Blockchain Architecture Explained In Simple And Clear Terms

Blockchain Architecture Explained In Simple And Clear Terms

Simply put, blockchain is a decentralized digital ledger which consists of a mesh of computers linked to each other. All the computers in the blockchain network define and agree on a shared state of data and strictly follow the constraints imposed on these data. It uses a peer-to-peer network of computers to validate transactions.

Also read: Blockchain explained:The A-Z of all you need to know about blockchain technology

The objective of this article is to help you understand the blockchain architecture. Blockchain architecture is simply talking about the different components that make up the blockchain technology. Most people think that blockchain and Bitcoin are synonymous. They fail to understand that Bitcoin is simply the first application of blockchain technology.

Blockchain architectureIn this article, we shall be explaining those things that really make up the blockchain architecture. Understanding the blockchain architecture will really help you in grasping the working principle of blockchain technology.

The Components Of Blockchain Architecture

`1. The Blocks

These are simply data structures that compile sets of transactions and distribute them to all nodes in the blockchain network. These “blocks” are created by miners which we shall subsequently discuss. Each block that makes up the blockchain architecture contains a block header which is the metadata that helps verify the validity of a block.  A block metadata contains the current version of the block, the previous block header hash, a merkle root hash which is the crytographic hash of all transactions that is included in the block, the time the block was created, the nBits, and the nonce.

There are different types of blocks within the context of a blockchain architecture.

  • Main branch blocks

These are the blocks that extend the current main blockchain. This is the block that has had the most work done on it.

  • Side branch blocks

These are the blocks that reference a parent block that is not at the tip of the current blockchain. The side branch block can be reorganized to form the main branch block when more work is performed on them.

  • Orphan blocks

This particular blocks reference a parent block that is not known to the node processing the block.

The more new blocks are added to the blockchain, the more increasingly difficult it will be to “overwrite” existing blocks.

  1. Transactions

This is another important component of the blockchain architecture. There are many who are of the opinion that transactions give a blockchain purchase. Transactions are the smallest building blocks of a blockchain network. Generally, transactions are made up of a recipient’s address, a sender’s address, and a value.  There is no different between this transaction and the one you perform with your credit or debit card.

For example, Bitcoin transaction moves the value of some Bitcoin from one address to another address. Every transaction changes the state of the agreed-correct blockchain because blockchain is a shared, decentralized, and distributed ledger. Each transaction is bundled and delivered to each node (users of the blockchain system) in the form of a block. A new transaction is distributed throughout the network where it will be independently verified and processed by each node.

Read: Enterprise blockchain: what it holds for the future

You need to know the constant movement of coin constitutes the data within the blockchain architecture.  Also, the ways that transactions are handled and verified differ by implementation. Every transaction contains one-or-more inputs and one-or-more outputs. The input is simply a reference to an output from a previous transaction while an output specifies an amount and an address.

  1. Mining

The process of creating a valid block which will be accepted by the rest of the blockchain network is called mining. This involves a huge work and computational power. Just like the processing network of a credit card company, miners also work in such manner. These miners take pending transactions, verify them to be cryptographically correct and accurate, and then package them into blocks to be stored on the blockchain network.

The mining process also involves the hashing of a potential block and checking to see if the hash fits the current difficulty rules. The mining process is a very important component of the blockchain architecture.

  1. Hashing

Hashing is the process of converting an input of letters and numbers into an encrypted output of a fixed length. You can create a hash by using an algorithm and it is very vital to blockchain management in cryptocurrency. You need to know that a hash input provides an equivalent hash out. A hash is a one-way function, meaning that it is practically impossible to work backwards to reconstruct an input that gives a particular output.

Due to hashing, even editing a single bit of the block header will automatically result in the creation of a different hash.

  1. Consensus

This is another important and essential component of the blockchain architecture. It simply means the set o rules that guide a blockchain network. You need to know that these rules are self-enforced. The larger the blockchain network due to the addition of more miners and participants, the overall consensus grows stronger as well. This is due to the increasing number of actors that are enforcing their own rules.

We can consider one of the Bitcoin’s codes that stipulate that the value of the transaction should be halved in every 200,000 blocks. A reward of 50 BTC is produced by the first 200, 000 blocks while blocks 200,001 through 400,000 produced a reward of 25 BTC. For instance, if a miner produces a block today with a reward that is bigger than the current such block would simply be discarded.

The actual rate of the reward for finding a new block is decided independently by the entire network. For your block to be accepted in the network, you must play by the same rules as everyone in the network. Without such, you run the risk of not following consensus standards, hence getting your verification ignored.

In other words, consensus adds another level of security to the blockchain network.

Categories Of The Blockchain Architecture

The blockchain architecture can be categorized into two sections which include:

This is a permissionless blockchain network that is completely open-ended; therefore anyone can participate without any kind of permission. The major advantage of the public blockchain architecture is that it is more secure than private blockchain. The disadvantage is that it has low privacy and consumes more computational power.

  • Private blockchain architecture

This particular blockchain network requires an invitation to participate in the network. For such an invitation to stand, it must be validated by the network starter or by the rules put in place by the network starter. This permissioned blockchain allows only the kind of participant that is required in the network.

The advantage over the public or permissionless blockchain is that it increases privacy. It requires less computational power thereby making it environmentally friendly. Its disadvantage with respect to the public blockchain architecture is that it is less secure.


As a blockchain enthusiast, your ability to understand the blockchain architecture will go a long way in helping understand blockchain technology. You can still carry out your own research to better understand the fundamental principles of blockchain technology.


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