Blockchain Layers / Blockchain Types and Features
This article provides an overview of the layer structure of blockchains and the various types, features, and technologies that make them unique. Think of it as a crash course in blockchain fundamentals, similar to a software engineering lecture. By gaining a solid understanding of these concepts, you will be well-equipped for future cryptocurrency trading and NFT gaming. Although the material may be dense, the knowledge you gain will be invaluable when following developments in the blockchain industry.
0. Blockchain technology is made up of virtualization technology
In the Layer 1 blockchain section, we discuss how blockchain networks are built on virtualization technologies that are similar to those used to virtualize servers, networks, and storage. Peer-to-Peer networks, for example, use a single virtualization server that functions like a rental server you might use. These virtualization servers are connected through a network, creating a decentralized network that is essential to the functioning of blockchain technology. Essentially, blockchain technology can be thought of as a combination of virtualization technologies.
Built on top of the virtualization server in Layer 1, the blockchain layer is a group of interconnected data, consensus, and application components. In the past, clients (computers) accessed a large server and ran applications from there. However, with the advent of blockchain technology, this process has been decentralized and distributed across multiple virtualization servers.
In a blockchain network, each client is infinitely virtualized through the use of virtualization technology. One such virtualization is the block, which is the blockchain itself that we access (accessing the blockchain network requires programming, web browsing through web apps, or running dApps). The cryptocurrencies and NFTs we own are also stored with a certificate within this block.
Table of Contents
A blockchain is a digital record-keeping system that stores transaction records in blocks. In addition to the transaction record, each block contains a hash value that represents the contents of the previous block (*1). The blocks are connected in a chronological chain, hence the name “blockchain.
Blockchain technology ensures that information stored within a block is highly resistant to tampering by using a hash value calculation. When an attempt is made to alter the information of a block that has already been generated, the new hash value will be different from the previous one. This means that the hash values of all subsequent blocks would also have to be changed, which is virtually impossible. As a result, the data structure of the blockchain is highly resistant to tampering and ensures the integrity of the stored information.
* 1 What is a hash value?
A hash value is a compact representation of a large amount of data that is calculated using a specific algorithm. It is designed to be unique and resistant to tampering, so even the slightest change in the input data will result in a completely different hash value being calculated. This characteristic of hash values makes them useful for ensuring the integrity and security of data in a variety of applications, including blockchain technology.
In this section, we will discuss the hierarchical architecture of the blockchain and delve into specific examples such as Ethereum and Hyperledger Fabric. Understanding the structure of the blockchain, especially Layer 1, is essential for keeping up with current events in the world of NFTs and cryptocurrencies. By gaining a deeper knowledge of Layer 1 blockchain, you will be better equipped to understand and analyze news and developments in this rapidly evolving field.
The application layer, also known as Layer 5, is the top layer of the blockchain architecture and is where smart contracts, chaincodes, and decentralized applications (dApps) reside. This layer can be further divided into the application layer and the execution layer.
The application layer is where end users interact with the blockchain network through scripts, APIs, user interfaces, and frameworks. These applications often connect to the blockchain network via APIs, with the blockchain serving as the back-end system.
The execution layer is a sublayer that contains the actual code to be executed and the rules to be followed, such as smart contracts and chaincodes. Transactions originate in the application layer but are validated and executed in the semantic layer, which is comprised of smart contracts and rules. This layer is responsible for ensuring the integrity and security of the transactions as they are processed on the blockchain network.
|Layer 5 ( Application Layer )|
|Sub Layer ( Application Layer )||Sub Layer ( Execution Layer )|
|dApp ( Web Applicaton )||Smart Contract (Distributed app dApps Games, etc..)||Chain Code|
* Oracle is an agent that safely provides values to Oracle smart contracts.
A decentralized application, or dApp, is a type of application that runs on decentralized technologies such as blockchain and leverages smart contracts or chaincodes. It is essentially a web application that interacts with smart contracts or chaincodes, but it is not controlled by a single entity or organization. Once deployed, dApps belong to the blockchain network and can be accessed by business users through a user-friendly interface.
Smart contracts can be used to connect to blockchains, while dApps can use either smart contracts or chaincodes. For example, when you access a traditional web application such as LinkedIn, the web page calls an API which retrieves data from a database. In contrast, dApps are API-based web applications that connect to smart contracts and the smart contracts execute transactions on the ledger. Some examples of dApps include financial applications such as invoice factoring and KYC (Know Your Customer) verification.
The consensus layer is a critical component of any blockchain platform, as it is responsible for achieving consensus among participants in the network. At the heart of every blockchain is a consensus algorithm, which is used to verify blocks, order them, and ensure that all participants agree on the state of the blockchain. The consensus layer is the most important layer of the blockchain, as it enables the platform to function effectively and ensures the integrity and security of the data stored on the blockchain. Whether it is Bitcoin, Ethereum, Hyperledger, or any other blockchain, the consensus layer plays a vital role in the functioning of the platform.
Consensus Algorithm Comparison Table
|PBFT( Allowed Blockchain ）|
Unauthorized and Permitted
Transaction Finality (Completed State that Cannot be Changed)
Do you Need a Token
Example of use
Hyperledger Fabric * 1 (Example: IBM Food Trust Food Logistics Verification)
* 1 Hyperledger Fabric is an Open Source Platform for Business.
The network layer, also known as the P2P (peer-to-peer) layer, is responsible for facilitating communication between nodes in the blockchain network. It handles tasks such as discovery, transactions, and block propagation. This layer is also referred to as the propagation layer, as it enables nodes to discover, communicate with, and synchronize with one another in order to maintain a consistent and accurate view of the current state of the blockchain.
In a P2P network, computers (nodes) are distributed and share the workload of maintaining the network. These nodes execute transactions on the blockchain and can be divided into two categories: full nodes and light nodes. Full nodes store a copy of the entire blockchain and participate in the consensus process, while light nodes do not store the entire blockchain and rely on full nodes for information.
In the blockchain, transactions are grouped into blocks and distributed across a P2P network, creating a distributed ledger or replicated database. This ledger stores the current state of all accounts on the network, and the data within it cannot be modified without the consensus of all participants.
The blockchain data structure is often depicted as a linked list of blocks, in which transactions are ordered chronologically. Each block contains data and a pointer to the previous block, forming a chain of blocks. The blockchain data structure consists of two main components: pointers and linked lists. Pointers are variables that reference the location of other variables, while linked lists are sequences of blocks that are connected through pointers.
Traditionally, when a client requests content or data from a server, the content is hosted on a server in a data center and the client communicates with the server through the application (a client-server architecture). However, with the advent of P2P (peer-to-peer) networks, clients can now connect and share data directly with each other.
A blockchain is a type of P2P network that computes, validates, and stores transactions in a shared ledger. This creates a distributed database that records all data, transactions, and other relevant information in an ordered format. P2P networks are decentralized, meaning that each computer (node) in the network holds data and communicates with other nodes on an equal footing.
In a P2P network, nodes are responsible for verifying transactions, organizing blocks, broadcasting to the blockchain network, and more. When consensus is reached, the node commits the block to the network and updates a copy of the local ledger. The network layer in the blockchain architecture consists of virtualization, creating virtual resources such as storage, networks, and servers. The node is the core of this layer, and any device that is connected to a blockchain network is considered a node.
Blockchain technology is increasingly being adopted in various industries, not just in the cryptocurrency sector. In addition to the public blockchain, which was originally developed as the underlying technology for Bitcoin, private and consortium blockchain models have emerged.
Public blockchain is a type of decentralized, permissionless network that allows anyone with an internet connection to take part in transactions. This is the fundamental model of blockchain, and many well-known virtual currencies such as Bitcoin, Ethereum, Litecoin, and Solana are built on public blockchain technology. Hyperledger Fabric is one example of a public blockchain platform.
A private blockchain is a blockchain that can only be used by a limited number of users with a specific administrator (operator). Private types are centralized networks and are not exposed to the outside world, ensuring privacy and allowing data to be stored on the blockchain within a closed system.
And since there is no need to reach consensus among an unspecified number of nodes and no mining is performed, even if a large amount of processing is required, it can be processed quickly. On the other hand, the administrator can change the rules at his discretion, and if the administrator encounters a problem or failure, the system may not work.
Due to these characteristics, the private type is said to be suitable for use within a single company or organization, and is especially promoted by financial institutions.
A consortium-type blockchain is a blockchain with multiple management bodies. The consortium type is a model that combines the excellent characteristics of public type decentralization with the functions that enable rapid mass processing of private type.
Due to the multiple administrators, changing rules requires more than a certain number of consensus, and security is stronger than the private type. It also inherits the advantages of public types such as tamper resistance (hard to be tampered with from the outside) and distributed ledger.
As a result, consortium-type blockchains are beginning to be used in blockchains built in collaboration with other companies in the same industry. There are also virtual currencies operated by consortium type.
In this article, we have explored the various layers and features of the blockchain technology, with a focus on the Ethereum blockchain. Ethereum has seen significant development in recent years, including the emergence of NFT games and NFT art transactions. There are also many potential future applications of the Ethereum blockchain, such as the implementation of various apps.
In contrast, Bitcoin is increasingly positioning itself as a digital gold on the public blockchain. It is uncertain whether the prices of Bitcoin and Ethereum will rise or fall in the future, but public blockchain development, including in the area of hyperleisure, is expected to continue. Financial institutions are also expected to continue developing private blockchains.
If you have a general understanding of the concepts discussed in this article, you should be able to comprehend blockchain-related news articles with ease. We hope that this article will be useful for your future endeavors in the blockchain space.
Supplement: [Frequently appearing blockchain terms]
* PoW (Proof of Work) supports a mechanism in which a person who succeeds in the required calculation by mining approves the data and writes a new block to the blockchain.
* PoS (Proof of Stake) Proof of Stake was proposed as an alternative to PoW in the early days of Bitcoin to solve the PoW problem. PoS determines the block approval rate based on the amount of crypto assets held, rather than the enormous power-consuming calculations of PoW.
Miners who have succeeded in mining once adjust the ease of mining by lowering the approval rate. However, it has been pointed out that it is easier for people with many assets to approve the block, so it is easier for some people to focus on it.
This may mean that the rich become richer. To prevent this, PoS follows randomization. In other words, check the centralized part. PoS has been adopted in Ethereum 2.0 etc. and is already used in some crypto assets.