Understanding the blockchain’s architecture and procedure does not appear to be a simple endeavour. This article will facilitate your understanding of the many components of blockchain technology. This guide describes the blockchain architecture, its components, its types, and more.
But first, let’s examine why it is called Blockchain.
This is due to the fact that it saves transaction information in blocks that are linked together to form a chain. As the number of transactions increases, so does the blockchain’s size. In 1991, the word blockchain was originally described. The fundamental qualities of blockchain technology are decentralisation, accountability, and security. This method can considerably increase operating efficiency and reduce expenses. The need and utilisation of blockchain-based applications will continue to increase. Therefore, now is the time to educate yourself on this topic.
So let’s begin by discussing our first topic.
What is Blockchain Architecture?
For starters, let us define blockchain technology. A blockchain is logically defined as a network of blocks that are linked together and carry specific information (database) in a secure and real manner (peer-to-peer). In other words, blockchain is a collection of interconnected computers rather than a single, centralised server, making the entire network decentralised.
To make the idea of blockchain even easier to understand, it can be compared to work done in Google Docs. You might remember the times when participants would pass around docs. documents and wait for others to make the necessary adjustments. Google Docs makes it possible for people to work on the same document at the same time.
Thanks to blockchain technology, digital information may now be shared rather than copied. Data security, trust, and transparency are all provided by this distributed ledger.
In the financial industry, blockchain architecture is used a lot. It is a financial ledger or record that is open to the public and in which every transaction is checked and approved. A blockchain is set up as a network of millions of computers, called “nodes,” that are not connected to each other. It is a distributed database architecture where each node acts as a network administrator that joins the network on its own. A blockchain is literally impossible to hack because there is no central place where information is kept.
The architecture of a blockchain can support a growing list of ordered records called “blocks.” Each block keeps track of the time and a link to the block before it.
Characteristics of the Blockchain Architecture
The architecture of the blockchain is good for business in many ways. Here are some benefits that come along with it:
1. Immutability
Records in a blockchain cannot be changed or deleted.
2. Provenance
The blockchain ledger makes it possible to find out where each transaction came from.
3. Cryptography
Complex calculations and cryptographic proof between the parties make sure that blockchain transactions are real and safe.
4. Decentralisation
Every part of the structure of the blockchain can access the whole distributed database. In contrast to a centralised system, a consensus algorithm is in charge of managing the network.
5. Transparency
It takes a lot of computing power to completely rewrite the blockchain network, so it is unlikely that it will be damaged.
6. Anonymity
Everyone in the blockchain network has a randomly generated address, not a user ID. This keeps users’ privacy, especially in a public blockchain.
Core Components of a Blockchain Architecture
The basic components of a blockchain architecture are as follows:
1. Block
A data structure for storing a group of transactions that is spread among all network nodes.
2. Chain
A chain is a set of blocks that go in a certain order.
3. Node
A node in the blockchain architecture is a user or machine (each has an independent copy of the whole blockchain ledger)
4. Transaction
A transaction is the smallest unit in a blockchain system (which includes records, information, etc.) and is what makes a blockchain work.
5. Consensus (consensus protocol)
A set of guidelines for using blockchain technology.
6. Miners
They are specialised nodes that verify blocks before adding anything to the blockchain’s structure.
NOTE: Within the blockchain, the creation of a new block is implied by any new record or transaction. The authenticity of each record is then confirmed and digitally signed. The majority of nodes in the system should verify this block before it is added to the network.
Different types of Architectures or Systems that Blockchain follows
1. Private Blockchain Architecture
With a private blockchain architecture, only a certain group of people or organisations can access the data. Organisations build these kinds of blockchain architectures to improve the benefit or efficiency of their work as a whole. The participants shared goals and the Proof of Stake (PoS) and Byzantine Fault Tolerance (BFT) consensus algorithms make sure they are reliable.
The main blockchain protocol and the smart contract layer are not tied together in private blockchain architecture. Using a private blockchain, you can set up online markets and programmable transaction areas called “smart contracts.”
2. Public Blockchain Architecture
A public blockchain architecture runs on consensus algorithms based on proof of work (PoW) and uses the right protocols. Since it’s open-source, a public blockchain doesn’t need anyone’s permission to work. Since this is open-source, you can define new blocks with the state they are in now. You can also download the code for a blockchain and look at transactions on the network.
This makes it possible to do transactions across the whole network. A public blockchain architecture makes it possible for transactions to be clear but anonymous or pseudonymous. The blockchains for Bitcoin, Ethereum, and Litecoin are all open to the public.
3. Consortium Blockchain Architecture
There is also a consortium blockchain architecture, which is a public blockchain with permissions. In this type of blockchain architecture, anyone can connect to the blockchain and view it, but only other participants can add information or connect a node. Companies build these kinds of blockchains to help customers, consumers, or society as a whole trust them more. Here, reliability is also made possible by the fact that participants trust each other and by using the same PoS and BFT algorithms.
A blockchain system can be more centralised or more decentralised depending on how it is set up and what it is used for. This just talks about how the blockchain is built and who is in charge of the ledger. A private blockchain is centralised because it is run by a specific group and gives them more privacy. A public blockchain, on the other hand, is open and therefore not controlled by any one person or group.
In a public blockchain, everyone can see all of the records, and anyone can take part in the process of coming to an agreement. But this type of blockchain isn’t as useful because it takes a long time for each new record to be added to the architecture.
From an efficiency point of view, the time it takes to confirm each transaction on a public blockchain is not good for the environment because it needs a lot more processing power than a private blockchain architecture.
Conclusion
To sum up, blockchain technology can be seen as a great solution from a business, legal, and technical point of view. It can make it easier for businesses to run their daily operations within a network of members who all agree with each other. From a legal point of view, any middlemen are left out of the blockchain ledger, and connections are only made between the people involved. Technically, it also makes sure that the data inside the system is under control, safe, and private.
Blockchain technology has already changed fields like crowdfunding, stock trading, and more because of how clear and powerful it is. It will only get bigger in the years to come because of the evolution of technology with the passing time.
FAQs
1. What is the meaning of blockchain?
Ans: A blockchain is logically defined as a network of blocks that are linked together and carry specific information (database) in a secure and real manner (peer-to-peer).
2. What is Blockchain Architecture?
Ans: In the financial industry, blockchain architecture is used a lot. It is a financial ledger or record that is open to the public and in which every transaction is checked and approved.
3. What are the major types of Blockchain Architecture?
Ans: The major types of blockchain architecture are:
- Private Blockchain Architecture
- Public Blockchain Architecture
- Consortium Blockchain Architecture
4. Is it possible to hack Blockchain Architecture?
Ans: A blockchain is literally impossible to hack because there is no central place where information is kept.
5. What is the meaning of private Blockchain Architecture?
Ans: With a private blockchain architecture, only a certain group of people or organisations can access the data. Organizations build these kinds of blockchain architectures to improve the benefit or efficiency of their work as a whole.
