BLOCKCHAIN ARCHITECTURE

The blockchain is a decentralized, distributed ledger (public or private) of

different kinds of transactions arranged into a P2P network. This network
consists of many computers, but in a way that the data cannot be altered without
the consensus of the whole network (each separate computer).

The structure of blockchain technology is represented by a list of blocks with

transactions in a particular order. These lists can be stored as a flat file (txt.
format) or in the form of a simple database. Two vital data structures used in
blockchain include:

▪ Pointers - variables that keep information about the location of another

variable. Specifically, this is pointing to the position of another variable.
▪ Linked lists - a sequence of blocks where each block has specific data
and links to the following block with the help of a pointer.

Logically, the first block does not contain the pointer since this one is the first
in a chain. At the same time, there is potentially going to be a final block
within the blockchain database that has a pointer with no value.
Basically, the following blockchain sequence diagram is a connected list of
records:

Blockchain architecture can serve the following purposes for organizations and
enterprises:

▪ Cost reduction - lots of money is spent on sustaining centrally held

databases (e.g. banks, governmental institutions) by keeping current
data secure from cybercrimes and other corrupt intentions.
▪ History of data - within a blockchain structure, it is possible to check
the history of any transaction at any moment in time. This is an ever-
growing archive, while a centralized database is more of a snapshot of
information at a specific point.
▪ Data validity & security - once entered, the data is hard to tamper with
due to the blockchain’s nature. It takes time to proceed with record
validation, since the process occurs in each independent network rather
than via compound processing power. This means that the system
 sacrifices performance speed, but instead guarantees high data security
and validity.

Types of Blockchain Architecture

All blockchain structures fall into three categories:

▪ Public blockchain architecture: A public blockchain architecture means

that the data and access to the system is available to anyone who is willing
to participate (e.g. Bitcoin, Ethereum blockchain systems are public).

▪ Private blockchain architecture: As opposed to public blockchain

architecture, the private system is controlled only by users from a specific
organization or authorized users who have an invitation for participation.

▪ Consortium blockchain architecture: This blockchain structure can

consist of a few organizations. In a consortium, procedures are set up and
controlled by the preliminary assigned users.
 “Core Components of Blockchain Architecture”

These are the core blockchain architecture components:

▪ Node - user or computer within the blockchain architecture (each has

an independent copy of the whole blockchain ledger)

▪ Transaction - Transactions are the smallest building blocks of a

blockchain system. They normally consist of a recipient address, a
sender address, and a value. It is similar to a standard credit card
 statement. The owner transfers the value by digitally signing the hash
produced by adding the previous transaction and the public key of the
receiver. Each transaction is time-stamped and collected in a block.

▪ P2P Network - The blockchain is a peer to peer (P2P) network working

on the IP protocol. A P2P network is a flat topology with no centralized
node. All nodes equally provide and can consume services while
collaborating via a consensus algorithm. Peers contribute to the
computing power and storage that is required for the upkeep of the
network. P2P networks are generally more secure because they do not
have a single point of attack or failure as in case of a centralized
network. A blockchain network can be a permission-based network as
well as a permission less network. A permission less network is also
known as public blockchain because anyone can join the network, while
a permission-based blockchain is called a consortium blockchain.
A permission-based blockchain or private blockchain requires pre-
verification of the participants within the network and these parties are
usually known to each other. In a typical blockchain architecture, every
individual node in a network maintains a local copy of blockchain. The
decentralisation of blockchain architecture is the sole credit of the P2P
network that it is built on.

▪ Block - a data structure used for keeping a set of transactions which is

distributed to all nodes in the network

▪ Chain - a sequence of blocks in a specific order

▪ Miners - specific nodes which perform the block verification process

before adding anything to the blockchain structure

▪ Consensus (consensus protocol) - The way all these copies of a single

ledger is synchronized is due to a consensus algorithm. The consensus
mechanism ensures that whatever local copy every individual party has,
they are consistent with each other and is the most updated one. The
copy that every individual node have is identical or similar to each
 other. It could be arguably stated that the consensus algorithm forms
the core of every blockchain architecture. Some of the consensus
algorithms are : POW, POS, Simplified Byzantine Fault Tolerance

Any new record or transaction within the blockchain implies the building
of a new block. Each record is then proven and digitally signed to ensure
its genuineness. Before this block is added to the network, it should be
verified by the majority of nodes in the system.

Working in a Blockchain

The following is a blockchain architecture diagram that shows how this actually
works in the form of a digital wallet:
 Layers of Blockchain Architecture

Application Layer

This layer has direct relevance to the Blockchain application. This is where the
Requirements Specification, Service Level Agreement, UI requirements,
Functional and Non-functional requirements are specified and are percolated as
rules to the layers down. The Blockchain network operates as required by the
application layer.

Blockchain tools and Libraries

Off- the- Shelf handy frameworks are always available for quick results, instead
of starting from scratch. These Blockchain tools make available to the users, the
required APIs, and libraries. These also provide an interface to set the rules and
configure the network. Also, development tools are available for writing,
documenting, testing, deploying and monitoring distributed applications. The
purpose of the Library is to provide the intermediate code required. Bitcoin is a
cryptocurrency Framework. Ethereum and Ripple support both Cryptocurrency
and Smart Contracts Blockchains. Hyperledger is an Open Source development
tool from Linux Foundation for Business Solutions development.

Data Management Layer

This is the heart of the Blockchain network. A Transaction is the smallest

building block of records that serves as a block in a Blockchain. The blocks get
created based on the rules of the transaction. In smart contracts, the contract
code is part of the transaction data. In the case of cryptocurrency networks, it is
the puzzle that gets executed. The logic and code for hash generation, Timestamp,
Merkle tree formation and the chain structure based on timestamp exist in this
layer. Block is a data structure for storing a related set of transactions. Each block
has certain data, Hash, Timestamp, Previous block hash, and Merkle root. Hash is
generated using Cryptographic algorithms like SHA-256 and is a fixed length one.
A chain is a sequence of Blocks in Timestamp order.

Programming Tools

The necessary to manage the security (IDMAC), Distributed Ledger Maintenance

and Data Management layer functions are supported by the programming tools
probably through applicable APIs. Programming languages like C++, C, Python,
Java, and Ruby are handy for developing codes in these cases. Web development
tools like HTML, CSS, Node JS are useful in User Interface development.

Infrastructure Layer

This layer has the physical and virtual resources of the Blockchain network. All
nodes and the communication network along with the protocols are part of this
layer.