1.2 Core Components

Blockchain Architecture

Blockchain architecture is typically divided into several layers, each serving a specific function, from managing the network to facilitating user-facing applications. These layers are: Network, Transaction, Blockchain, Trust, and Application.

1. Network Layer (Data Propagation Layer)

The network layer is responsible for the communication and synchronization between nodes in the blockchain network. It facilitates the peer-to-peer (P2P) exchange of data, such as transactions and blocks.

Key Functions:

• Data Propagation: Broadcasts transactions and blocks to all nodes in the network.

• P2P Connectivity: Establishes and maintains connections between nodes without relying on a central server.

• Node Discovery and Synchronization: Helps nodes identify each other and stay updated with the latest blockchain state.

Technologies Used:

• Communication protocols like gRPC or devp2p.

• Data transmission protocols such as TCP/IP.

2. Transaction Layer (Data Layer)

The transaction layer handles the creation, validation, and storage of transactions. It defines the rules for what constitutes a valid transaction within the blockchain.

Key Functions:

• Transaction Creation: Collects information such as sender, receiver, and amount.

• Transaction Validation: Ensures authenticity using digital signatures and compliance with protocol rules.

• Storage in Mempool: Temporarily holds unconfirmed transactions until they are added to a block.

Components of a Transaction:

• Sender and Receiver Addresses: Represented by cryptographic public keys.

• Transaction Data: Includes the value being transferred or instructions for a smart contract.

• Digital Signatures: Generated by the sender’s private key to ensure authenticity.

• Transaction Fee: A small fee paid to incentivize miners or validators.

3. Blockchain Layer (Consensus Layer)

The blockchain layer is where blocks are constructed and linked, and it ensures all participants agree on the state of the ledger through consensus mechanisms.

Key Functions:

• Consensus: Implements algorithms such as Proof of Work (PoW), Proof of Stake (PoS), or other mechanisms to validate and finalize transactions.

• Block Construction: Groups transactions into blocks and links them via cryptographic hashes.

• Fork Resolution: Manages potential conflicts when the chain splits, ensuring a single authoritative ledger.

Characteristics:

• Immutability: Each block contains the hash of the previous block, creating an unalterable chain.

• Decentralized Agreement: Ensures that no single entity controls the ledger.

4. Trust Layer (Governance and Security Layer)

The trust layer provides the mechanisms that establish security and governance within the blockchain ecosystem. It ensures trust among participants without the need for intermediaries.

Key Functions:

• Cryptography: Secures data using hashing algorithms (e.g., SHA-256, Keccak) and asymmetric encryption (e.g., RSA, ECC).

• Digital Identity: Uses public and private key pairs to authenticate participants.

• Governance: Defines rules for upgrading and managing the blockchain protocol.

• Attack Resistance: Protects against threats such as Sybil attacks, 51% attacks, and replay attacks.

Why It’s Important:

The trust layer eliminates the need for centralized authorities by relying on mathematical algorithms and decentralized consensus.

5. Application Layer

The application layer is the interface that interacts directly with users and developers. It includes decentralized applications (DApps) and smart contracts that leverage blockchain technology.

Key Functions:

• Decentralized Applications (DApps): Applications built on the blockchain that offer various functionalities, such as decentralized finance (DeFi), gaming, and supply chain tracking.

• Smart Contracts: Self-executing programs that automatically enforce agreements based on predefined conditions.

• User Interfaces: Wallets, blockchain explorers, and graphical tools that make the blockchain accessible to end-users.

Tools and Technologies:

• Solidity: Used to write smart contracts on Ethereum.

• Web3.js: Enables JavaScript applications to interact with the blockchain.

• Truffle, Hardhat: Frameworks for developing, testing, and deploying blockchain applications.

Interaction Between Layers

These layers work together seamlessly. For example:

1. A user initiates a transaction through a wallet (application layer).

2. The transaction is broadcast to nodes (network layer) and validated (transaction layer).

3. Once validated, the transaction is added to a block via consensus (blockchain layer).

4. The trust layer ensures the transaction is secure and compliant with governance rules.

Core Components

Blockchain functions based on three key principles: distribution, immutability, and consensus. It is built upon several fundamental components that work together to create a secure, decentralized, and transparent system. The core elements include nodes, transactions, blocks, and other key structures like cryptographic algorithms and consensus mechanisms.

https://www.mobindustry.net/blog/designing-a-blockchain-architecture-types-use-cases-and-challenges/

Nodes

A node is any computer or device connected to the blockchain network. Nodes are responsible for maintaining a copy of the blockchain ledger, validating transactions, and participating in the consensus process. Nodes can be categorized into:

1. Full Nodes:

   • Store a complete copy of the blockchain ledger.

   • Validate all transactions and blocks independently.

   • Examples: Bitcoin core nodes in the Bitcoin network.

2. Light Nodes:

   • Store only a subset of the blockchain data (headers of blocks).

   • Rely on full nodes for detailed transaction verification.

3. Mining Nodes:

   • Special nodes that validate and add new blocks to the blockchain by solving cryptographic puzzles (Proof of Work) or staking tokens (Proof of Stake).

4. Validator Nodes:

   • Operate in consensus mechanisms like Proof of Stake, where they validate transactions based on their stake.

Transactions

A transaction is the most basic unit of operation in a blockchain. It represents the transfer of data or value from one participant to another. Transactions are grouped into blocks before being added to the blockchain.

Key components of a transaction:

1. Sender and Receiver Addresses: Cryptographic public keys that identify the parties involved.

2. Transaction Data:

   • Includes details of the transfer, such as the amount or asset type.

   • In smart contract platforms, it may include executable code.

3. Digital Signature:

   • Created using the sender's private key.

   • Ensures authenticity and prevents tampering.

4. Transaction Fee:

   • A small fee paid to miners or validators for processing the transaction.

Blocks

A block is a container that holds a batch of transactions. It is the fundamental unit that forms the blockchain. Each block is linked to the previous one, creating a secure, chronological chain.

Structure of a Block:

1. Block Header:

   • Contains metadata about the block.

     • Block Hash: Unique cryptographic identifier of the block.

     • Previous Block Hash: Links the block to its predecessor.

     • Timestamp: Records when the block was created.

     • Merkle Root: Represents all transactions in the block using a cryptographic tree structure.

2. Block Body:

   • Contains the list of validated transactions included in the block.

   • The size of the body depends on the blockchain’s specifications (e.g., Bitcoin’s block size is limited to 1 MB).

3. Nonce:

   • A random value used in Proof of Work to adjust the block's hash and meet the consensus protocol's difficulty requirements.

https://upload.wikimedia.org/wikipedia/commons/thumb/9/95/Hash_Tree.svg/1200px-Hash_Tree.svg.png