As a descendant of Web2, the 3rd iteration of the Web brought with it more decentralization, transparency and trustlessness. It is already touted as the future of the internet despite being coined less than a decade ago.
Interestingly, Web3 technology operates on top of several layers. The spine of Web3 is the blockchain layer, a technology designed using the principles of cryptography. Other layers include the smart contract layer, application layer and infrastructure layer. Today, I begin an odyssey into Web3 and its infrastructure by explaining the workings of the Blockchain Layer. Please keep reading.
What is The Blockchain Layer?
Blockchain is a distributed, immutable ledger for transaction recording and asset tracking. It’s a state-of-the-art database primarily for storing data in blocks and adding them to a chain. There are no limits to what type of data blockchains can store; everything from tangible to intangible assets is traceable using blockchain. The entire rationale behind the blockchain’s launch was the devolution of financial power from highly centralized brokers to everyone and anyone. Hence, in a standard blockchain transaction setup, there is no need for third parties to supervise transactions. What examples of blockchains are available today? Major networks like Bitcoin, Ethereum, Litecoin, Cardano and Solana use Blockchain Layer as a base. The blockchains enable transacting digital currencies, including BTC, ETHER, LTC, ADA, and SOL, respectively. As the elixir of financial decentralization, the blockchain layer plays several critical roles within the Web3 realm. These include: Providing an immutable ledger Bolstering trustlessness in transactions More decentralized data systems On account of those unique functionalities, the blockchain layer became the most fundamental part of the Web3 landscape. But what are the constituents of the blockchain layer? Today we look at the nuts and screws of the blockchain layer.
An Immutable and Decentralized Ledger: The Data Layer
At the heart of its operation, the blockchain bestows the permanence of transaction details— this means the layer focuses on recording transactions and ensuring that the record is permanently available. What’s more exciting is that with its permanence, blockchain has no loopholes to alter data. This unshakeable facet of blockchain fosters transparency, bolstering user confidence. Hence, the cornerstone of Web3 immutability is the blockchain layer. As a critical component of the blockchain layer, the data layer sets parameters for data structures to bolster integrity and security. This layer encompasses two meshed elements: a linked list and pointers.
Pointers — Variables pointing to the position of other variables
Linked lists – List all chained blocks, including the data and pointers to previous blocks. These two combined are part of Merkle trees, which is applicable in most blockchain data layers. The Merkle tree system is a binary tree of hashes fashioned to foster security and integrity in the blockchain network. The blockchain’s genesis block has no pointers but contains details like block hash, timestamp, block version number, nonce and current difficulty goal. The block ensuing the Genesis has pointers. Blockchain layers implement a private and public key for signing and verifying transactions. It’s the job of the two keys to follow network transactions and ensure that information remains permanent and cannot be manipulated.
The Peer-to-Peer Network: Bostering Decentralization Distributed is the word mainly used to describe any project within the Web3 space. In a stride towards more decentralization, the web3 landscape adopted a
Peer-to-peer architecture — an enormous network of devices interacting and sharing information. This network of interconnected peer-to-peer (P2P) computers collectively verifies and maintains the ledger’s integrity. It denies any single entity absolute control over the blockchain’s integrity. Note: This system is the most fundamental part of the blockchain layer, validating/verifying transactional data and storing it on the impermeable ledger. The networking computers or devices are named nodes, bringing us to the following subheading: CONSENSUS.
The Consensus
Deeply rooted in the blockchain layer is a sublayer focused on consensus, mainly called the Consensus layer.
Under this section of the Blockchain layer, we meet validators focused on validating and ordering blocks with the consensus of everyone. All processes of transaction validation occur in the blockchain layer but are powered by the consensus layer. After transaction validation, which involves an agreement between the validators, all transactions are bundled into one block and added to the blockchain. All blockchain networks backing the web3 space, including Ethereum, Bitcoin, Hyperledger, and others, demand consensus mechanisms to function effectively. Here are the essential elements of a consensus layer; The consensus layer sets the most fundamental rules of operation between nodes within this distributed P2P network. The Consensus mechanism enhances the chain’s integrity by ensuring the transactions follow only one truthful chain. The consensus system also has rules that every node must strictly adhere to when validating blocks. Blockchain’s founding principle, decentralization, is only achievable through consensus. Not a single party should have any majority control over the chain. The consensus layer achieves a unanimous decision system in the participating nodes. Communication between nodes is a crucial part of the blockchain layer, and it’s the job of the network layer to back the communication. Popular consensus mechanisms in blockchain include Byzantine Fault Tolerance, Proof of Work, different iterations of Proof of Stake, Proof of Capacity, Proof of Authority and Proof of Activity.
The Cryptography
In general, blockchain functionality strictly adheres to the principles of cryptography. Everything from the consensus, hashing, encryption, decryption, and keys are primary cryptography components. Cryptography is a way of creating techniques to prevent 3rd party access to data in private messages. The public and private key system has been the central aspect of cryptography, with the former acting as the encryption key, while the latter is mainly a decryption key. Party A produces a secret key encrypted with the public key, while the data recipient decrypts it using a private key.
This cryptographic system leveraging a dual key system is called asymmetric cryptography and allows for a continuous expansion of the blockchain environment as the data is exchanged. Another critical facet of cryptography is the hash function, which takes an alphanumeric function and transforms it into a compressed numerical value. It’s a unique identifier for a piece of value or content. Finally We have explored the most fundamental layer of the Web3 universe, the blockchain layer. Its roles include data storage and protection, bolstering transparency and decentralization. Its combination of cryptographic principles, peer-to-peer system, and consensus makes it a complete technology to back the latest iteration of the web. In future articles, I will discuss the other layers backing web3, including the smart contract, application, and infrastructure layers.