used by Bitcoin), Proof of Stake (PoS), and other unrelated blockchain-based systems. Therefore, you must assess which approach best suits your needs. 

If the mining mechanism requires high energy and processing time, you can choose the blockchain consensus mechanisms like PoW or if you are looking for a lower cost solution, you can choose PoS, which is created for low energy consumption mining and as an alternative to PoW. 

Other essential factors for consideration include reissuance mechanisms, user permissions, atomic exchanges, signatures, asset issuance, key management and structure, hand-shaking, and address formats.

3.2 Platform

Without starting from scratch, you may create a blockchain app on over 25 platforms, including Hyperledger Fabric, Ethereum, Quorum, and BigChainDB. Therefore, it is advisable to consider which platforms would work best with the objective of your project before moving forward. The minimum price for developing the app across various blockchain networks, including Ethereum, Hyperledger fabric, Ripple, and R3 Corda, starts at $6,000.

• Ethereum: Because it is a public network, every peer may see and access every transaction recorded on the blockchain network. With the programming language Solidity, you may build a blockchain application, establish smart contracts, and form your ecosystem.
• Hyperledger: It is a private network, so only users who have been granted access can see transactions. Hyperledger is an excellent option if you require a corporate data exchange solution within your business. You’ll need a group of Go, Java, and JavaScript blockchain app developers to build an application for this platform.
• R3 Corda: It is a platform that primarily focuses on trade, supply chain management, healthcare, and trade finance. The best feature of Corda, a platform for building private blockchains, is how simple it is to interact with existing systems.
• Ripple: Anyone who wants to build a financial tool should use this platform. With Ripple, you may connect to banks and payment processors and transmit money quickly and easily to any location on Earth. You can make up to five transactions every second with Ripple.

The set of skills your development team will require to use blockchain technology depends on the platform you choose.

3.3 Stack

Every platform has a unique set of blockchain programming languages and tools you should be aware of. Concentrating on the appropriate stacks for optimal development would be best. Since the cost varies with the choice of technologies, one must analyze all the advantages and disadvantages of tech stack to keep the budget intact.

3.4 APIs

Despite the market’s availability of a variety of pre-built APIs for the development process, at some point, it may require you to create an API for a particular use case, such as performing data authentication and auditing, managing smart contracts’ interactions with the system, storing and retrieving data, generating key pairs and addresses, etc. Pre-built API will certainly cost you less than the API that you will be creating from scratch.

3.5 UI/UX

After finalizing all the backend details, making a UI and admin interface is the next stage. Choosing the appropriate front-end programming language, external databases, servers, etc., for your app development process will be done here. Based on the server you choose or the skill set you hire for development of UI/UX of your application, cost may vary.

3.6 Proof

An MVP development strategy is preferable because blockchain is still in its infancy. Simply put, testing a working solution before launching the entire solution is advisable, and this solution should include the essential aspects of the intended application. The sum of all these criteria will determine the degree to which blockchain software is complex. 

The intricacy of the dApp would evaluate the cost breakdown structure, which would like the following:

3.6.1 Low Complexity Blockchain Based Application

• App Type
• Payment applications built around current cryptocurrencies
• Basic smart contract development
• Minimum cost of low complexity blockchain apps – $15k (it may vary depending on the other technical requirements)

3.6.2 Medium Complexity Blockchain Based Application

• App Type
• dApps created with the current blockchain Platform
• Moderate decentralization
• Centralized and decentralized elements both exist in architecture
• Minimum cost of medium complexity blockchain apps – $40k (it may vary depending on the other technical requirements)

4. Industry of Blockchain App

Blockchain suggests integrating the idea of decentralization into conventional digital solutions. The sector of the economy that your blockchain app will operate in and the type of your app heavily influence the cost of blockchain app development. The complexity of the dApp, the number of stakeholders interacting with the app at any given moment, and industry compliances are a few cost-affecting elements that differ from one business to another. 

The basic price range for blockchain application development is between 20K USD – 80K USD. However, these prices may vary from industry to industry.

5. Team Strength 

You might have to put down a more considerable financial commitment if your blockchain app needs additional resources. Choose a team that meets your needs for resources in terms of both number and quality.  You might require a small group of four to five experts for a small-scale project, including a project manager, a backend developer, a blockchain developer, an app designer, and a quality assurance (QA) specialist. This number can go significantly higher for a substantial undertaking like creating and establishing a Decentralized Autonomous Organization (DAO).

6. Agency Size

If you are looking forward to going with the app development agency, you might need to consider the agency size such as large size blockchain app development company, medium and small app development agencies – as it will also affect the pricing of your overall development process. 

• The initiatives that large-cap firms take are chosen extremely carefully and mostly expensive. Any number of factors, such as the need to keep the portfolio up to a certain quality or the financial management of a large workforce, could be to blame for the excessive cost estimate. 
• On the other hand, small agencies typically charge significantly less than medium and large app development companies because they are in a desperate need to build their work portfolios.
• Whereas mid-size blockchain app development Companies are the best choice because they have the expertise to tackle the project and don’t offer prices that would break the brand’s budget. 

7. Personalization

Consider creating a customized blockchain application to satisfy the various consumer needs and earn significant ROIs. Use innovative design techniques to introduce features that improve the end-user experience. Personalizing the application for users is a good choice since most users may not be experienced with utilizing DApps.

An emerging company cannot afford to lose early clients over something as trivial as choosing the correct features. Therefore, personalizing the application may cost you more depending on the functionalities, but it could be the best investment if you want to keep your customer base.

Blockchain Development Cost Based On Application Types

Let’s now evaluate the potential costs of the most common types of blockchain applications after discussing all the key aspects influencing the cost of blockchain app development.

1. NFT Marketplace

Modern-day business enthusiasts are finding NFTs to be a popular investment. Leading technology companies like Facebook, Twitter, and Microsoft, as well as top fashion brands like Gucci, Gabbana, Louis Vuitton, Adidas, and Nike, are spending time and money creating this extremely ambitious cryptographic asset. 

If you want to create an NFT marketplace, you should work with a company that can test your concept and project development costs and develop and deploy a result-driven platform. An NFT marketplace might cost around $40,000 or higher to develop.

2. DApps

DApps use decentralized technologies to provide user-oriented functionality. These applications use a distributed ledger to track transactions and don’t rely on an intermediary to control data flow. To produce a mobile application focused on results, a DApp development company can consider your needs. A DApp can be made for a minimum starting price of approximately $40,000 – $80,000, which may vary depending upon the other factors.

3. DAO

An organization that operates in the digital and decentralized infrastructure is known as a decentralized autonomous organization (DAO). To assist you in setting up DAO for your company, you might employ a DAO agency. A DAO development may cost you around $5000 and higher depending upon the complexity.

4. Cryptocurrency Wallet App

Cryptocurrency wallets are being used by businesses to collect cryptocurrency tokens, efficient data handling, and cryptocurrency transactions. Using a variety of cryptocurrencies to make and handle one-of-a-kind transactions is possible with these wallets. To design a dynamic and feature-rich application to manage your data on cryptocurrency transactions, you can work with an app development company that develops cryptocurrency wallets.

5. Cryptocurrency Exchange App

The cryptocurrency exchange app industry is booming, offering a secure and reliable application infrastructure to allow users to trade crypto tokens. Your crypto plans might become a profitable mobile app with the aid of a cryptocurrency-exchange app development business. Users of these apps embrace the advantage of innovative digital resources and cutting-edge technologies that enable crypto aficionados to trade perfectly. A bitcoin trading app’s design, development, and deployment may cost you $40k and higher depending upon the additional features and complexity.

WrapUp!

With a thorough understanding of the cost structure, we may analyze various components to determine a likely assessment. A new blockchain app may cost you around $40,000 and higher to design, develop, and test but depending on the size of the development team or app development company, the price may vary. According to the prediction by Fortune Business Insights, a CAGR of 56.3% is predicted for the global blockchain market during the projection period as it increases from USD 7.18 billion in 2022 to USD 163.83 billion by 2029. Which is why, it is an ideal time to invest in blockchain technology and blockchain app development to stay on top of the competition. 

Working with a blockchain app development business may make getting a precise quotation for your project easier. Depending on the needs of the sector right now and technological developments, the cost estimate might alter, but an effective conversation is still needed. Additionally, you can get in touch with Idea Usher for best solutions for your blockchain app development and all associated factors.

Contact us to take your business a notch higher with our backend development services.

E-mail: [email protected]

Phone Numbers : (+91) 946 340 7140, (+91) 859 140 7140 and (+1) 732 962 4560

FAQ

Q. Is implementing blockchain expensive?

A. Because blockchain is a feature-dependent technology, the final cost will depend on the project’s particulars. We should note that the price of developing a blockchain application starts at $5,000 and can reach $200,000.

Q. What makes blockchain so costly?

A. Blockchain requires several processing nodes dispersed over multiple participants because of its distributed architecture, which raises transaction prices overall and causes scalability and performance problems.

Q. What is the fundamental skill requirement for blockchain?

A. A developer is a requirement. Today’s developers can leverage all of their abilities with blockchain technology. As a result, proficiency in data structures, web development, and fundamental programming languages is necessary to work as a blockchain developer.

Q. What 4 different sorts of Blockchains are there?

A. The four different blockchains are – Public Blockchain, Private Blockchain, Hybrid Blockchain, and Consortium Blockchain.