How Much Does it Cost to Build a Decentralized Application (DApp)? Are there free options?

How Much Does it Cost to Build a Decentralized Application (DApp)?

Blockchain technology has come to stay! It is the present and the future.

We hear about the increase in the price of cryptocurrencies such as Bitcoin, Ether, Stellar Coin, and others daily because of the ever-increasing interest in cryptocurrency and blockchain technology in general.

While the huge interest in blockchain technology can be attributed to a large extent to cryptocurrencies, there are lots of other applications built on blockchain technology.

Ethereum for example is a blockchain technology that’s powering game-changing technology such as Dapps (Decentralized Applications), Defi (decentralized finance system), NFTs (non-fungible tokens), smart contracts, and other digital applications.

Blockchain technology is used in today’s world by businesses to build secure cost-effective applications. Like every application, companies would need to draft a budget before undertaking a blockchain development project.

How much does it cost to build a DApp? Find out the answer to this question in this article.

Factors affecting the cost of building a DApp

1. Cost and type of developers involved?

The first factor that influences the cost of DApp development is the method in which you choose to develop the DApp. You can choose to hire freelance software developers to build the blockchain application, employ the services of an agency, or build using an in-house team of developers.

Hiring a rookie freelance developer costs between $30,000 to $50,000, but the cost of hiring an expert blockchain developer is between $50,000 to $90,000. Using an in-house software development team would cost between $500,000 and $2,000,000 this is due to the cost of hiring and training the blockchain app developers.

The third option which is to hire an agency is regarded as the best option as the agency usually has lots of experience building decentralized applications similar to yours.

The size of the agency is what determines the pricing, and we can categorize them into three: large-size agencies, medium-sized agencies, and small-size agencies.

Small-sized agencies are most likely just starting up and would be less selective when choosing projects to work on as they are looking to add projects to their portfolio. They usually comprise a team of 10 to 50 developers, costing $5,000 to $50,000 depending on the complexity of the project.

Medium-sized agencies are more selective when it comes to choosing projects to work on as they usually have regular gigs. Medium-sized agencies on average consist of between 500 to 1000 developers and the cost of building a blockchain application here would be between $25,000 to $200,000.

Large-sized agencies are very selective in the projects they choose to build. They usually have 3000+ developers and the cost ranges from between $450,000 to $1,500,000.

2. The Industry of the Application

Another important factor that influences the cost of DApp is the industry of the application to be built. The requirements of the various industries are the cause of the price variation.

For example, while DApp in the social media industry requires high-level authentication and authorization, DApp in the financial industry requires an even higher level of authentication. So, the amount of money you would spend on authentication in the financial industry would be more than in the social media industry.

Other variables to be factored in include the number of users interacting with the app at every given time and industry compliance requirements. Below are the varying costs of DApps in some common industries:

1. Healthcare costs between $55k to $100K+
2. Social Media costs between $45-$100K+
3. Public sector costs between $70k to $100K+
4. The finance industry costs between $50-$100K+
5. On-demand industry costs between $40k to $80K+

3. The complexity of the Applications to be built

A combination of different factors determines the complexity of a DApp. These factors include:

The platform to be used: numerous platforms can be used to build DApp from the ground up with Ethereum being the most popular. Other platforms that can be used include Ripple, NEO, and OpenChain. The most important is to ensure the platform that you choose is compatible with the industry of the DApp to be created.

For example, while Ethereum can be used for DApp in most industries, Ripple is best used for DApp in the finance industry, while OpenChain is best for Digital Asset Management.

Consensus Mechanism: this is a system that is used to maintain the security of the blockchain and validate the authenticity of transactions within the blockchain. Most DApps use one of the three most common consensus algorithms Proof of Work (PoW), Proof of Stake (PoS), and Delegated Proof of Stake (DPoS).

Technology stack: a technology stack is the combination of programming languages, technologies, tools, and frameworks/libraries that are used to build an application. The MERN stack consisting of MongoDB, Express, ReactJs, and NodeJs is a popular technology stack used for building web applications. Things are quite different when building blockchain applications, so you need to ensure you select the right products to achieve effective development.

Let’s take a look at some of the major tech needed:

The APIs

APIs are majorly used in blockchain application development for authentication, monitoring, handling smart contracts, auditing, creating key pairs and addresses, and other use cases. While there are open-source APIs available to use, the use cases mentioned in the preceding sentence require custom-made APIs.

The UI & UX / frontend

The UI/UX design is arguably the most important part of the DApp for the users as this is the part of the application they see and directly interact with. It is thus important to make this part of the application as enticing to users as possible by using the best modern technology.

Proof

Before the entire blockchain application is built, there should be a sort of prototype to show some of the main features the application will have.

There are two methods of doing this, which are either using the POC or MVP approach. POC means Proof of concept, while MVP means Minimum viable product. It is recommended to go with the MVP approach so that you can show the main features of the DApp.

Conclusion

Building a Dapp requires great effort and an expensive process. It requires careful planning and budgeting. The fact that there are not too many experienced blockchain developers is one of the reasons why building DApp is very expensive. Other reasons include the complexity of the DApp to be built and its industry.

Originally published by Babajide Oyafemi on Bunzz