Different Layers of Blockchain
In the domain of blockchain technology, an ecosystem is a collection of components that work together to produce a unique environment. Blockchain-based ecosystems have a collection of distributed nodes where immutable transactions are repeated. The blockchain (or digital ledger) technology is built upon a layered architecture as shown in the below figure.
According to some blockchain professionals, there are five layers of blockchain technology:
- Hardware/Infrastructure layer.
- Data layer.
- Network layer.
- Consensus layer.
- Application and Presentation layer.
Some blockchain experts believe that blockchain has 7 layers:
- Hardware/Infrastructure layer.
- Data layer.
- Network layer.
- Consensus layer.
- Incentive layer.
- Contract layer.
- Application and Presentation layer.
The 7 Blockchain layers are explained below:
1. Hardware or Infrastructure Layer
- Hardware or infrastructure makes up the Blockchain’s top layer. On a server housed in a data center, the content for the Blockchain is hosted.
- Client-server architecture, as used in web browsing and other applications, refers to the process where clients request data or content from application servers.
- Blockchain technology typically uses a Peer-to-Peer (P2P) network of computers to calculate, validate, and record transactions in an ordered format in a shared ledger.
- A distributed database is the end result, and it keeps track of all the data, transactions, and other pertinent information.
- Nodes are the computers that make up a peer-to-peer network. The Blockchain network’s nodes are responsible for verifying transactions, grouping them into blocks, broadcasting them to the network, and so forth.
- In the event that all parties agree, the nodes update their local copies of the ledger and commit the block to the Blockchain network. A device is referred to and utilized as a node after it connects to a blockchain network.
2. Data Layer
- The linked list used to represent a blockchain’s data structures has two main components: pointers and a linked list of blocks that arrange the transactions.
- A linked list is a collection of chained blocks where each block is filled with data and pointers to the block before it. Pointers are variables that refer to the location of other variables.
- A Merkle tree is a binary tree of hashes that holds the hash of the Merkle root along with other information including the hash of the previous block, the date, the nonce, the block version number, and the current difficulty goal.
- Blockchain technology is secured, has integrity, and is irrefutable due to a Merkle tree.
- A hash tree, also known as a Merkle tree, is a tree in which each leaf node is labeled with the cryptographic hash of a data block and each non-leaf node is labeled with the labels of all of its child nodes.
- In order to guarantee the security and integrity of the data stored there, transactions are digitally signed on the blockchain.
- Anybody with the public key can validate the signer of a transaction that has been signed using a private key.
- Because the encrypted data is also signed, the digital signature ensures data integrity and verifies information tampering.
- Data encryption prevents the detection of the information. The sender’s or owner’s identity is also protected by a digital signature.
- The structure of a block on a blockchain is determined by the data layer.
3. Network Layer
- The network layer is also known as the peer-to-peer (P2P) layer. In addition to being known as the propagation layer, it is in charge of inter-node communication.
- Transactions, block propagation, and discovery are handled by the network layer.
- The network layer makes sure that nodes are able to communicate, synchronize, and propagate with one another in order to keep the blockchain network’s present state valid.
- Peer-to-peer networks are types of computer networks where nodes are dispersed and share workloads in order to accomplish a common purpose. Nodes also carry out blockchain transactions.
- The terms “full node” and “light node” refer to two different types of nodes. Ensured by full nodes include mining, consensus rule enforcement, and transaction validation and verification. Light nodes, however, can send transactions and merely store the Blockchain header.
4. Consensus Layer
- Blockchain platforms cannot function without the consensus layer. Whether using Ethereum, Hyperledger, or another blockchain, the consensus layer is the most important and fundamental layer.
- The consensus layer is in charge of validating the blocks, putting them in the proper sequence, and making sure everyone is in agreement.
- The distributed peer-to-peer network’s consensus layer establishes a certain set of agreements between nodes.
- Power remains distributed and decentralized due to the consensus layer.
5. Incentive Layer
This stack’s optional incentive layer is the fourth tier. This layer handles how network nodes are compensated for the effort they put forth to establish consensus in terms of rewards. Depending on the consensus process being used, this layer may or may not be implemented.
- This layer defines the minimum amount of transaction fees needed to perform actions on the blockchain.
- This determines the variant types of incentives available on the network.
6. Contract Layer
The information in the contracts layer, which is right next to the application layer and specifies how a service will operate and what kind of information will be made accessible, is similar to that in a real-world contract. In essence, there are four types of contracts, which are briefly discussed below:
- Service contract: The endpoint’s offerings and the protocols to be used in the communication process are described in this contract for the benefit of the client as well as the general public.
- Data contract: A data contract lays out the terms of the data that a service will exchange. The data contract must be accepted by the service as well as the client.
- Message contract: An agreement over a message governs a data contract. Its main function is to customize the SOAP message parameters’ type formatting. The SOAP format is used by WCF for communication purposes, it should be noted. Simple Object Access Protocol is the abbreviation for this.
- Policy and Binding: There are a few prerequisites that must be met in order to communicate with a service, and these prerequisites are set forth in the policy and legally binding agreements. This contract must be adhered to by the client.
- The application layer is subdivided into the execution layer and the application layer.
- The programs that end users utilize to engage with the blockchain network are included in the application layer.
- Scripts, APIs, user interfaces, and frameworks made up the application layer, together with smart contracts, chaincode, and decentralized applications (dApps). The blockchain network serves as the back-end system for various applications, which are connected to it through APIs.
- Chain code, smart contracts, and underlying rules make up the execution layer, which is a sublayer.
- However, the transaction is validated and carried out at the semantic layer before moving from the application layer to the execution layer.
- Applications transmit instructions to the execution layer, which carries out transaction processing and maintains the Blockchain’s deterministic nature.
Layered Architecture of Blockchain Ecosystem
Blockchain has been hailed as the most revolutionary in the past ten years. Most likely to be impacted are the financial markets. Healthcare, pharmaceuticals, insurance, smart properties, automobiles, and even governments are just a few of the industries that are incorporating technology. However, Bitcoin – A Peer-to-Peer Electronic Cash System, which is also the initial application of blockchain technology, is the implementation of the technology that has been most successful so far. So, it makes sense that the easiest way to grasp blockchain technology is to first comprehend how the Bitcoin System was created and put into use.
An ever-expanding digital list of data entries is what a blockchain is, to put it simply. This type of list is made up of numerous data blocks that are linked together and secured using cryptographic proofs in the order that they are stored. The article focuses on discussing the layered architecture of the blockchain ecosystem.
The following topics will be discussed here:
- What Is Blockchain?
- Components of Blockchain Technology
- Different Layers of Blockchain.
- Types of Blockchain Layers Based on Professionals.
- What Are Layer 2 Solutions?
- Ethereum Blockchain Laye
- What Is The Blockchain Security Layer?
- Layer 1 vs Layer 2 Blockchain.
- Best Layer 1 Crypto
- Best Layer 2 Crypto
- Best Layer 3 Crypto
- Best Layer 4 Crypto
Let’s start discussing each of these topics in detail.