Build Your Own Blockchain: The First Step to Building a Decentralised Future

Introduction

It feels like only yesterday that the world went crypto crazy as Bitcoin's value started skyrocketing, and anyone with a bit of extra dough wanted in on the rocket to the moon. But the reality is that there are thousands of coins to choose from nowadays, and they don't all rely on blockchain. That said, blockchain is an interesting technology as a diverse range of concepts are involved in making it work. This article is the first step in a series where I will build a blockchain-based cryptocurrency, exploring the fundamentals of cryptography, transactions and decentralised networks.

By the end of this series, you'll have built a minimal but functional blockchain implementation, allowing you to grasp the underlying principles of decentralised systems.

A little backstory—in early 2020, when COVID-19 was in full force and I was unemployed, I decided to use my extra time to explore new technologies. I wrote a blog post about creating my own blockchain-based cryptocurrency, partly out of curiosity and partly to stay productive during uncertain times. That blog no longer exists, but at the time, the post gained a lot of traction—perhaps due to the widespread boredom and increased screen time brought on by the pandemic.

However, on the chance that people found it helpful, but primarily for my entertainment, I decided to revisit and expand this instruction post into a series, taking a deeper dive into the fundamental concepts.

It should be noted that I am not advocating for blockchain, any cryptocurrency, or even decentralised economies. Those raise both economic and political questions. This is just a technology blog, and my interests are purely based on technical enquiry.

Goals & Overview

Before we dive into the technical details, let's clarify the purpose of this series:

• Educational Focus: This is not about creating a full-scale cryptocurrency but a guided learning experience.
• Privacy, Security & Decentralisation: Understanding how blockchain strengthens these principles.
• Zero Trust & Trust Minimization: Exploring why blockchain technology is designed to operate in a trust-minimised environment.

The Evolution of Centralised vs. Decentralised Systems

Historically, currencies (and most digital systems) have been centralised. That means that a single entity, like a government, controls access and makes decisions about it. Now, you might think that a dollar is worth a dollar and the US Government doesn't need to be involved in cash transactions, but in fact, what makes a dollar worth a dollar is that the US Government backs its value, controls the printing of the dollar, and ultimately makes decisions that affect its perceived value.

While centralised systems offer efficiency and control, they pose significant risks:

• Single Point of Failure: If the central authority fails (e.g., a bank going bankrupt or a company shutting down), users can lose access to their funds or data.
• Censorship & Control: Centralised platforms can restrict access, modify data, or enforce arbitrary rules.
• Security Risks: A single database is an attractive target for hackers, making data breaches more frequent.

Decentralised systems, like blockchains, aim to distribute control across many participants, removing the dependency on a single entity. Instead of trusting a single company or authority, trust is distributed across a network of independent nodes.

This is not to say decentralised systems are immune to problems. From an economic standpoint, they carry significant risks, including volatility, regulatory uncertainty, and scalability challenges. However, this series is focused on the technological aspects rather than the financial feasibility, so we'll primarily examine the underlying mechanics rather than their economic viability.

Threat Models: Why Blockchain Minimizes Trust

Blockchain technology operates on the principle of "trust but verify." Instead of assuming honesty, blockchain systems enforce trust minimisation through:

• Cryptographic Security: Transactions and data are secured through cryptographic hashing, digital signatures, and public/private key encryption.
• Consensus Mechanisms: Participants in the network follow predefined rules, such as Proof of Work or Proof of Stake, to validate transactions without relying on a central authority.
• Immutability & Transparency: Once recorded, data on a blockchain is challenging to alter, ensuring integrity and accountability.

By distributing trust, blockchain reduces the risks associated with a single point of failure, making it resilient against fraud, censorship, and hacking attempts.

Why Build a Minimal Blockchain?

Even if you're not planning to launch your own cryptocurrency, building a minimal blockchain is a fantastic way to:

• Understand the Core Concepts: How hashing, cryptographic signatures and consensus mechanisms work.
• Develop a Security Mindset: Explore how blockchain enhances security through decentralisation and cryptographic proofs.
• Gain Hands-On Experience: Writing code that simulates blockchain operations deepens your technical knowledge.

Practical Component: Getting Started

Basic Requirements

This project will be built using Node.js and TypeScript. We will primarily use native Node.js libraries to ensure the code continues to work over time. While external dependencies can be convenient, I want to minimise their use to prevent future compatibility issues for readers following along later.

Installing Node.js

To ensure compatibility and longevity, install Node.js from the official website: Node.js Downloads. This site provides the latest LTS (Long-Term Support) version, which is recommended for stability. Follow the installation instructions for your operating system before proceeding further.

With those considerations in mind, we'll start with a simple exercise to set up our project:

1. Project Setup

Create a new folder for your blockchain project and initialise a Node.js environment:

mkdir minimal-blockchain
cd minimal-blockchain
npm init -y

Install TypeScript and necessary dependencies:

npm install --save-dev typescript @types/node

Set up a TypeScript configuration file:

tsc --init

Open the tsconfig.json file and modify the outDir setting to specify the output directory for compiled JavaScript files:

"outDir": "./dist"

2. Configuring TypeScript and Adding Scripts

Modify package.json to include scripts for building and running TypeScript files efficiently. Open package.json and add the following lines inside the `scripts` section:

"scripts": {
  "build": "tsc",
  "watch": "tsc --watch",
  "start": "node dist/index.js"
}

This ensures we can build TypeScript files, watch for changes, and run the compiled JavaScript files easily.

3. Writing Our First Blockchain Code

Create a new file named src/index.ts and add the following content:

console.log("Hello, Blockchain!");

Compile the TypeScript file:

npm run build

Run the compiled JavaScript file:

npm start

Expected output:

-> minimal-blockchain npm start

> minimal-blockchain@1.0.0 start
> node dist/index.js

Hello, Blockchain!

For development, you can continuously watch for changes and recompile automatically using:

npm run watch

What’s Next?

In the next post, we'll explore blockchain data structures, hashing, and why they are fundamental to security. Stay tuned!