- Category: Blockchain Technology
An immutable time-stamped series record of data that gets managed on a distributed network is Blockchain. This technology was first implemented in 2008 by Satoshi Nakamoto, and now after 11 years of progress, it has achieved as one of the most secured technologies having hands-on almost every sector of the economy. The reason behind this reliability is its architecture, which is quite complex to understand.
So let’s move forward to learn architecture, different components, and the process involved in high-security technology Blockchain.
Various people mislead blockchain as bitcoin currency only, but there is a lot more under the umbrella of blockchain. It uses a peer-to-peer network of computers to validate the transactions in the block. This technology works in an open network that has no central authority. That is why the information in it is open for participants and everyone to see, which is called transparency.
Building your blockchain solution is not so complicated, all it takes is complete knowledge of its architecture and core components. The technology has core characteristics of accountability, reliability, and decentralization.
Planning of Blockchain
Blockchain is the spine of Digital Cryptocurrency Bitcoin. To understand the architecture, it is necessary to have a brief knowledge about the technology. Blockchain is a decentralized distributed ledger of transactions among the network of computers. The transactions done by the user are verified directly without a central authority.
If you want to implement a customizable blockchain solution, programming languages such as C++, Python, C, Java, and Ruby are needed. Besides, web development skills like HTML, CSS, Node JS will give handy experience. Blockchain has three pillars of success.
- Decentralization: It is a process of distributing the power of central authority for every small transaction. Every single user wants to get an opportunity to become one of the network’s many decision processors.
- Transparency: Who doesn’t want crystal clear water? Just like the same blockchain provides unparalleled transparency to the valid ledger. Users can check these records as per their convenience.
- Immutability: There was a need for a technology that gives security to the database from insiders too. Blockchain provides the ability to ledgers to remain unchanged, unaltered, and indelible as blocks of data cannot be altered.
How is Blockchain distributed?
Blockchain is distributed in three types of networks and subdivided further. Just like the image is showing different nodes, the same concept is.
Distributed networks are further divided into two types of networks that work on the same terms with few differences.
Public Distributed Ledgers: Just like any other public access here also anonymous users can get into multiple nodes of the network for decision making.
Private Distributed Ledgers: On the other hand here users are not anonymous who are getting into multiple nodes of the network for decision making.
What are the stages of the transaction?
Blockchain follows a hierarchy of processes for the transactions in the network. These stages are necessary for the data in terms of transparency and immutability.
The process starts from the user end where he/she will put their request. The request made is for the transaction of anything like a financial transaction or any data to be recorded in the ledger, etc.
The request then sent to the block that would represent the transaction. In the blockchain, data is stored in the form of blocks and linked to each other in the form of a chain, which induces the word blockchain.
Block sent to the network
This block carrying the request is sent to every node of the network. One of the pillars of blockchain stated here, i.e., distributed. This block gets distributed on different nodes of the network to verify and ensure the security of the request.
Once all the nodes receive the block, they then validate it. Block gets validated by every node distributed among different computers, and after verifying every object, moved forward.
After all the validations from every node, the block gets the reward and then added to the existing blockchain.
Now comes the final stage, where the block has crossed all the hurdles and completed the transaction of the user.
Layers of Blockchain
The Internet has seven layers for data transmission and security, and so is blockchain. Blockchain is one of the most secure technologies in the digital world, having three different layers for its services to us.
Cryptocurrency has given the experience of security to the next level in the country, out of which Bitcoin has come up to shine.
As every cake has a creamy layer, the same blockchain stack has its foremost creamy layer as Overlay Network. It includes various protocols for auditing services:
- Proof of Process
- Proof of Existence
- Proof of Audit
Decentralized protocols are with built-in data as we can develop the open-source technology. Due to overlay networks and the Blockchain, validation, and transactions didn’t get controlled by a single entity.
Open-source APIs are publicly available for all developers for accessing their data. It allows the developers and outside workforce to access the backend data to improvise their applications.
The application layer is more consumer part of the stack. Generally, applications built in this layer are similar to each other.
Components of Blockchain
Every ecosystem has organs that give functioning to it. Blockchain ecosystems have the following components.
- Node: This represents the user or the system that is involved in the blockchain.
- Transaction: The smallest building block present in the blockchain system.
- Block: It is used to keep a set of transactions as a data structure that gets distributed to all nodes on the network.
- Chain: Blocks that are linked together in a specific order, form chain.
- Consensus: As everything needs to have rules and arrangements to carry out their operations so as the blockchain.
Let’s discuss in brief about some of them and a few others also:
In a specific blockchain ecosystem, for participation, every internet-connected computer related to that particular blockchain ecosystem has to install and run a node application.
The database can be synchronized, replicated, and shared among the members of the decentralized network and is available for the participants of that particular blockchain ecosystem.
An extraction of machine set off with instructions and implemented as part of node application that is run by every participant in the blockchain ecosystem.
It is essential for deciding the functioning of the blockchain and its extension in the future. This algorithm provides security and stability to the data in the blockchain.
Blockchain architecture serves various benefits to organizations and enterprises:
- Data Security: Once data entered, it is hard to alter it in the database.
- Cost Reduction: With the growing cybercrime, lots of money is spent on data security. Blockchain structure is sustaining the security at a low cost too.
- Flexibility of Data: Blockchain is a distributed data structure, so it can be retrieved any moment from the distributed network.
- Every time a transaction is requested, a new block gets built within the blockchain. Each record is digitally signed and rewarded to ensure its transparency. It then gets verified by the majority of nodes of the system and then added to the network.
Implementing the blockchain solution
Blockchain is a decentralized distributed network and for creating a solution, there are few steps involved within it.
Step 1: Identifying the Use Case
The foremost and crucial step for any software is identifying the use case. The same is for blockchain implementation, the key to development is to figure out the problems, target audience, and solution for the same. Various problems will come in mind when researching the problems, and that will add clarity to the goals.
Step 2: Choosing Blockchain carefully
There are a lot of varieties in the market for technology. Sometimes it becomes very difficult to choose the type of technology for your dream business solution. Some of the popular blockchain platforms that are available in the market are:
- Hyperledger Fabric
It is very important to do proper research work on these platforms too and, make sure that it will suit your budget and possess the quality that your solution needs. You can also take advice from someone who has prior experience in blockchain, and that can be any person in any company.
Step 3: Initializing the Blockchain
We have already discussed the process of blockchain earlier above, and that process is necessary to get followed by the data. To initialize the blockchain solution, it is advisable to create the first block manually. The block should possess the features of the chain and then share it at all nodes of the network system.
Step 4: Choosing the Right Consensus Protocol
These protocols refer to the mathematical problems that require large calculations. They create an undeniable system of agreement between systems and networks to prevent the system from exploitation, hacking, spam attempts. There are a variety of protocols like:
- Proof of Stake
- Proof of Work
- Proof of Weight
- Delegated Proof-of-Stake
- Byzantine Fault Tolerance
Step 5: Building an Ecosystem
Creating a community within the industry or an organization is very helpful in understanding the technology and its potential to improve the trust among the businesses. An ecosystem does base on belief, and in the blockchain ecosystem, it is very necessary as it involves a large number of stakeholders in it.
Step 6: Designing Deliberately
The design had the power of attracting the crowd. Blockchain solution needs to get designed properly as there is always a possibility of updating it in the future. The process of the solution needs to be revised to lay preliminaries for blockchain.
Step 7: Navigating Uncertainty
Blockchain is still new in some sectors. You should be ready every time for making changes in the framework and the challenges for regulatory approaches. A certain change is anything can reshape the whole solution.
Blockchain technology enables organizations & companies in the following ways:
- Blockchain protects from cybercrimes, electronic crimes, hacking, etc.
- It helps in introducing modern digital interaction.
- Reduction of cost due to the removal of intermediaries, inefficiencies, and duplications.
- Quick transactions with trust.
- Detailed control over transactions and business processes.
Initializing a blockchain solution is not an easy task. It can be a little frustrating in starting, but later on, you will realize this is more successful than expected. This is a new technology, but in the future, it can create various possibilities in the success of your organization.
Blockchain helps in running daily operations more easily within a defined network. From the legal outlook to technical terms, blockchain ledgers had made a connection between involved parties only. This technology ensures control over the privacy and security of data in the system over time.