What is blockchain technology
A blockchain is a decentralized, distributed ledger that is used to record transactions across a network of computers. It is composed of a series of blocks, each of which contains a number of transactions. Each block is linked to the previous block, creating a chain of blocks, hence the name "blockchain."
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Blockchain architecture and design
The key feature of a blockchain is that it is decentralized, meaning that there is no central authority or centralized server that manages the ledger.
Instead, the ledger is maintained by a network of nodes, or computers, that work together to validate and record transactions. This makes it difficult for any one entity to corrupt or tamper with the ledger, as any changes would have to be made across the entire network.
The process of adding new blocks to the blockchain is called "mining" or "forging".
In a public blockchain network, the mining process is open to anyone with the computational power and the necessary software to participate.
In the mining process, new blocks are added to the chain through a consensus mechanism, which is a set of rules that the nodes in the network use to agree on the contents of new blocks.
The most common consensus mechanism is called proof-of-work. In proof-of-work, nodes, called miners, compete to solve a complex mathematical puzzle, which is used to add new block to the chain.
The first miner to solve the puzzle gets to add the new block to the chain and is rewarded with a certain number of cryptocurrency( if the network is cryptocurrency based blockchain).
This process consumes a lot of computational power and energy which is sometimes regarded as a negative aspect of public blockchain networks.
Another important aspect of the blockchain architecture is its transparency and immutability. The ledger is visible to anyone, and all transactions are recorded on it permanently, making it difficult to tamper with the data.
Components of blockchain architecture
A blockchain architecture typically consists of the following components:
Ledger:
The ledger is the main component of a blockchain and is used to record transactions. It is a decentralized, distributed database that stores the transaction history of the blockchain network.
Nodes:
Nodes are the computers or devices that make up the blockchain network. They communicate with each other to validate and record transactions, and maintain copies of the ledger.
Consensus Mechanism:
A consensus mechanism is a set of rules that the nodes in the network use to agree on the contents of new blocks. The most common consensus mechanism is proof-of-work, which requires nodes (also called "miners") to solve complex mathematical puzzles in order to add new blocks to the chain.
Network Communication Protocol:
A network communication protocol is a set of rules that govern how nodes communicate with each other. This allows nodes to share new transactions and blocks, and to reach consensus on the contents of the ledger.
Digital Signature:
Digital signature is a security measure that uses cryptography to ensure that only authorized users can access the network. Each transaction is signed with a digital signature, which is a unique code that verifies the identity of the sender.
Smart Contract:
A smart contract is a computer program that defines the rules and penalties around an agreement. They are used to automatically execute the terms of a contract when certain conditions are met. They can be used for a variety of purpose, from financial transactions to supply chain management
APIs:
Application Programming Interfaces (APIs) are a set of rules that allow external applications to interact with the blockchain. This allows users to easily access and view data on the blockchain, and to create new transactions and smart contracts.
Mining/Forging:
A mining or forging process that is used to create new blocks and add them to the blockchain. This process typically involves solving complex mathematical puzzles, and it is rewarded with a certain number of cryptocurrency( if the blockchain is cryptocurrency based).
Types of blockchain architecture and their advantages and disadvantage
There are several types of blockchain architecture, each with its own advantages and disadvantages:
Public blockchain:
A public blockchain is open to anyone and is not controlled by any central authority. Anyone can participate in the network, view transactions, and validate new blocks. Examples include Bitcoin and Ethereum. Advantages include high security, transparency, and decentralization. Disadvantages include high computational power consumption and lack of privacy.
Private blockchain:
A private blockchain is typically used in enterprise settings and is only open to a select group of participants. Access to the network is controlled by a central authority and transactions are typically faster due to a smaller number of participants. Examples include Corda and Hyperledger. Advantages include faster transaction times and increased privacy. Disadvantages include lack of decentralization and increased risk of a single point of failure.
Consortium blockchain:
A consortium blockchain is a hybrid of the above two types, in which a group of companies or organizations collectively maintain the network. The network is not open to the public and is not controlled by a single entity, but rather a group of entities. Advantages include faster transaction times, increased privacy, and reduced risk of a single point of failure. Disadvantages include lack of complete decentralization, and potential conflicts of interest among consortium members.
Hybrid blockchain:
A hybrid blockchain is a combination of public and private blockchain, in which specific functions are designated as public or private. It allows for the creation of a public network with private components, depending on the use case. This allows for the benefits of both public and private blockchain to be utilized in the same network.
It's important to note that the choice of blockchain architecture will depend on the use case and the specific requirements of the organization or community. Public blockchains are well-suited for open and decentralized systems, while private and consortium blockchains are well-suited for more closed, permissioned systems. Hybrid blockchains are useful when there's a need of combining the best feature of public and private blockchain network.
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Created by-- HARSH CHAUHAN
