Types of Blockchain Architecture
There are different key components that make up any blockchain network. They include the block, transaction, and the consensus mechanisms. However, there is also an important aspect of blockchain technology constituting the different types of blockchain architectures there. They include:
1. Public Blockchain Architecture
For a public blockchain architecture, it allows anyone to take part in the network. As such, the transaction’s public information can be accessible by anyone. However, it is important to note that private data of a transaction are still available. Examples of public blockchain architectures include Bitcoin, Litecoin, and Ethereum.
2. Private Blockchain Architecture
In private blockchain architecture, it means that not everyone can access the blockchain. In this regard, the administrator or the ruling set of nodes determines who can join the network.
3. Consortium Blockchain Architecture
This type of architecture combines the best features of both public and private blockchain. It is heavily controlled and best suited for enterprise blockchains.
Blockchain Consensus Methods
Consensus methods in blockchain make an integral part of any blockchain type. Different methods determine how fast, efficient, and secure any transaction can be. There are a number of consensus mechanisms at play. However, we look at the most popular ones.
Proof-of-Work( PoW)
The proof-of-work is the first-ever consensus method to be used by blockchain networks. It was first introduced with Bitcoin. In this consensus method, miners are responsible for validating a transaction. There must be the presence of a new block that can then be added to the network. Blockchain PoW requires extreme computational power and also has a high requirement in the sense of hardware.
Proof-of-Stake (PoS)
Proof-of-stake is used by 2nd generation blockchain network, Ethereum. It has a completely different approach as it does not call for extensive power consumption. In PoS, nodes take charge of staking. Users stake their coins to become validators and create new blocks. Users that have more coins staked have more chances to get rewarded. Therefore, PoS investment is heavy.
Delegated PoS
DPoS is a different type of PoS. It handles the node selection differently. In this case, coin holders select the nodes to take part in the consensus mechanism. Validators can also vote while choosing or kicking a node. It is more suited for an established network with more trust.
Applications of Blockchain
Blockchain technology has a wide range of applications, ranging from finance to healthcare to supply chain management. Some of the popular use cases include:
Smart Contracts
Smart contracts are self-executing contracts with the terms of the agreement directly written into code. The contracts run on blockchain technology and are enforceable without the need for intermediaries. Smart contracts operate on a decentralized network of nodes that validate and execute the code. The decentralization eliminates the need for central authority, which reduces the risk of censorship and the possibility of any likelihood of failure. The terms and conditions of a smart contract are transparent and visible to all participants on the blockchain. This transparency enhances trust among parties, as they can independently verify the execution of the contract. The instance a smart contract is deployed on the blockchain, its code becomes immutable, which means that it cannot be changed. This ensures that the agreed-upon terms are followed without the possibility of unauthorized modifications. When dealing with smart contracts, it is best to know that they are not immune to vulnerabilities, which calls for careful consideration of the code’s security in the developing phase. This helps avoid likely exploits that come after deployment.
Decentralized Applications (DApps)
Decentralized applications, commonly identified as dApps, encompass of applications that run on decentralized networks, utilizing blockchain technology. These types of applications run on a peer-to-peer network, distributing both the processing and storage of data across a network of nodes. This is different from traditional applications, which are hosted on centralized servers. DApps operate on decentralized architectures, meaning that they operate on a network of nodes (computers) distributed globally. With such architecture, there is the likelihood of reliability and resiliency. Additionally, with blockchain technology, there is the possibility of data integrity and prevents tampering. Additionally, dApps make use of a consensus mechanism, which helps to agree on the state of the network. They are also created as open-source projects, which allows the users in that particular network to review, contribute, and improve the code. There are different decentralized applications across varying industries, which include decentralized finance (DeFi) platforms for financial services. There are also decentralized exchanges (DEXs) for trading crypto and social media platforms that take charge of user privacy and data ownership. Even with such major unique features that make them attractive, dApps face challenges that include scalability issues, user adoption, and the need for optimal user interfaces.
Security and Privacy Implications of Blockchain Technology
Even with the immense popularity of blockchain technology, there remains some concern about its security and privacy implications. One of the privacy concerns is that blockchain transactions are permanent and immutable, which means that once a transaction is recorded on the blockchain, it cannot be deleted or changed. This makes it difficult for users to have some degree of control over those who have access to their personal information. Also, blockchain transactions can be traced, which, in a way, can reveal the user’s identity and transaction history. On the other hand, blockchain technology has some security and vulnerabilities. One of the popular threats to blockchain security is the 51% attack. This is a situation where an attacker gains control of the majority of the network’s computing power and can manipulate the blockchain’s transactions. Another threat is the Sybil attack, where an attacker creates multiple fake identities to control the network. In addition, Distributed Denial-of-Service (DDoS) attacks are another risk, where a malicious actor floods the network with traffic, making it difficult or impossible for legitimate users to access the blockchain. Insider attacks can also be an issue, where malicious users gain control of a node in the network, which in turn manipulates the blockchain transactions.
Final Thoughts
Blockchain constitutes a one-of-a-kind technology. As such, it means that more and more companies will mostly start to adopt blockchain into their businesses. As such, having to start on blockchain technology calls for the comprehension of such general elements. With a number of practical applications being implemented and explored, blockchain is finally making a name for itself.