LAYERS OF BLOCKCHAIN
The blockchain technology is based on a layered approach Figure 8.7. The block- chain technology is decomposed into several layers that will in turn help in better understanding of security and the design of the blockchain. There are few layers for the blockchain technology discussed in the following sections.
As we know a blockchain technology is a tamperproof, decentralized, and shared ledger technology, so there can be multiple applications that can build on the basis of these features of the blockchain. Some applications built in application layer can interface with the other layers; therefore, the application layer is on the top of this layer suit.
The application layer is the one where a user can code the desired functionality and build the application for user of the application. Since the blockchain is a decentralized technology and there is no server involved, the application needs to be installed on each node. Although there are some instances where blockchain is in the backend and the applications need to be hosted on a web server and needs a server-side programming, but it would be good if there were no server involved in the blockchain network as it would defeat the purpose and benefit of blockchain technology.
This layer handles the executions of all the instruction that were performed at the application layer for all the nodes present on the blockchain network. The set of instruction could range from simple ones to multiple instructions. For example, smart contract is also small code that needs to be executed when some funds need to be transferred form one person to another person. Now if one application is present on all the nodes of the blockchain network the code has to be executed independently on all the nodes. In order to avoid the inconsistencies in the output, the execution of code on a set of input should always produce the same output for all the nodes present on the blockchain.
This layer also called as logical layer of blockchain layer suit. This layer deals in validation of the transactions performed in the blockchain network and also validating the blocks being generated in the network. When a transaction comes up from a node, the set of instruction are executed on the execution layer and gets validated on the semantic layer. Semantic layer is also responsible for the linking of the blocks created in the network. As we already know each block in the blockchain contains the hash of the previous block except the Genesis block. This linking of block needs to be defined on this layer.
A propagation layer deals with the peer-to-peer communications between the nodes that allow them to discover each other and get synced with another node in a network. When a transaction is carried out, it gets broadcasted to all other nodes in the network. Also, when a node proposes a block, it will immediately get broadcast in the entire network so that other nodes can use this newly created block and work upon it. Hence, the propagation of the block or a transaction in the network is defined in this layer and ensures the stability of the complete network. However, depending upon the network capacity or network bandwidth sometimes the propagation could occur instantly sometimes it may take a longer.
This layer is the base layer for most of the blockchain systems. This main purpose of this layer is to make sure that all the nodes must get agree on a common state of the shared ledger. The layer also deals with the safety and security of the blockchain. There are many consensus algorithms which can be applied for generation of cryptocurrencies like Bitcoin and Ethereum, they uses proof-of-work mechanism to select a node randomly out of various nodes present on the network that can propose a new block. Once a new block is created, the block is propagated to all the other nodes to check if the new block is valid or not with the transactions in it and based on the consensus from all other nodes the new block gets added on to the blockchain.
BLOCKCHAIN USE CASES
The blockchain technology has seen major growth in various sectors. The technology is being used in different major organizations with multiple purposes. The technology is not just limited to cryptocurrency but also the performance of the technology. The technology provides high level of security and privacy to the network. The networks based on blockchain technology are improving the growth and quality of the business process. There are many sectors that are already using the blockchain technology for improving of their organizations. A few of the sectors are banking and insurance, healthcare, supply chain, agriculture, real estate, and many more.