The scale of innovation that blockchain technology has fostered across different industries shows that awareness about blockchain architecture is growing. You must know about the basic components, layers, and consensus mechanisms in blockchain architecture to create efficient blockchain systems. Your search for the best blockchain architecture glossary ends here as we discuss the most notable terms you will come across in blockchain systems.
According to a new survey, almost 60% of Fortune 500 companies are experimenting with blockchain adoption through new initiatives (Source). The growing adoption of blockchain technology will drive not only business leaders but also aspiring professionals to learn about blockchain and web3. The ideal approach to start learning about blockchain architecture and how it works involves familiarizing with the most important terms.
Unraveling the Simplest Blockchain Architecture Glossary for You
One look at the examples of different blockchain applications, whether it is cryptocurrencies or innovative dApps, will leave you searching for more about the technology. As you dive deeper into blockchain terminology, you will find how the smallest building blocks shape the complex architecture of blockchain systems. Breaking down the fundamental terms into simple explanations can help you get a better idea of blockchain architecture.
The Network Components
You must have heard the term ‘network’ in most of the descriptions of blockchain technology. Blockchain is generally defined as a peer-to-peer network that takes collective responsibility of maintaining a shared ledger. The nodes serve as building blocks of the blockchain network and help in performing different tasks. The primary responsibilities of a node in blockchain networks include transaction validation, storing a copy of the ledger and transferring information throughout the network.
Nodes are a common addition in any blockchain terms glossary as without them, you cannot think of decentralization in blockchain. Depending on the functionality, you will find different types of nodes with distinct roles.
A full node is responsible for storing a full copy of the complete blockchain history and helps with independent verification of all transactions and blocks.
Light nodes work on storing on the header of blocks and depend on full nodes to verify the inclusion of transactions in a block. The light node follows the Simple Payment Verification model, thereby earning the name SPV node, and is used frequently on mobile devices.
You cannot create a web3 glossary for blockchain architecture terms without including validator or miner nodes. These nodes actively drive the consensus mechanism of a blockchain and help in creating and adding new blocks.
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Data Structure of the Blockchain
After learning about the basic units of a blockchain, you might be curious to know about how the blockchain stores transaction data. As the name implies, blockchain stores data in the form of a chain of blocks, which is a sequence of data units linked to each other with cryptographic hashes.
The block in a blockchain represents a container for transaction data. It helps in storing a collection of validated transactions and a timestamp. Another important element in a block is the cryptographic hash that connects it with the previous block. The header of a block includes the metadata of the block, hash of the previous block, the Merkle root and the timestamp. The body of a block includes the list of transactions validated in the concerned block.
The cryptographic hash is also an important addition in crypto terminology for beginners as it provides cryptographic security in blockchain. It is a fixed-length string that includes letters and numbers generated from input data through algorithms like SHA-256. Even the smallest change in input data will completely change the output hash, thereby ensuring immutability of block data.
You cannot learn about blockchain architecture without understanding the Merkle tree, a data structure that offers summary of all transactions in a specific block. The Merkle Root is a single hash in the block header that verifies the inclusion of a specific list of transactions in a block.
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Defining the Blockchain Rulebook with Consensus
Every blockchain terms glossary includes references to different types of consensus mechanisms. The consensus mechanism represents the algorithm with a predefined set of rules that help nodes in a blockchain achieve agreement on the validity of transactions. You will find different types of consensus mechanisms in discussions on blockchain architecture.
The Proof of Work consensus mechanism works through the effort of miners, who use computational power to solve mathematical puzzles. It is one of the most secure consensus mechanisms albeit with extremely high resource consumption.
New blockchain networks rely on the more efficient Proof of Stake consensus that involves validators locking up their tokens to become eligible for adding new blocks. Early blockchain networks like Ethereum have embraced Proof of Stake for its energy efficiency.
Variants of Blockchain Architecture
The general notion about blockchain architecture is that every blockchain is a distributed and shared ledger accessible to every participant. Any reliable blockchain architecture glossary will tell you otherwise as there are four different types of blockchain architectures.
Any blockchain which is accessible to every participant and does not involve permissions can be classified as a public blockchain. The two notable examples of public blockchain are Ethereum and Bitcoin.
Businesses can create private blockchain for their specific needs with clearly defined permissions. The permissioned blockchain will be accessible only to few authorized participants within the organization.
You would not get any marks for guessing that a hybrid blockchain brings the best of public and private blockchains. Hybrid blockchains such as Dragonchain offer the middle ground for users confused between private and public blockchains.
The search for blockchain terminology related to architecture will also lead you to consortium blockchains. The primary idea behind a consortium blockchain like R3 Corda revolves around several private nodes owning and governing the blockchain in collaboration with each other.
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Identifying the Layers in Blockchain Architecture
You will find different approaches to implement the diverse variants of blockchain architecture without any specific standard. Most of the blockchains follow a layered structure and understanding the layers is essential to implement blockchain architecture.
The application layer is responsible for hosting applications that will interact with the blockchain. The notable components in the application layer include the user interface, dApps, and smart contracts.
Every web3 glossary will focus on the service layer in blockchain architecture as it defines the functionality of blockchain. The components in this layer include DAOs, oracles, and wallets.
The consensus layer or protocol layer is responsible for defining how the nodes in a blockchain can achieve agreement. You will find consensus protocols, virtual machines, and sidechains in the consensus layer of blockchain architecture.
The network layer of blockchain helps in facilitating interaction among nodes with execution environments and communication mechanisms.
Data layer is a critical component of blockchain architecture that helps in creating, managing, and encrypting data. The prominent components in the data layer include digital signatures, data blocks, hashes, storage, and the Merkle tree.
The most overlooked layer in blockchain architecture, the hardware layer, facilitates the physical resources required to host the blockchain. It includes nodes, servers and mining hardware used for the blockchain.
Final Thoughts
An overview of the blockchain architecture glossary reveals that understanding the basic components can help you easily figure out how blockchain works. It not only provides a detailed understanding of blockchain architecture but also the insights required to choose the ideal architecture. You would need comprehensive training resources to learn more about blockchain architecture.
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Final Summary
- The growing adoption of blockchain technology has been driving the urgency to learn more about blockchain architecture.
- The network components in blockchain architecture include full nodes, light nodes and miner or validator nodes.
- Data structure of blockchain architecture resides in blocks, cryptographic hashes and the Merkle tree.
- Consensus mechanisms define the rulebook in blockchain architecture with different consensus mechanisms offering distinct advantages.
- Businesses can choose between public, private, hybrid, or consortium blockchain architecture according to their needs.
- The layers in blockchain architecture include application layer, service layer, consensus layer, data layer, network layer and infrastructure layer.
