A Basic Introduction to Blockchain Architecture

To better understand the structure, components, and benefits of Blockchain architecture, it is necessary to prior have a basic understanding of Blockchain.

Most people only know Blockchain as the underlying technology of cryptocurrencies and nothing more. However, Blockchain exceeds just being an underlying tech. It is basically a chain of the blocks that contains information. Blockchain uses a peer-to-peer system of computers (shared distributed ledger technology) to authenticate transactions. Each transaction is digitally signed (encrypted) to ensure the integrity and authenticity of the transaction.

Blockchain Architecture is a system that is used to make and share distributed ledgers of transactions between networks of users (computers). It enables users (nodes) to interact with the Blockchain to create and verify transactions instantly without any central authority. Presently, Blockchain architecture is predominantly used in the finance sector.

The Blockchain architect can be categorized into three sections: Public Blockchain architecture, Private Blockchain architecture, and Consortium Blockchain architecture.

Public Blockchain Architecture

The public Blockchain architecture, also known as permissionless Blockchain architecture, is available to anybody who wants to participate to verify and add transactions block to the Blockchain. Data and ledgers on public Blockchain architecture are visible and available to everyone on the internet (completely open-ended). This system is free for use and also offers incentives for people to join. Examples include the Bitcoin, Litecoin, and Ethereum Blockchain architectures. Public Blockchain architecture offers low privacy but is more secure than private Blockchain architecture.

Private Blockchain Architecture

The private Blockchain architecture, unlike the permissionless Blockchain architecture, is used within a single organization. This system is only opened and controlled by participants that are required in the network or by users who are authorized or invited to participate in the system. Hence, the system is also called permitted Blockchain architecture. In this system, anyone on the internet is allowed to view the ledger but cannot only specific people are allowed to verify and add a transactions block to the Blockchain. Private Blockchain architecture offers high privacy but is less secure than public Blockchain architecture.

Consortium Blockchain Architecture

Just like its name, this type of Blockchain architecture consists of a few organizations. In this system, ledgers are opened and restricted to selected groups. That is, it is controlled by the preliminary assigned users – only a group of organizations can verify and add a transactions block to the Blockchain. Consortium Blockchain architecture is controlled by the preliminary assigned users.

High-level View of Blockchain Architecture

Generally, Blockchain architecture is an ecosystem of several nodes (users), with each node having a local copy of a ledger. The users, which most times belong to different organizations, interact with one another so as to arrive at an agreement on the content of the ledger.  No central authority is required to control and validate transactions.

The process of arriving at an agreement is referred to as “consensus.” Nodes send transaction requests to the Blockchain to be validated. Once the transaction is validated, a record of the validated transaction is added to the ledgers and cannot be removed or altered. This property is known as the probabilistic immutability nature of Blockchain.

Core Components of Blockchain Architecture

The following are the core components of Blockchain architecture:

Nodes: these are the users or computers that interact within the Blockchain architecture. Each node has an independent copy of the ledgers.

Transactions: these are the smallest building blocks of Blockchain architecture. They are the information and records on the system.

Blocks: these are data structures used for keeping a set of transactions that is distributed among all users in the system.

Chain: this is a sequence of blocks in a particular arrangement.

Miners: these are also nodes but specific nodes that verify the blocks before they are added to the Blockchain.

Consensus: this is also referred to as consensus protocol. It is a set of arrangements and rules to execute Blockchain operations.

The usefulness of Blockchain Architecture

Various organizations and enterprises can use Blockchain architecture for the following purposes:

  • Cost reduction: normally, enterprises and organization including governmental institutions spend a lot of money on sustaining their centrally-held databases to keep data secure from cybercrimes, thefts, or other corrupt acts. However, Blockchain architecture offers a low-cost method of storing and securing data.
  • History of data: Blockchain architecture makes it possible to check and track the history of any data or transaction anytime. Unlike the centralized database that only gives a snapshot of data at a point in time.
  • Data validity and security: once data are entered on the Blockchain architecture, it is very difficult or nearly impossible for the data to be tampered with due to the nature of Blockchain architecture. More so, Blockchain architecture guarantees high data validity.

Key Characteristics of Blockchain Architecture

Here are some embedded characteristics of Blockchain architecture:

  • Transparency: Blockchain architecture cannot be corrupted or tampered with since overwriting the Blockchain architecture completely requires huge computing power.
  • Anonymity:  Blockchain architecture keeps users’ anonymity as each user on Blockchain architecture is given a generated address.
  • Cryptography: Blockchain architecture involves cryptographic proof and complex computations among users, with which it validates transactions and ensures trustworthiness.
  • Decentralization: each user on the Blockchain architecture has access to the whole distributed database.
  • Provenance: Blockchain architecture makes it possible to track the origin of any transaction or data in the Blockchain ledger
  • Immutability: any data or record stored in the Blockchain architecture cannot be altered or deleted.
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