What is blockchain? What's inside it?? Wanna see....
Tags: blockchain, beginners, web3, knowledgebase
Published: 2022-10-10 11:43:21

Today we will get to know about Blockchain, the technology that maintains the digital cryptocurrency Bitcoin. We will learn about blockchain, it's layer architecture and types, why it is popular, and some benefits and drawbacks.

So without further ado let's get back to the discussion. First of all what is blockchain for us?

##**What is blockchain**

Blockchain , a **distributed or decentralized ledger** allows for the safe storage of data that cannot be altered. In this case, the term "decentralized" or "distributed" refers to the fact that all of the nodes share their resources and have the same priority. 

Data is stored in blocks, and each network node has an exact copy of the entire database. Because the majority of copies of the ledger will not reflect this change and will reject if someone tries to manipulate an entry in one copy, security is ensured.

---

##**What Is Blockchain Technology?**

Blockchain technology holds public transactional records in many databases, called the "chain," in a peer-to-peer network. This is called a 'digital ledger' which is authenticated and protected by the owner's digital signature. The digital ledger's data is safe. The digital ledger is shared among multiple computers on a network, where actual purchases are recorded. Anyone can see the data but can't corrupt.

Blockchain allows transparent data sharing. Blockchain databases retain chronology, preventing data erasure or modification without consensus. Using a secure, immutable ledger, developers may track payments, orders, and user accounts.

---

##**Blockchain Layer Architecture**

Multiple technologies secure blockchain's integrity and stability. Blockchain uses math, cryptography, game theory, peer-to-peer networks, and validation protocols. Blockchains are secure because they have no central authority. DLT employs a protocol to confirm transactional data with many computers (or nodes). Each node adds, inspects, and modifies entries.

Blockchains are stacked to suit this unique authentication method. Five tiers have different functions. Let's start with architecture and each layer's purpose.

**1. The Hardware /Infrastructure Layer:** The blockchain's data is safely kept on a data server. Computers make a request to the server for this information whenever we use the web or blockchain applications. This sharing of information is made possible by the client-server architecture.

Blockchains are P2P networks that link users to their peers to share information faster. It's a network of interconnected gadgets that can share data. This creates a decentralized ledger. Nodes are network computers that may send and receive data. Each node randomizes financial data.

This layer is responsible for managing the blockchain's communications infrastructure.


**2. The Data Layer:** Blockchains are lists of blocks that record and validate transactions. The "Genesis Block" doesn't link to other blocks. When a certain number of transactions are verified, nodes construct, upload, and connect a 'block' of data. So, a blockchain can grow over time.

The sender's private key "digitally signs" each transaction. Before attaching a digital signature, the owner's identity is encrypted for safety.

`All nodes link and distribute blockchain transaction blocks. Before a transaction is broadcast, the sender's private key digitally signs it. After nodes agree a transaction is valid, it's encrypted with a hash function and placed to a block. The block is added to the chain, linking it to the others.`

Once recorded, blockchain data cannot be changed.


![Blockchain Layer Architecture](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/vxiu8flvg10gydj26szz.png)

**3. The Network Layer:** P2P architecture obtains consensus by transferring data across numerous nodes. All network nodes must communicate. Network layer allows 'inter-node communications' "Propagation Layer" recognizes nodes, creates and adds blocks. This layer maintains the blockchain's state through efficient node communication.

Blockchain decentralizes with more nodes.

**4. The Consensus Layer:** Blockchain's base. If this layer's transaction validation fails, the system crashes. This layer's protocol requires a certain number of nodes to verify a transaction. So many nodes must agree on the validity of each transaction at once. This strategy maintains the blockchain's decentralized nature because no node monopolizes transaction data. This is a "consensus mechanism."

Blockchain developers must examine the consensus algorithm. Blockchain stores only confirmed transactions. Various blockchains use proof-of-work (POW), proof-of-stake (POS), etc. More info here.

**5. The Application & Presentation Layer:** Hosted smart contracts and distributed apps (dApps). Smart contracts base choices on contract expiration, spot pricing, and more. Decentralized apps (dApps) execute decisions. Everything happens at the application layer.
The best layer comes first.

Network applications including as smart contracts, oracles, decentralized applications (DApps), wallets, etc. run on this layer.

---

## **Blockchain Layer**

Blockchain layers are distinct technology. Each layer uses past infrastructure to deliver new market solutions. Ethereum exploits ISP infrastructure to create its own dApp architecture.

Replace with:

1. Networks [Layer 0].
2. Blockchains [Layer 1].
3. Sub-Blockchains (or software upgrades) [Layer 2].
4. DApps (Decentralized Applications) [Layer 3]. 


![Blockchain Layer](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/a96yobfo33q2ue35kdpa.png)


**1. Layer 0:** "Layer zero" makes blockchain possible. This technology underlies Bitcoin, Ethereum, and other blockchain networks. Internet, network, and connections are Layer 0 elements.

**1. Layer 1:** Layer 1 projects are blockchains. Public blockchains are digital ledgers that let people access and upload financial data while restricting alterations. Each blockchain uses a distinct consensus mechanism and smart contracts to automate transactions without a third party.

New technology makes Layer 0 protocols insufficient for scalable, safe, decentralized blockchains. Layer 2 protocols apply.

**1. Layer 2:** People develop Layer 2 blockchains using other blockchains. Layer 1 blockchains make them efficient and scalable.

**1. Layer 3:** Layer 3 is called "decentralized applications," which is a way to name protocols that users can interact with. Up until this point, all of the layers provided software to other developers. L3s, which are also called Web3 Apps, are all about the users.

---

## **Types of Blockchain**

Permissioned and permissionless blockchains are popular. Other blockchain types are subsets of these two, or both.

Permissioned blockchain can restrict node access and govern node network rights. Users share their identities on a permissioned blockchain network.

Permissionless blockchain grants pseudo-anonymous access to all users. Any user can become a network node. Blockchain makes permissionless networks more secure than permissioned networks.

Let’s look at the four key subtypes of blockchain networks:

1. Public Blockchain.
2. Private Blockchain.
3. Hybrid Blockchain.
4. Consortium Blockchain. 


![Types of Blockchain](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/whhviokfe533u5d9k0g8.png)

**1. Public Blockchain:** Public blockchains are widely used for cryptocurrency mining and exchange. These networks usually feature longer validation times than private blockchains but are more secure.

Here are some basic key points of public blockchain - 

1. Since the name of this blockchain is "public," anyone can use it. This means that no one owns it.
2. Anyone with internet access and a good computer can join this public blockchain.
3. All the computers in the network have a copy of all the other nodes or blocks.
4. We can also check the accuracy of transactions or records in this public blockchain.

![Public Blockchain](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/0tcvkso9a67oh53msd6n.png)


**2. Private Blockchain:** Private blockchains, often called managed blockchains, are permissioned blockchains overseen by a single entity. This governing body can approve or reject new nodes joining the network as needed. It also has the ability to delegate specific tasks to certain nodes with varied degrees of authority.

Here are some basic key points of private blockchain - 

1. Unlike a public blockchain, these are kept more secret.
2. Certain authorized users only have access to them.
3. These blockchains are only accessible within a restricted environment.
4. This is a type of network that is restricted to a select group of employees or members of a certain organization.

![Private Blockchain](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/tpyv3tuq8hmv5uzcftep.png)


**3. Hybrid Blockchain:** Private and public blockchains come together in an interesting way in hybrid blockchains. Like a private blockchain, this type of blockchain is run by a single authority. But there is a level of public oversight built into it. In a hybrid blockchain network, public blockchains must validate certain transactions. 

Here are some basic key points of hybrid blockchain - 

1. It combines public and private blockchains.
2. Various permission-based and permission-less systems are in use.
3. Smart contracts that regulate user access
4. In the case of a hybrid blockchain, even though the principal entity owns the chain, it cannot edit the transaction.

![Hybrid Blockchain](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/9ozn2ntavtxplij85s4c.png)

**4. Consortium Blockchain:** Consortium blockchains are an alternative to public and private blockchains that try to overcome their limitations by having multiple groups govern the network as a whole. Consortium blockchains are more distributed than private blockchain networks despite being permissioned.

Here are some basic key points of Consortium blockchain - 

1. Additionally known as Federated Blockchain.
2. The organization's problems have been effectively addressed using this novel approach.
3. There is public information and there is private information.
4. In a blockchain of this variety, multiple entities share responsibility for its upkeep.

![Consortium Blockchain](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/uwpv5hnk7588qqno5by4.png)

---

## **At a glance**


![At a glance](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/b2iv0xfy8a0l1qhyga71.png)

---

## **Why is blockchain popular** 

Blockchain is an emerging technology with many advantages in an increasingly digital world. Some are:

**1. Highly Secure** - It uses a digital signature to make sure that transactions are safe from fraud. Without a specific digital signature, other users can't change or corrupt the data of one person.
**2. Decentralized System** - In the past, transactions needed to be approved by governing bodies like a government or bank. With Blockchain, transactions are done with the agreement of all users, which makes them safer, smoother, and faster.
**3. Automation Capability** - It can be programmed and can set off a series of actions, events, and payments when the trigger conditions are met.

---

## **Benefits of Blockchain**

Blockchains can protect and secure sensitive data from online transactions thanks to their high level of security, which is one of its main advantages. Blockchain technology also allows quick and easy transactions for those looking for them. In contrast to other transaction techniques, it actually only takes a few minutes to complete. Additionally, there is no intervention from financial institutions or governmental bodies, which many users view as advantageous.

Besides there are also other benefits of blockchain. This section discusses some of the further advantages of blockchain technology.

**1. Open:** - One of the main benefits of blockchain technology is that it is open to everyone, so joining the distributed network does not require permission from anyone. This means that anyone can contribute to blockchain technology.

**2. Verifiable:** - Using zero-knowledge proof, one party proves the correctness of data to another without disclosing anything about the data, blockchain technology stores information in a decentralized manner so that everyone can verify its accuracy.

**3. Permanent:** - Because it is a decentralized network with a number of trustworthy nodes, the records or information that are stored using blockchain technology are permanent, so there is no need to worry about losing the data because duplicate copies are stored at each local node.

**4. Tighter Security:** - Blockchain tightens security by storing each transaction on a connected block that uses hashing techniques. The SHA 256 hashing algorithm is used to store transactions.

**5. Immutability:** - Because of the decentralized nature of blockchain technology, data cannot be altered, and any change will be reflected in all nodes, fraud cannot occur; consequently, transactions can be described as tamper-proof.

**6. Efficiency:** - Because the blockchain eliminates any third-party interference in the time between transactions, the system becomes more efficient and quick. Settlement goes more easily and smoothly. Blockchain has the potential to improve trading efficiency and speed by streamlining, disciplining, and eliminating the possibility of errors.

**7.  No third party interference** – No administration or monetary foundation has control of the cryptographic forms of money that work on blockchain innovation. This means that the value of the currency cannot be manipulated by the government.

**8.  Transactions** – Editing or manipulating the blockchain that keeps track of all transactions is impossible. The transaction data can be viewed at any time by both parties to a transaction and the general public. This improves the security of online transactions. With blockchain technology, transactions can be completed quickly and processed faster.

## **Drawbacks of Blockchain**

Every coin has a reverse side. Blockchain technology is still in its infancy, and before it can be widely used for everyday transactions, there are some issues that need to be addressed.

**1. Scalability:** - Due to the fixed size of the blocks used to store information, blockchain technology cannot be scaled. This is one of its biggest flaws. Because the block size is 1 MB, it can only hold a few transactions on a single block.

**2. Immaturity:** - Because blockchain is only a couple of years old, people don't have much faith in it and aren't ready to invest in it. However, a number of blockchain applications are succeeding in a variety of industries, so it needs to win the trust of even more people before it can be used in its entirety.

**3. Energy Consuming:** - According to the survey, 0.3% of the world's electricity was used in 2018 to verify transactions made with blockchain technology, which necessitates a significant amount of energy.

**4. Time-Consuming:** - To add the next block to the chain, miners must repeatedly compute nonce values, which takes a long time and must be accelerated for industrial use.

**5. Legal Formalities:** - Due to environmental concerns, some nations prohibit the use of blockchain technology in applications like cryptocurrency. They do not encourage the commercial use of blockchain technology.

**6. Storage:** - Because blockchain databases are stored on all network nodes, there is a storage problem, and more transactions will require more storage.


**7. Privacy:** - All nodes in the network have access to encrypted and anonymous data on a public blockchain. As a result, this data is legitimately accessible to all network members. Transactional data could be used by someone to identify a person in the network, just as web trackers and cookies are typically used by businesses. Sadly, this demonstrates that blockchain security is not 100%.

**8. High implementation costs:** - Although this technology has low costs for users, it also has high costs for businesses to implement, which delays its widespread adoption and implementation.

**9. Private keys:** - In the case of private keys, as has been documented on numerous occasions, losing them makes it nearly impossible to recover them, posing a problem primarily for holders of cryptographic values. Excessive security can also be a drawback.

**10. Unemployment:** - As Blockchain technology is adopted and implemented, all of these intermediation sectors for the validation of payments and processes will inevitably be reduced to the point of disappearance, along with the jobs required for them. This is because there will be no need for intermediaries.


This was a discussion of Blockchain and some of its important topics. Will try to discuss on another blockchain topic Next. Thank You.....