An Introduction to Blockchain Technology’s Layers

2 Jan 2023

Today’s talk of the town is the marvelous blockchain. As we all came to know, by its very nature, data is not immutable, trustworthy, or accurate. It can easily be manipulated, and those issues are not fixed simply by chaining the blocks together. A single or a group of computers controlled by a single party can easily manipulate data. So, how is that blockchain technology so groundbreaking?

The answer is the open consensus mechanism. This is true innovation. Even if their identities are unknown, this mechanism allows all participants to reach a consensus – on the state of the blockchain – and they can freely enter and exit the system. Convenient, isn’t it?

When we look at it closely, blockchain is nothing more than a data structure. It isn’t inherently secure or reliable, nor is it naturally slow or resource-intensive. To determine which of these characteristics apply, we first have to determine who runs the nodes and the consensus mechanism. Let’s take a closer look at its technology layers. 

The Blockchain Architecture’s Layered Structure

Blockchain transactions are digitally signed to safeguard the data’s integrity and security. The digital signature is the one that detects information manipulation. Digital signatures ensure unity because the encrypted data is signed, too. Because the data is encrypted thanks to the blockchain data layer, it cannot be discovered.

The hardware infrastructure and data, network, consensus, and application layers make up the layered architecture of blockchain.

Here’s how it works. The blockchain’s content is stored on a server in a data center anywhere. The client-server architecture is established when a person uses an app or browses the web and requests data or content from application servers. Clients are in a position to communicate with one another and share information. A P2P network is a large collection of computers sharing data (hardware infrastructure).

Internal node communications are handled by the network layer (also familiar as the P2P layer). It is in charge of block propagation as well as transaction discovery. This peer-to-peer layer ensures that nodes can find one another and interact, synchronize, and disseminate information to keep the blockchain network secured. On the other hand, the consensus layer is required for blockchain platforms to perform. 

Smart contracts, chain codes, and dApps are part of the application layer, too. There are two types of protocols: application and execution layer protocols. The execution layer, which executes transactions and ensures the blockchain’s predictable nature, receives instructions from apps.

State Channels, Sidechains, and Rollups

A state channel boosts transaction speed and capacity through various methods by allowing two-way communication between off-chain transactional channels and the blockchain. The miner is not required to validate a transaction over a state channel. Instead, it’s a network-connected resource secured by a smart contract or multi-signature mechanism. The state channel and its transitions are posted to the blockchain once transactions are completed.

A sidechain is a type of blockchain that works in tandem with the blockchain to process large amounts of data. The main goal is to ensure overall safety and increase speed and scalability. In several ways, sidechains differ from state channels. Transactions on the sidechain, for example, are not private between participants. They’re recorded in the ledger for all to see.

The famous rollups are secondary layer blockchain solutions that perform transactions outside the layer one network. Increased transactions, lower gas costs, and open participation are the main advantages of rollups.
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