Blockchain technology has provided an innovative solution to the problem of decentralization by leveraging its unique architecture. It provides a distributed ledger system that utilizes cryptographic security to ensure data integrity and immutability. Blockchain architecture differs significantly from traditional database structures because it involves a continuously growing chain of records called blocks.
People are interested in questions like “What is blockchain architecture?” Understand the reasons behind blockchain's unique properties. You may also have the same question when you understand how blockchain arranges verified transactions in a specific order to create a transparent and permanent record of all transactions. Learn more about blockchain architecture and discover its true potential.
Identify critical components of blockchain architecture
The first thing you need to understand blockchain architecture is a definition of the term. Blockchain architecture refers to the design of the structure of a peer-to-peer network of computers or nodes that acts as a backend for various systems and applications. Blockchain networks function as virtual machines with no central authority managing communication between nodes. The decentralized nature of blockchain ensures that there is no single point of failure, thereby ensuring greater security.
As more and more people want to learn blockchain architecture, it is important to find the easiest approach to do the same. Blockchain architecture can be visualized as an orchestra, with different players having unique roles. The various components of blockchain architecture work together to enable the unique properties that blockchain technology offers.
Core components of blockchain architecture
The basic unit of blockchain architecture is the node. A node is a machine on a blockchain's peer-to-peer network. A node is nothing but a computer connected to a distributed network and the Internet. This node also runs core software that helps it interact with other nodes in the network. The main functionality of a node revolves around updating, storing, and sharing data with other nodes in a distributed ledger.
A transaction is an entry in a blockchain's distributed ledger. You can find transactions that transfer value, such as digital assets, from one address to another. On the other hand, blockchain transactions can also cause changes in the state of smart contracts.
Distributed ledger or decentralized ledger describes everything that can be expected from blockchain technology. It is a type of decentralized database that stores the chain of blocks that make up the blockchain. A distributed ledger contains a chain of blocks from the genesis block to the current block. Blocks are immutable, or completely immune to change, because they are linked together with unique metadata. It is important to note that metadata refers to the previous block's cryptographic hash, transaction data, and timestamp.
The basic concepts of blockchain architecture explained to beginners also include references to blocks. A block is also the basic unit of a blockchain, as it contains a batch of transactions that a decentralized network must process and verify on a shared ledger.
It is unthinkable to build a blockchain network without a consensus protocol. A consensus protocol is a collection of rules that guides interactions between nodes in a peer-to-peer network. Consensus protocols also specify how nodes within a blockchain network must agree on the authenticity of transactions and their verification. The consensus protocol also defines how nodes store transaction data on a distributed ledger. The importance of consensus protocols also extends to determining how smart contracts are executed.
A blockchain network’s consensus protocol also introduces miners and validators to the blockchain architecture. Depending on the type of consensus protocol used in a blockchain architecture, you will find miners and validators as the entities responsible for securing the network. Miners and validators are nodes in the network that verify and validate transactions before adding them to the blockchain. While there are miners in Proof of Work consensus, validators are common in Proof of Stake consensus protocols.
Miners must set up specialized machines to perform various functions, such as validating transactions through mathematical calculations, transferring data, and storing a distributed ledger. Miners also receive rewards for their efforts to ensure that only verified transactions are added to the blockchain.
Validators are also an important part of the blockchain architecture diagram for proof-of-stake consensus. The job of a validator is almost the same as that of a miner. However, validators do not require sophisticated computing hardware like miners to solve mathematical puzzles to verify transactions. On the contrary, it places a certain stake in the network in order to earn the right to verify transactions on the blockchain.
Another notable component of blockchain architecture is encryption. This is a key component to ensure the security and authenticity of transactions added to the blockchain. The two most important terms used in blockchain encryption are public key and private key. Blockchain architecture leverages cryptography to ensure the security of data on a distributed ledger and create an addressing system.
Public key and private key cryptography helps in creating different keys for encryption and decryption. The public key helps with encryption, and the private key allows decryption. A public key acts like a wallet address to which users can send information and assets. The private key is similar to a bank account password, as it helps you access data and funds on the blockchain. It is also important to note that private keys are also essential for authorizing certain actions in smart contracts.
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Unraveling the layers of blockchain architecture
Looking at the components of a blockchain architecture increases your curiosity about the layers it contains. You can find five blockchain architecture layers with different functionality. The layers include the hardware layer, data layer, network layer, consensus layer, and application layer.
The hardware layer consists of a network of devices, or nodes within a network, that power the computational power of the blockchain.
The data layer of blockchain architecture helps store transaction details such as the recipient's public key, the sender's private key, and information about the transferred assets.
The network layer is responsible for managing the interactions between the various nodes within the blockchain architecture.
The most important layer in blockchain architecture is the consensus layer. Responsible for validating blocks depending on the type of consensus protocol used in the blockchain network.
The last layer of the blockchain architecture, the application layer, is the user-side layer of the blockchain. It serves as a playground for creating apps such as DeFi apps, NFT platforms, crypto wallets, and decentralized apps.
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Discover the uniqueness of different types of blockchain architectures
Another important highlight of our guide to blockchain architecture explained in simple terms is the explanation of different blockchain architectures. You'll find three notable types of blockchain architectures: public, private, and consortium architectures. The following sections will help you understand their unique characteristics and features.
As the name suggests, public blockchain architecture allows anyone to participate in the network. You can set up a node to participate in a public blockchain network without anyone's permission. All participants can view transactions on the network, add transactions, and act as nodes to validate transactions.
Public blockchain networks do not rely on a central authority, making them safe from manipulation and censorship. In addition to that, public blockchains also guarantee immutability and transparency, allowing anyone to verify transactions. Another important characteristic of public blockchain networks is that network participants have an incentive to work honestly.
Private blockchain networks follow an architecture that allows only a select few participants to participate in the network. Access to private blockchain networks is restricted to authorized participants. The responsibility for validating and recording transactions on a private blockchain rests with authorized participants.
Many organizations use private blockchain networks for internal record-keeping and supply chain management. Private blockchain networks ensure faster transactions as well as better control over participation. The main focus of private blockchains is on privacy, which reduces the level of transparency.
The next important variant you need to know to learn blockchain architecture is consortium blockchain architecture. Consortium blockchain networks follow a special architecture that incorporates multiple organizations as owners. Consortium blockchain architecture allows a predefined group of nodes to write transactions on the blockchain. Consortium blockchain architecture allows you to achieve higher security while adhering to the principles of decentralization.
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final thoughts
Discussions about blockchain architecture should focus on the core components that make up a blockchain network. You can build blockchain architectures using nodes, blocks, distributed ledgers, cryptography, and consensus protocols. It is also important to note the importance of validators and miners in the architecture of blockchain networks. In addition to that, you should also learn about the different types of blockchain architectures and their unique characteristics. A deep understanding of blockchain architectures will give you effective solutions to identify the best architecture according to your needs.
