The scale of innovation that blockchain technology has fostered across different industries shows that awareness of blockchain architecture is growing. You need to know the basic components, layers, and consensus mechanisms of blockchain architecture to create effective blockchain systems. Your search for the best blockchain architecture glossary ends here as we discuss the most notable terms you will encounter in blockchain systems.
According to a new survey, nearly 60% of Fortune 500 companies are experimenting with blockchain adoption through new initiatives (Source). The increasing adoption of blockchain technology will attract not only business leaders but also future professionals to learn about blockchain and web3. The ideal approach to start learning about blockchain architecture and how it works is to familiarize yourself with the most important terms.
Discover the simplest Blockchain architecture glossary for you
A look at examples of different blockchain applications, whether cryptocurrencies or innovative dApps, will help you learn more about the technology. As you delve deeper into blockchain terminology, you’ll discover how the smallest building blocks shape the complex architecture of blockchain systems. Breaking down fundamental terms into simple explanations can help you get a better idea of blockchain architecture.
Network components
You must have heard the term “network” in most descriptions of blockchain technology. Blockchain is generally defined as a peer-to-peer network that takes collective responsibility for maintaining a shared ledger. Nodes serve as the building blocks of the blockchain network and help perform different tasks. The main responsibilities of a node in blockchain networks include validating transactions, storing a copy of the ledger, and transferring information across the network.
Nodes are a common addition to any glossary of blockchain terms because without them you can’t think about decentralization in blockchain. Depending on the functionality, you will find different types of nodes with distinct roles.
A full node is responsible for storing a complete copy of the entire blockchain history and facilitates independent verification of all transactions and blocks.
Light nodes work on storage on the block header and depend on full nodes to verify the inclusion of transactions in a block. The lightweight node follows the Simple Payment Verification model, thus earning the name SPV node, and is frequently used on mobile devices.
You cannot create a Web3 glossary for blockchain architecture terms without including validator or miner nodes. These nodes actively drive the consensus mechanism of a blockchain and help create and add new blocks.
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Blockchain data structure
After learning about the basic units of a blockchain, you might be curious about how the blockchain stores transaction data. As the name suggests, blockchain stores data in the form of a chain of blocks, which is a sequence of data units linked to each other by cryptographic hashes.
The block in a blockchain represents a container for transaction data. It stores a collection of validated transactions and a timestamp. Another important element of a block is the cryptographic hash that links it to the previous block. A block’s header includes the block’s metadata, the previous block’s hash, the Merkle root, and the timestamp. The body of a block includes the list of transactions validated in the block concerned.
Cryptographic hashing is also an important addition to cryptographic terminology for beginners because it provides cryptographic security in the blockchain. It is a fixed-length string that includes letters and numbers generated from input data via algorithms such as SHA-256. Even the smallest change in the input data will completely change the output hash, ensuring the immutability of the block data.
You can’t learn about blockchain architecture without understanding the Merkle tree, a data structure that provides a summary of all transactions in a specific block. The Merkle root is a unique hash in the block header that verifies the inclusion of a specific list of transactions in a block.
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Defining the blockchain rulebook with consensus
Each glossary of blockchain terms includes references to different types of consensus mechanisms. The consensus mechanism represents the algorithm with a predefined set of rules that help the nodes of a blockchain reach an agreement on the validity of transactions. You will find different types of consensus mechanisms in blockchain architecture discussions.
The Proof of Work consensus mechanism works thanks to the efforts of miners, who use computing power to solve mathematical puzzles. It is one of the most secure consensus mechanisms, although it consumes extremely high resources.
New blockchain networks rely on the more efficient Proof of Stake consensus which involves validators locking up their tokens to become eligible for new blocks to be added. Early blockchain networks like Ethereum adopted proof of stake for its energy efficiency.
Blockchain Architecture Variants
The general notion regarding blockchain architecture is that each blockchain is a distributed and shared ledger accessible to all participants. Any reliable blockchain architecture glossary will tell you otherwise, because there are four different types of blockchain architectures.
Any blockchain that is accessible to all participants and does not involve permissions can be classified as a public blockchain. The two notable examples of public blockchain are Ethereum and Bitcoin.
Businesses can create a private blockchain for their specific needs with clearly defined permissions. The permissioned blockchain will only be accessible to a few authorized participants within the organization.
You won’t get any marks for guessing that a hybrid blockchain brings the best of both public and private blockchains. Hybrid blockchains such as Dragonchain provide a middle ground for users confused between private and public blockchains.
Searching for blockchain terminology related to architecture will also lead you to consortium blockchains. The main idea behind a consortium blockchain like R3 Corda revolves around multiple private nodes owning and governing the blockchain in collaboration with each other.
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Identify the layers of Blockchain architecture
You will find different approaches to implementing the various variations of blockchain architecture without any specific standards. Most blockchains follow a layered structure and understanding these layers is essential to implementing blockchain architecture.
The application layer is responsible for hosting the applications that will interact with the blockchain. Notable components of the application layer include the user interface, dApps, and smart contracts.
Each web3 glossary will focus on the service layer in the blockchain architecture as it defines the functionality of the blockchain. Components of this layer include DAOs, oracles, and wallets.
The consensus layer or protocol layer is responsible for defining how nodes in a blockchain can reach an agreement. You will find consensus protocols, virtual machines and sidechains in the consensus layer of the blockchain architecture.
The network layer of blockchain helps facilitate the interaction between nodes with execution environments and communication mechanisms.
The data layer is a critical component of blockchain architecture that helps create, manage, and encrypt data. The main components of the data layer include digital signatures, data blocks, hashes, storage, and the Merkle tree.
The most overlooked layer of blockchain architecture, the hardware layer, facilitates the physical resources needed to host the blockchain. It includes the nodes, servers and mining hardware used for blockchain.
Final Thoughts
A look at the blockchain architecture glossary reveals that understanding the basic components can help you easily understand how blockchain works. It not only provides a detailed understanding of blockchain architecture, but also provides the information needed to choose the ideal architecture. You would need comprehensive training resources to learn more about blockchain architecture.
The Certified Enterprise Blockchain Architect (CEBA)™ certification program from 101 Blockchains offers a credible learning tool for understanding blockchain architecture. It includes lessons on advanced blockchain architecture concepts and shows you how to choose the best blockchain platforms. Take the first step to becoming an expert in blockchain architecture now.
Final summary
- The increasing adoption of blockchain technology has made it urgent to learn more about blockchain architecture.
- The network components of blockchain architecture include full nodes, lightweight nodes, and miner or validator nodes.
- The data structure of blockchain architecture resides in blocks, cryptographic hashes, and the Merkle tree.
- Consensus mechanisms define the rules of the blockchain architecture with different consensus mechanisms providing distinct benefits.
- Businesses can choose between public, private, hybrid or consortium blockchain architecture depending on their needs.
- The layers of blockchain architecture include the application layer, service layer, consensus layer, data layer, network layer, and infrastructure layer.
