Blockchain technology has provided an innovative solution to decentralization problems thanks to a unique architecture. It offers a decentralized ledger system that leverages cryptographic security to ensure the integrity and immutability of your data. Blockchain architecture is very different from traditional database structure because it comprises an ever-changing chain of records, called blocks.
People are curious to answer questions like “What is the architecture of blockchain?” » to understand the reasons behind the unique characteristics of blockchain. You might also ask yourself the same question when you learn how a blockchain organizes verified transactions in a specific order to create a transparent and permanent record of all transactions. Let’s learn more about blockchain architecture to discover its true potential.
Identifying Crucial Components in Blockchain Architecture
The first thing you need to understand blockchain architecture is the definition of the term. Blockchain architecture refers to the design of the structure of a peer-to-peer network of computers or nodes that functions as a backend for different systems and applications. The blockchain network operates as a virtual machine without any central authority to manage communication between nodes. The decentralized nature of blockchain ensures that it has no single point of failure, thus ensuring better security.
As more and more people want to learn blockchain architecture, it is important to find the simplest approach to do the same. You can visualize blockchain architecture as an orchestra in which different players play unique roles. The different components of the blockchain architecture work in unison to achieve the distinct characteristics offered by blockchain technology.
Basic Components in Blockchain Architecture
The fundamental unit of blockchain architecture is a node, which is a machine on blockchain peer-to-peer networks. Nodes are nothing more than computers connected to the distributed network and the Internet. The node also runs the basic software that helps it interact with other nodes in the network. The main functions of a node revolve around updating the decentralized ledger, storing it, and sharing data with other nodes.
Transactions are the entries in the decentralized ledger of the blockchain. You can find transactions that transfer value such as digital assets from one address to another. On the other hand, blockchain transactions can also lead to changes in the state of smart contracts.
The decentralized ledger or distributed ledger describes everything you can expect from blockchain technology. It is a type of decentralized database that stores the chain of blocks that make up the blockchain. The decentralized ledger comprises a chain of blocks starting from the genesis block to the current block. Blocks are linked to each other with unique metadata that makes them immutable or completely unaffected by any changes. It is important to note that metadata refers to the cryptographic hash of the previous block, transaction data, and a timestamp.
The fundamental concepts of blockchain architecture explained to beginners will also include references to the block. It is also a fundamental unit of a blockchain because blocks include a batch of transactions that the decentralized network must process and verify on the shared ledger.
You cannot imagine creating a blockchain network without consensus protocols. The consensus protocol is a set of rules that guide the interaction between nodes in the peer-to-peer network. Consensus protocols also dictate how nodes in a blockchain network should agree on the authenticity of transactions and their verification. Consensus protocols also define how nodes should store transaction data on the decentralized ledger. The importance of consensus protocols also extends to determining the means of executing smart contracts.
The consensus protocol of a blockchain network also integrates miners and validators into the blockchain architecture. Depending on the type of consensus protocol used in the blockchain architecture, you can find miners and validators as entities responsible for securing the network. Miners and validators are the network nodes that verify and validate transactions before adding them to the blockchain. You will find miners in Proof of Work consensus while validators are common in Proof of Stake consensus protocols.
Miners must set up a dedicated machine to perform different functions such as verifying transactions through mathematical calculations, transferring data, and storing the decentralized ledger. The miner also receives rewards for their efforts to ensure that only verified transactions are added to the blockchain.
Validators are also an important part of any blockchain architecture diagram for Proof of Stake consensus. The work of a validator is almost the same as that of a miner. However, validators do not need advanced hardware like miners to solve mathematical puzzles to verify transactions. Rather, they place a certain stake in the network to gain the right to verify transactions on the blockchain.
Another notable element of blockchain architecture is cryptography. This is an important element in ensuring the security and authenticity of transactions added to a blockchain. The two most crucial terms you will find in cryptography for blockchain are public key and private key. Blockchain architecture leverages cryptography to ensure data security on the decentralized ledger and create an addressing system.
Public-private key cryptography helps in creating different keys for encryption and decryption. The public key helps with encryption while the private key helps with decryption. The public key functions as the wallet address where people can send information or assets. Private keys are similar to your bank account password because they help you access your data and funds on a blockchain. It is also important to note that private keys are also essential to authorize certain actions on smart contracts.
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Untangling the Layers of Blockchain Architecture
Examining the components of blockchain architecture sparks curiosity about the layers you can find in blockchain architecture. You can find five layers of blockchain architecture with distinct functionalities. The layers include hardware layer, data layer, network layer, consensus layer, and application layer.
The hardware layer includes the network of devices that drive the blockchain’s computing power or network nodes.
The data layer in blockchain architecture is useful for storing transaction details such as the recipient’s public key, sender’s private key, and information about the assets transferred.
The network layer is responsible for managing the interactions between the different nodes of the blockchain architecture.
The most important layer of blockchain architecture is the consensus layer. It is responsible for validating blocks according to the type of consensus protocol used for a blockchain network.
The final layer of the blockchain architecture, the application layer, is the user-facing layer in the blockchain. It serves as a playground for building applications such as DeFi apps, NFT platforms, crypto wallets, and decentralized applications.
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Discover the uniqueness of different types of Blockchain architecture
Another highlight of the blockchain architecture guides explained in simple terms is the explanation of different blockchain architectures. You will find three notable types of blockchain architecture, such as public, private, and consortium architectures. The following sections can help you understand their unique features and functionality.
As the name suggests, public blockchain architecture allows anyone to participate in the network. You can configure a node to participate in public blockchain networks without anyone’s permission. Each participant can view transactions on the network, add transactions, and work as a node to verify transactions.
Public blockchain networks do not depend on any central authority, ensuring security against manipulation and censorship. Additionally, public blockchain also offers the assurance of immutability and transparency, thus allowing anyone to verify transactions. Another crucial trait of public blockchain networks is the ability to incentivize network participants to work honestly.
Private blockchain networks follow an architecture in which only a few selected participants can join the network. Accessibility to private blockchain networks is limited to approved participants only. The responsibility for verifying and recording transactions in a private blockchain lies with approved participants.
Many organizations use private blockchain networks for internal record keeping or for supply chain management. Private blockchain networks provide greater control over participation while ensuring faster transactions. The main focus of private blockchain revolves around privacy, thereby reducing the level of transparency.
The next important variation that you need to know to learn blockchain architecture is consortium blockchain architecture. The consortium’s blockchain networks follow a special architecture that brings together several organizations as owners. The consortium’s blockchain architecture allows a predefined group of nodes to write transactions on the blockchain. With the consortium’s blockchain architecture, you can achieve higher security while preserving the principles of decentralization.
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Final Thoughts
Discussions about blockchain architecture should focus on the essential components that make up a blockchain network. You can create a blockchain architecture with nodes, blocks, a decentralized ledger, and cryptography and consensus protocols. It is also important to note the importance of validators and miners in the architecture of a blockchain network. In addition to this, you should also learn about the different types of blockchain architectures and their distinct characteristics. A thorough understanding of blockchain architecture provides an effective solution to identify the best architecture based on your needs.
