Blockchain Architecture

The functions of Blockchain are known to all. But, the way it works isn’t. So, in order to understand, it is important to study the basic elements of Blockchain architecture.

Blockchain is an expanding list of cryptographically signed and irrevocable transactional records shared by all participants within a network.

It offers ample business benefits like greater transparency, improved traceability and enhanced security that make Blockchain stand out. And all of these special and advanced perks are possible only due to the complex and intelligent architecture of Blockchain.

Moreover, the majorities of database technologies turn to a client-server network where a server stores data and is administered. But, Blockchain is different. It uses a distributed network where all the network participants have the authority to access, update and maintain data. Eventually, this data moves through plenty of Blockchain architecture elements right before they are inserted as a block holding data in the Blockchain.

 

Blockchain architecture components

The way it works is not as simple as the definition sounds. When it comes to practicality, complex discourse is a constant. The rest of the blog will present the Blockchain architecture of Bitcoin in general.

1. Node

Blockchain happens to be a peer-to-peer network working on IP protocol. In this network, nodes are the computer that processes and authenticates transactions. Each and every node has a replica of the complete Blockchain database that stores all the information of a transaction. Finally, when multiple nodes possess similar transactional details stored in their database, there are considered as consensus.

When a new transaction to an existing one arrives, every node evaluates those transaction algorithms. In case the majority of these algorithm nodes come to a consensus which is a valid transaction, the transmission is recorded into the ledger along with a new block being added into the chain of transactions. Or else, it is denied.

Suppose if a new Bitcoin is added to the Blockchain, the details are delivered to every node. Each node then authenticates the addition of Bitcoin with different network databases. Then, it adds or rejects it accordingly.

2. Transactions

Transactions happen to be the smallest blocks of the Blockchain architecture. They store sender address, recipient’s address and other important data. Their function is to change the state of the agreed-upon Blockchain. Transactions are bundled and take the form of the blocks before being delivered to each node.

Now, each of the nodes verifies those transactions as they get distributed throughout the network. After the verification of the nodes, in case most of them arrive in consensus, the data is successfully added to the Blockchain.

In addition, transactions contain more than one input that act as references to outputs of earlier transactions. Besides, they also hold outputs that uphold an amount or an address.

How are things in Bitcoin?

Each transaction shifts the value of Bitcoin between two addresses. For instance, when Alex sends a Bitcoin to Cindy, the transactions will shift the value from his address to her.

This way, it leaves a reference for the earlier transaction’s output. Also, the transaction’s output becomes a public key. To this, Cindy will hold the private key along with a value of Bitcoin. Now, once the transaction gets verified, Cindy will successfully receive the Bitcoin value and the Blockchain will have all the detailed added.

3. Block

Blocks are the elements of the Blockchain architecture that bundle up a series of transactions and actively distribute them to the nodes of a Blockchain network.

The task of creating these blocks are that of the miners. A block comprises of metadata as well as some transactions that the miners select. The block header holds the metadata for nodes to use and authenticate the data of a block.

Moreover, the metadata comprises of various fields for instance,

  1. That is, the block’s current version.
  2. Merkel root hash, a cryptographic hash of all the transactions that are present in the block.
  3. Previous block header hash, a reference hash of a block’s parent block.
  4. Time of the block created
  5. Abb. For number used once.
  6. And encoded form of the current difficulty of the block and the target threshold.

 

How are things in Bitcoin?

Referring to the Bitcoin Blockchain architecture, users make transactions that sit in a pool unless a miner bundles it to craft a block. In the network, miners include any transaction. It is the consensus rules that validate and sorts transactions systematically.

4. Miners

To recollect, let us define miners again.

They are the nodes that bundle transactions and create valid blocks that the rest of the networks accept. They add a hash function to every block. Their feature is that miners are one-to-one functions and this indicates that they will lend the same hash functions with the same input.

Besides, they happen to be one-way functions. That is, it is not possible to work them backwards. This way, the hashing functions become an essential aspect that contributes to the security of the Blockchain architecture.

Moreover, it is due to hashing that it is impossible to change metadata of a block. That is because altering even a minute detail of the block header will create a new hash function altogether. And this will be authenticated once again before inserting it to the Blockchain ledger.

The mining process comprises of creating a new hash function and assessing whether the function fits the current difficulty level of the block.

How are things in Bitcoin?

In Bitcoin, this is an incentive that creates new coins right from coinbase transactions. This is a type of transaction present in all blocks that has a single output value. In case the miner’s block gets approval by the entire network, the address gets credited with the new Bitcoin.

5. Consensus

The concepts including processing, verifying, etc prior to adding them to the Blockchain is called consensus. Rules of the consensus ensure that the database copy of a node remains consistent with one another as well as the most update one.

Moreover, as a Blockchain network enlarges and grows, the consensus algorithms grow stronger. This happens due to the increasing number of participants leveraging their own database.

In addition, there are many consensus rules like Proof of Stake, Simplified Byzantine Fault Tolerance that defines rules for diverse actions.

 

Blockchain Architecture and the Technology Development

Now, centering towards how a Blockchain developer will craft a platform with the assistance of the Blockchain architecture components, one can classify the Blockchain network into diverse types: public, private, hybrid Blockchain and consortium. And these branches of Blockchain network offer various advantages according to the business model and need.

This way, the Blockchain technology performs to function with perfection.

Caroline Ross April 10, 2020

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