Blockchain Architecture

What is Blockchain

Blockchain is basically a kind of digital ledger that helps in maintaining transactional records. The information is stored in regular batches which are known as blocks and they are linked in a chronological way together to configure a continuous chain of blocks known as the blockchain.

The changes that a user makes in the information that is stored in a particular block cannot be rewritten. However, the change in information gets stored as a new block. Blockchain is considered secure as powerful cryptography is used which provides sole address ownership to the user along with the crypto assets which are related to them. The crypto is designed as a combination of both public as well as private keys and they are created using a combination of numbers and letters. Therefore, this helps from the identity thrift when the address is not directly linked with the identity of the user.

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Types Of Blockchain Architectures

There are mainly 4 types of blockchain architectures:

1. Public Blockchains :

These blockchains are open and allow anyone to join the network. These allow all the present blockchain nodes to gain equal rights for creating new data blocks, accessing the blockchain, and even validating the data blocks. They were initially used for cryptocurrency mining and its exchange. Some examples of public blockchains are Bitcoin, Ethereum, etc. The estimated efficiency of this blockchain is low as compared to other types.

2. Private Blockchains :

These blockchains are meant to have control by a single organisation and are permissioned. The central authority decides whether to grant permission to a node or not in a private blockchain. Private blockchains are mostly decentralised as their public access is regulated. There are a few examples of private blockchains such as business-to-business,  virtual money exchange, umbrella projects, etc.

There are drawbacks to both private as well as public blockchains. The private blockchain has less validation time for fresh data as compared to the public blockchain. It is also stated that private blockchains are riskier and are vulnerable to hacks and frauds. Hence there was a development of consortium and hybrid blockchains to overcome these drawbacks

3. Consortium Blockchains :

These blockchains are taken care of by a group of people in an organisation rather than a single community like a private blockchain scenario. Consortium blockchains are comparatively more decentralised as compared to private blockchains and they retain high-security levels. However, when we talk about the drawbacks of this blockchain, the cost is really high. It is very difficult to digitise the data and create connections to the other members present in the supply chain. The estimated efficiency of this blockchain is high as compared to other types.

4. Hybrid Blockchains :

These blockchains are generally controlled with an oversight performance handled by a public blockchain and are done by a single organisation. They perform the transactions together. There are several examples of hybrid blockchains such as IBM Food Trust, developed for improving the efficiency of the complete food supply chain.

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Components Of A Blockchain Architecture

Blocks : Blocks are a type of dataset that stores important information in the form of a ‘block header’. This block header helps the user to verify its neighbourhood. We can define this information stored inside as:

• A version of the block 
• The version of the parent block
• The time that is taken for the block creation
• nBits
• Encrypted hash for all the transactions

The rest of the block comprises transactions that are set during the time of data mining. There are different blocks present according to their functionalities in the blockchain architecture. They are described as follows:

Orphan Blocks : These are not known to the node, basically the parent block.

Side Blocks : These are described as those parent blocks which are absent in the current blockchain.

Main Blocks : This block extends the current blockchain to the user.

Transactions : Transactions contain the address of the sender, the recipient, and also of the respective values. Transactions are collated and then sent to all the nodes present in the blocks. Each transaction is processed individually at every node.

This type of continuous movement of the data combines to build the blockchain architecture. Every transaction will have its own input and output which can either be single or multiple. The input is defined as the reference value in the previous transaction whereas the output sums up the amount as well as the address. 

Mining : Just like the process of credit card networks, mining works in the same way. Each transaction that is present waits in the queue and is re-checked depending on its values. If the transaction is marked as correct, it then moves forward towards the respective blocks and gets a green signal in the network.

Database vs Blockchain Architecture

The traditional blockchain architecture uses a client-server network. This network has a server that retains all the necessary information together which makes it easy for updation. As this system works as a centralised database, everything is controlled by administrators who decide whether to grant permissions or not.

When we talk about distributed blockchain networks, every participant that is present in the network approves, maintains, and even updates the new entries in the system. Not each individual controls the system but it is controlled by everyone present within the network of blockchain. It is ensured that all the procedures and records help in contributing to the security of the network as well as data validity. Therefore, it is not mandatory for the parties to trust each other and reach a common conclusion.

Therefore, we can conclude that the blockchain is known for its decentralised network and distributed ledger for both public as well as private transactions for a P2P network. The network consists of few computers where data cannot be changed without the permission of the complete network. The complete network includes each and every system that is present.

Creating A Blockchain Network

Below are the steps to build a blockchain network.

1. Finding the use case

A user needs to understand whether the blockchain he is going to follow satisfies his current problem or not. It is done by researching properly and understanding the problem solving based on the decisions being made to choose the blockchain. There are 3 main use cases that a user can follow. They are described below:

• Smart contracts: It is described as a way of automating processes and ensuring legal bindings of the digital code. This can only be a good option in case you feel the business can make the right use of it. Still, a user should introspect well and research properly before making the decision.
• Smart asset management: If the business is about retirement, finance, insurance, exchange, or any kind of payments, then this is the right choice to move ahead with. 
• Data Verification and Authentication: If the business has to deal with storage, digital signatures, or encryption, then this is the right choice to make. This use case also works for generating the transactions as well.

2. Choosing The Consensus Mechanism :

The next step is choosing the right consensus mechanism for the requirement. There are several mechanisms for the same. (POW) Proof-of-Work is the most popular one. Though, this method is not very pleasant to use for businesses that require a strong hardware system with a huge amount of energy for successful implementation. There are several other mechanisms as well such as Quorum, Hyperledger, Corda, etc. and all of them can be easily implemented on distributed ledgers. Hence, the only task is to look for the right consensus mechanism available that fits the requirements of the work in the most ideal way.

3. Choosing the platform :

The next step for the user is to choose the right platform to build his blockchain network. There are a lot of options available for this step as well and all of them have something unique in them to offer to the user. Some of the well-known platforms are Ethereum, Corda, Hyperledger Fabric, Quorum, BigChainDB, etc

4. Nodes Design :

After choosing the right platform for your business need, the user needs to design the appropriate nodes. A user can design a closed network where permissions are granted only if the user follows KYC rules. We have discussed that the network that does not require permissions are public networks and they allow anyone to join their network. The private networks do not allow everyone to take advantage of their network nor do they share any information with everyone. Therefore, a user can design the nodes as public or private depending on the requirement.

5. Creating Blockchain Instance :

Now is the time to create an instance for the blockchain network after designing the node. A user can create an instance on any platform that he wants. Various aspects can be configured here such as native assets, key formats, asset insurance, atomic exchange, etc.

6. Designing APIs :

Now the user has an instance that is actively running, the need is to handle the application interface. The Blockchain network has preexisting APIs for the platform that the user has. APIs help in performing functions related to audits, generating key pairs, and addresses, retrieving data and storage, creating smart contacts as well as data authentication.

7. Designing The User Interface And Admin :

Now is the time to create a frontend setup after completing the backend. The maximum information a user has to provide is the admin keeping into consideration that it should not overwhelm the interface with unrequired information. Languages such as PHP, Java, Python, HTML, etc can be used for designing the front end successfully.

8. Finalising The Blockchain :

The setup is now complete and the user only needs to finalise the setup of the blockchain. The steps make sure that the blockchain is actively running and the mechanism is also up to the mark. Later, the user can add the latest technology to his blockchain which can include cloud, artificial intelligence, etc.

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Key Characteristics Of The Blockchain Architecture

• Immutable : Each blockchain node present in the architecture has a duplicate of the digital ledger. The node keeps on checking the transaction validity for adding a transaction. In case, the validity for the majority of nodes comes as true, the node is successfully added to the network. This means when the majority of the nodes approve of the transaction, only then the transaction block can be added to the ledger, otherwise, it is not possible.
• Distributed : Any changes made to the blockchain ledger are updated in the form of seconds or minutes. Because there is no interference from the intermediaries, validation for the change is processed fast in the blockchain. 
• Decentralised : A user needs to have the approval of the government or some authorities to make the transactions while following the conventional methods. Whereas in the case of Blockchain, a user can perform all the transactions with the mutual consensus of all the users which results in smooth, safe, as well as fast transactions.
• Secure : The architecture of Blockchain is designed in such a way that it is a highly secure network as it has the feature of a digital signature that can conduct fraud-free transactions. Digital signatures make it possible to change the data when not used by a specific user. Even if some attempt is made by someone the modification of the data means or for changing the hash IDs is next to impossible.
• Faster Settlement : The old or Traditional systems of banking are prone to risks or fallouts which eventually take several days for the transaction process. However, these transactions are not completely successful as they can corrupt very easily. Blockchain offers its users a faster process for settlement when compared to other banking systems.

Skills Required To Build A Blockchain Architecture

As we know that blockchain is the upcoming technology in the world, a person needs to have certain skill sets in order to be a successful blockchain developer. Below are several skills that a person should master before pursuing blockchain development:

• Data Structures : This is the most important and useful skill a blockchain developer should possess. This is used to deploy the systems as the developers have to engage the data properly using data structures. The concept of blockchain entirely works on data structures.
• Smart Contracts : This concept has now been a popular one amongst the upcoming businesses. This happened majorly after the launch of the Ethereum blockchain. This skill helps the developer easily exchange services as well as goods among the parties. 
• Cryptography : This skill is used by the developers to hold back a foreign entity to read or edit personal content. The data remains secure and fraud-free using cryptography techniques. Hence it is a very essential skill for a blockchain developer.
• Interoperability Skills : These are the skills of a developer to view as well as collect information from different blockchain systems. A developer should understand if a network sends some data, and how well the receiver will be able to take it for reading, understanding, or responding to it. Hence this skill calls for a better understanding of data exchange between different parties.

frequently asked Blockchain Interview Questions

Conclusion

In this article, we have discussed Blockchain and its architecture. The article explains the components of blockchain architecture along with the different types of blockchain architectures. Blockchain is basically a kind of digital ledger that helps in maintaining transactional records. We have also discussed the key characteristics of the blockchain architecture and the skills required to build a blockchain architecture.

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