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Delve into the blockchain architecture to seamlessly create your blockchain!
Deb Mukhuty
Explore the complex anatomy of blockchains to learn more about the blockchain system.
A blockchain is a distributed, decentralized, public digital ledger that records transactions and tracks assets in a business network. It is only possible to alter the records retroactively by altering the network consensus and all the subsequent blocks.
The structure of a block may vary, but overall, it consists of:
Header: It contains the identifying information about the block and its location in the chain. This information includes the previous block's hash, the nonce, and a time stamp.
Data: The ledger contains all the transactions since the last block was committed to the chain.
Merkel Root: A data structure frame of different data blocks. A Merkle Tree keeps all of the transactions in a block by means of creating a digital fingerprint of the entire transaction. It lets the users verify whether or not a transaction can be included in a block.
Next, the vital components of blockchain architecture consist of:
Node: A node is a computer system that includes a copy of the primary protocol of a blockchain along with its entire transaction history.
Transactions: A transaction is a contract and transfer of assets (typically cash or property) between parties—the network of computers in a blockchain stores transactional data in a digital ledger.
Block: In blockchain, a block is a place where data is stored.
Chain: All the blocks in a blockchain are connected with the help of a chain.
Miners: In blockchain, miners have the appropriate software and computer hardware to mine digital currencies or solve complex mathematical problems.
Consensus: A consensus, in blockchain, validates a transaction and marks its authenticity.
With the anatomy of blocks and blockchain in mind, this article shall further explore the six blockchain layers in detail. But first, let us look into these six layers:
Data Structure
Consensus Mechanisms
Network
Smart Contracts
Applications
User Interface:
Do you want to know more about these layers? Read on!
The data layer of blockchain is mainly concerned with data structure and storage. Depending on the blockchain, the range of a data structure can start from a simple transaction list to a more intricate structure that stores contract state information. The data layer ensures confident and secure message transmission. Typical block metadata contains:
Version: It is the current version of the block structure.
The previous block header hash refers to this block’s parent block.
Merkle root hash is a cryptographic hash of all transactions in this block.
Time: It is the time that this block was created.
nBits: The current difficulty was used to create this block.
Nonce (“number used once”): It is a random value that the creator of a block can manipulate however they choose.
Source: IG
Transactions in a block, in blockchain technology, are stored as part of the Merkle tree. A Merkle tree is a mathematical data structure that comprises hashes of different data blocks that summarize all the transactions in a block. Merkle trees are binary and require an even number of leaf nodes. They help in verifying the data integrity of the transactions in a block.
Lastly, a genesis block is the name given to the first block of a blockchain. The first miner on the network creates it. From it arises all the other subsequent blocks, and it serves as a reference point for validating the authenticity and integrity of the blockchain. It cannot be deleted or modified.
This consensus layer deals with enforcing network rules that elaborate on what the nodes within the network should do to reach a consensus about the broadcasted transactions. It is consensus that allows blockchain to be decentralized because all the nodes in the network follow the same rules, thus maintaining uniformity in all the copies of a blockchain. So, every change in a single blockchain is verified and adopted by another blockchain in the network.
Proof of Work (PoW) is a consensus mechanism that needs a significant portion of computing effort from a network of devices. PoW allows the processing of secure peer-to-peer transactions without requiring a trusted third party. On the other hand, Proof of Stake (PoS) is a consensus protocol in blockchains that decides which user shall validate new blocks of transactions and consequently earn a reward for correctly doing so. The PoS system has several advantages over the PoW scheme. It has greater energy efficiency, does not require top-of-the-line technology to create new blocks, and results in the network having more nodes.
Other consensus algorithms include Delegated Proof of Stake (DPoS), Practical Byzantine Fault Tolerance (PBFT), Proof of Capacity (PoC), and Proof of Burn (PoB), to name a few.
Source: Appinventiv
Under Proof of Work, block creators are called miners who work to solve for the hash to verify transactions. Whereas, under Proof of Stake, block creators are called validators who check transactions, verify activity, maintain records, and vote on outcomes.
In the network layer, blockchain uses the distributed network so everyone downloads and interacts with all the information on the Blockchain. In a decentralized network, multiple authorities serve as a centralized hub for participants. No one needs to know or trust others. In the network, each member contains a copy of the same data in the form of a distributed ledger. If a member's ledger is corrupted in any way, the majority of the members in the network will reject it. It increases system reliability and faster performance.
Decentralized networks are made up of nodes that interact on a direct and peer-to-peer basis, excluding the need for third parties. Nodes provide essential functions such as validating transactions, maintaining the distributed ledger, and ensuring security and stability.
Besides this, peer-to-peer (P2P) service is a decentralized platform on which two individuals directly interact, eliminating any intermediation by a third party. P2P makes cryptocurrencies possible as it offers decentralization, security, and independence.
Smart contracts are digital contracts stored on a blockchain and are automatically executed when prices are met. They simplify business between anonymous and identified parties, often eliminating the need for a middleman.
The programming language for smart contracts includes C++, Clarity, Java, JavaScript, Python, Rust, Solidity, Vyper, and Yul and Yul+.
Lastly, we have blockchain oracles, which connect blockchains to external systems. This enables smart contracts to execute based on inputs and outputs from the real world.
Oracles facilitate the decentralized Web3 ecosystem to access existing data sources, advanced computations, and legacy systems.
Source: Nownodes
In blockchain technology, the application layer is the end product of the entire system that offers specific products for the users, such as wallet, lending, and staking.
A decentralized application (DApp) is a distributed, open-source software application that runs on a P2P blockchain network instead of a single computer. The advantages of dApps include safeguarding user privacy, the flexibility of development, and the lack of censorship.
On the other hand, we have Initial Coin Offerings (ICOs), which are events where companies sell a new cryptocurrency to raise money. The startups primarily use an ICO to raise capital and create direct connections between the company and investors.
One of the significant problems of blockchain is its usability and accessibility. Hence, it is that there is user-friendly access to the blockchain. Some of the tips include:
Understand your users
Simplify your interface
Educate your users
Empower your users
Secure your users
Support your users
Here’s what else to consider.
For effortless user interaction, we also have wallets tal signatures. A digital wallet is a financial transaction application that securely stores payment information on any connected device and securely stores payment information. A digital signature authenticates transactions.
Seamlessly interacting with DApps shall enhance your blockchain experience. It can be done by
Choosing a blockchain like Ethereum
Getting a compatible wallet like MetaMask
Funding the wallet with cryptocurrency
Finding a DApp
Accessing the DApp’s website
Connecting your wallet
Using the DApp as intended
Approving and confirming transactions
Monitoring your activities
Logging out and disconnecting when done
Lastly, for the successful adoption and functioning of blockchain technology, a UI/UX design is crucial. By creating user-friendly and intuitive interfaces, UI/UX designers can simplify the process, build people’s trust, increase the adoption of blockchain, and foster a sense of community.
Source: Coinbase
In the blockchain ecosystem, the six layers rely on one another for security, functionality, and scalability, forming a cohesive network. This facilitates blockchain technology to make advancements, improve efficiency, foster innovation, and reshape industries across finance, supply chains, and beyond.
So, if you are a blockchain enthusiast, follow the strategies and information given in this article to understand blockchain technology's ongoing evolution better!
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