Types, Components Architecture of blockchain.pptx

2.Block Chain Basics
1. Types of Network
2. Layered Architecture of Blockchain Ecosystem
3. Components of blockchain
4. Cryptography (private and public keys, Hashing &
Digital Signature)
5. Consensus Mechanisms
Dr. Shilpa Dange.
Modern College, Pune.5

2.Block Chain Basics
Types of Block chain:
Depending on the business use and requirements, it is essential to choose a suitable
blockchain network. Every Blockchain is created specifically for a purpose and to
address particular issues.
Different types of Blockchain networks including :
•Public Blockchain
•Private Blockchain
•Hybrid Blockchain
•Consortium Blockchain

Public Block chain
Public blockchains are decentralized networks in which anyone can
-participate,
-validate transactions,
-preserve the integrity of the blockchain.
These networks are accessible to the general public, which allows anyone to
join, view, or write transactions.
Public blockchains are permissionless and allow everyone to join them.
All members of the blockchain have equal rights to read, edit, and validate the
blockchain.
People primarily use public blockchains to exchange and mine cryptocurrencies like
E.g. Bitcoin, Ethereum, and Litecoin.

Public Block chain
Characteristics :
• Permissionless :It has no restrictions, anyone can access it and participate in the network without any kind of permission.
• Decentralised : It follows a distributed ledger system and is not controlled by a single entity. The nodes are responsible for
maintaining the network as they process and verify transactions.
• Anonymous : You are not required to reveal personal details like your real name or identity, everything stays hidden. This means
your transactions can’t be tracked back to you.
• Immutable: Data once written and validated on the blockchain cannot be changed.
• Transparent : Anyone can access and view the ledger at any time which makes public blockchains completely transparent.
Advantages
• Trustable : As users have full access to the digital ledger at any time and due to the blockchain’s decentralized nature, chances of
corruption are eliminated within the network, leaving almost no room for grey areas or discrepancies.
• User Empowerment : The user is the hero in the public blockchain. They are given the power to contribute their ideas, get involved
in the validation process of transactions and maintain the public network with no interference from a central authority.
• Security : The public blockchain is kept safe from hacking attempts, data breaches and other cybersecurity issues, due to the large
number of participants joining the secured network at all times. Having a larger number of participants results in a safer
blockchain.
Advantages:
• Everyone can participate only requirement is good hardware and internet.
• Bring trust among users or entities.
• It has a high level of transparency as it’s a larger network.
• Broader decentralization of access to more participants.
Disadvantages:
• Poor energy efficiency due to large network.
• Lower performance scalability.
• Less privacy as many of the things is visible.

Public Block chain
Disadvantages
•Energy Consumption : Since public blockchains rely on consensus mechanisms such as proof of
work which involves participants validating transactions, it consumes a lot more time and energy to
complete due to its size.
•Transaction speed : It takes a long time to process a transaction on the public blockchain, making
it very slow.
•Scalability : Slow transaction speed worsens issues with scalability. The number of users on the
public blockchain is high, which in turn burdens the network with more transactions.
Real life application of blockchain :
Here is a list of real world problem where we can use blockchain :
1.In a secure and full-proof voting management system.
2.To supply chain management.
3.In healthcare management.
4.Real estate project.
5.NFT marketplace.
6.Avoid copyright and original content creation.
7.In the personal identity system
8.Fund raising

Private Block chain or Permissioned Block Chain
• These are the closed network only a set of groups are allowed
to validate transactions or data in a given blockchain network.
These are used in the network where high privacy and security
are required.
• Private blockchains are restricted to a specific group or
organization, and only authorized participants can join the
network.
• These blockchains provide enhanced privacy and control over
the network, making them suitable for organizations that
require secure internal processes and confidential
transactions.

Private Block chain
• Private blockchains are commonly used in enterprise
settings where sensitive information needs to be shared among
trusted parties without exposing it to the public.
• They offer fast transaction speeds and lower costs compared to
public blockchains since they do not rely on consensus
mechanisms involving multiple participants.
• With private blockchains, organizations can ensure data
integrity, streamline operations, and maintain confidentiality
within their network.
• Private blockchains provide enhanced security as it is
only accessible to limited members only leading to
less risk of unauthorized access and possible risks.

Private Block chain
Advantages:
•It provides limited access to only trusted participants alleviating the risk of illegal
entry and possible attacks.
•Faster transactions and speed along with enhanced data confidentiality and privacy.
•A private blockchain can be customized according to specific organizational
requirements.
•Fewer validators and nodes result in less operational costs in comparison to public
blockchains.
•Smaller network size results in more efficient consensus mechanisms.
Disadvantages:
•Decreased level of decentralization due to a controlled number of participants.
•The selected group of validators or authorized nodes can have a single point of
failure if any of them gets malfunctions or compromises.
•Creating and maintaining a private blockchain can lead to enhanced
Blockchain app development costs due to significant investment in administration
and infrastructure.

Private Block chain
Use Cases:
• Financial institutions prefer private blockchain to manage the processes for cross-border
payments, trade settlements, and remittances. It provides them with faster transaction times
and safe data sharing.
• The government employs private blockchain to maintain citizen records, manage identity
verification, and track property ownership efficiently and securely.
• ERP systems integrated with private blockchain enable businesses to manage supply
chains, financial processes, inventory management, increased data integrity, and fewer
redundancies.
• It helps to collaborate between different organizations or consortiums, making them able to
share confidential data and automate work processes.

Hybrid Blockchain
A hybrid blockchain captures the essence of
both, offering a middle ground by allowing
organizations to have a private, closed network
but also offering the transparency and security of
a public blockchain where necessary.
It comprises the best of both networks enabling
decentralization, transparency, and immutability similar
to public Blockchain.
The Hybrid Blockchain network also has some elements
of private blockchains such as faster transaction
processing and enhanced privacy.

Hybrid Blockchain
•Hybrid Blockchains store confidential transactions and sensitive
data on a private network that is only available to authorized
participants including consortiums or businesses. On the other hand,
less sensitive data will be stored on the public chain leading to
inclusivity and openness.
•A Hybrid Blockchain network is specifically beneficial for industries
such as healthcare, finance, and supply chain management
requiring regulatory compliance and secure data handling.

Hybrid Blockchain
Advantages:
• The blend of public and private networks enables higher scalability by adapting a larger number of transactions.
• The hybrid approach facilitates organizations to tailor their blockchain infrastructure to align their specific use cases
providing more flexibility than a regular solution.
• Employing a combination of public and private networks would be more cost-efficient than adopting an entire private
blockchain network.
• This network is helpful to develop trust between participants as it creates a balance between data confidentiality and
openness.
• Private chains offer quicker transaction processing in comparison to entire public blockchains to enhance system
performance overall.
Disadvantages:
• A Hybrid Blockchain network adds complexity to the entire architecture and needs appropriate integration &
synchronization between private and public components.
• The Hybrid model can have potential attack vectors as both private and public chains require to be secured properly.
• The combination of private and public elements may raise governing concerns, particularly about data privacy and
compliance in related industries.

Consortium or Federated Block Chain

Consortium BlockChain
• A Consortium Blockchain is a semi-private blockchain
system where multiple entities come together instead of a
single organization to participate in the consensus process.
• Unlike public blockchains that are open to all or private
blockchains controlled by a single entity, consortium
blockchains operate under the leadership of a group.

• In this network, a group of trusted and pre-chosen participants
including organizations, companies, or government entities create a
network to maintain and authorize the blockchain collaboratively.
• It allows consortium members to share confidential data securely
while continuing transparency and decentralization.
• It leads to enhanced trust and less risk of malicious activities.
Overall, consortium blockchains maintain a balance between the
decentralization advantages of public blockchains and the
controlled access needed for enterprise use cases.

•
Advantages:
•
Restricted access to trusted users guarantees the security and confidentiality of sensitive data while lessening the risk
of unauthorized access or attacks.
•
The consortium has a smaller group of validators; hence its consensus mechanism can be faster and more efficient
leading to better scalability.
•
Less need for intricate PoW (proof of work) or consensus algorithms outcomes in transaction fees and lower energy
consumption.
•
This network facilitates smooth collaborations and data distribution between organizations resulting in managed
workflows and enhanced interoperability.
•
The Consortium Blockchain network can be customized to align with the specific requirements of participants which
makes it simple to execute industry-specific use cases.
•
Disadvantages:
•
Decisions related to consensus mechanisms, updates, and network rules need an agreement among consortium
members resulting in possible governance clashes and interruptions in executing changes.
•
Though consortium blockchains provide more privacy in comparison to public blockchains that can lead to less
transparency for external stakeholders and auditors. It makes data accuracy verification harder on the blockchain.
•
When the Consortium is controlled by strong entities, there is always a risk of collusion in negotiating the justice and
neutrality of the network.

• Use Cases:
• Financial institutions, banks, and other payment processors can team up
on a consortium blockchain to manage cross-border payments, facilitate
real-time & safe settlements, and increase KYC processes.
• Healthcare providers, researchers, and insurers can exchange medical
records, patient data, and research findings securely to have enhanced
data privacy and compliance with regulatory needs.
• In international trade, Consortium blockchains can make trade financing
processes easier via an immutable and transparent transactions record,
lowering the risk of fraud and augmenting the trust among participants.
• Consortium blockchains can enable supply chain financing with a
consistent source of transaction data for lenders, lessening risk and
facilitating a quicker approach to working assets for suppliers.
• Private and government organizations can form an interoperable and
secure identity management system on a consortium blockchain network
augmenting user privacy and decreasing identity fraud risks.

Layered Architecture of Blockchain Ecosystem
1. Layered Architecture of Blockchain Ecosystem

• Hardware Layer/ Infrastructure Layer:
This layer consists of the physical components that support the blockchain network,
such as computers and servers. A node is a computer or network of computers that
decrypts transactions, and a blockchain is the sum of all nodes.
Includes the internet, hardware and connections.
A blockchain data can be stored on individual nodes.
But a blockchain is a peer-to-peer computer network that computes, verifies, and
orderly records transactions in a shared ledger.
Clients can communicate directly with one another and exchange data. A vast network
of computers that share data is referred to as a peer-to-peer network. As a result, all
data, transactions, and other relevant data are stored in a distributed database.

• Data layer:
Following the hardware layer is the data layer, where transaction
details are stored. The transaction information recorded on a
block (the basic unit of a blockchain) includes information about
the sent crypto, the public key of the recipient, and the private
key of the sender.
Each data-containing block is connected to the block that came
before it and the block that will be generated next. Only the first
block of the network, the genesis block, is connected forwards
and not backwards.

• Network layer
The network layer, the P2P layer, oversees communication between nodes. This layer manages tasks like
discovery, transactions, and block propagation. It's sometimes referred to as the propagation layer.
This P2P layer is crucial for nodes to locate and communicate with each other, ensuring they can
collaborate, communicate, and maintain synchronization to uphold the legitimacy of the blockchain network.
In a P2P network, nodes are dispersed and collectively share the network's responsibilities to achieve a
shared objective. The nodes are responsible for executing the transactions on the blockchain.
• This layer handles the communication between blockchain nodes. It connects nodes, propagates
transactions, and distributes data throughout the network. Since blockchain is an open system, each node
must be aware of the transactions being validated by other nodes. The network layer facilitates this
communication.

• Consensus layer:
This layer guarantees that all nodes in the network concur on
the validity of each transaction. It uses a consensus
mechanism, such as Proof of Work (PoW) or Proof of Stake
(PoS), to validate and add transactions to the blockchain.

• Application layer:
• The Application layer in the blockchain is the one on which apps
are built. This layer includes smart contracts, decentralized
applications (dApps), and other software that run on top of the
blockchain network.
• It allows developers to create new applications and services
that leverage the security and transparency of the blockchain.
• These implementations may consist of anything, like wallets,
social media Apps, browsers, Defi Apps, and NFT platforms, to
name a few. While the UI/UX of the app is identical to that of
any other standard application, the backend data storage of
these applications is decentralized.

Since its arrival in the public domain, some 14 years ago, this
emerging technology has undergone countless iterations and
become the informal backbone of the digital economy.
Throughout its evolution, different versions of blockchains have
arrived on the marketplace all claiming to be different and
promising to solve some kind of existential problem.
Ultimately, one of the most effective methods used in the
industry today for classifying/categorizing them is according to
the four-layer framework based on the function of their
implementation.

Components of Blockchain
1. Node
2. Ledger
3. Wallet
4. Nonce
5. Hash

1. Nodes
The types of blockchain nodes are:
• Archival full nodes
• Pruned full nodes
• Light nodes
• Master nodes
• Mining nodes
• Authority nodes
• Staking nodes
• Lightning nodes
A single blockchain won't have all these types of nodes. The
configuration depends on the blockchain and its specific needs.

1. Nodes
The types of blockchain nodes are:
• Archival full nodes
An archival full node stores the entire blockchain ledger, meaning all the transactions from the
beginning to the most recent. This type of node needs to have a large amount of memory
available since blockchains can take up quite a bit of space.
• Pruned full nodes
A pruned full node has a set memory limit. It downloads the blockchain, and then it deletes
blocks starting with the oldest. This process is known as pruning, and blocks aren't fully
deleted since their metadata and sequence remain. After pruning, this node will hold the most
recent blockchain transactions up to its limit. For example, if the size limit is 1 GB, it will hold
the most recent gigabyte of transactions.
• Light nodes
A light node only downloads and stores block headers. Because it sticks to the essential data,
it relies on full nodes to function and is used to process fast, simple transactions.

• Master nodes
A master node is a type of full node that validates transactions and maintains a record of the
blockchain, but it can't add blocks to the blockchain.
• Mining nodes
A mining node participates in the cryptocurrency mining process. Mining nodes are selected
based on the blockchain's consensus mechanism. For example, with proof of work, the first
mining node to solve a mathematical problem gets to confirm a block of transactions. A mining
node may consist of one miner or a mining pool, which is a group of miners working together.
• Authority nodes
An authority node is one that has been elected by the organization or community managing a
blockchain. It's found in blockchains that have a vetting process required to be a node. For
example, blockchains that use a proof-of-authority system only use approved nodes run by
node operators who have provided identifying information.

• Staking nodes
A staking node locks up cryptocurrency funds as collateral, which is known
as staking. Blockchains that use a proof-of-stake system select staking
nodes to confirm blocks of transactions. A staking node may consist of one
user or a staking pool, which is a group of users who pool their crypto
funds to have a better chance of being selected to confirm blocks.
• Lightning nodes
A lightning node creates a separate network for users to connect to off the
blockchain, enabling off-chain transactions. The transactions are processed
and then submitted to the main blockchain. Lightning nodes are useful on
congested blockchain networks with slow processing and high transaction
fees. These nodes allow for low-cost, near-instantaneous transactions.

Ledger
A ledger is a collection of records containing the details of transactions from one account to
another account. They contain information that help prepare a company or individual’s
financial statements to show a complete trail.
A ledger is a kind of database where confirmed transaction are stored. Blockchain platforms
don’t use a centralised database. Instead each node has a copy of ledger.
For example, assume Ethereum and its huge user base. If an Ethereum user transfers 20
Eth to a friend, it will instantly be recorded by a ledger which will be visible to both the
sender and the receiver.

How is a ledger maintained?
• Every block in a blockchain contains a ledger of transactions that
have been added to the network since the previous block.
• Each block contains a record of all the transactions that have
occurred on the network, including the sender’s information,
receiver’s information, amount, and other details.
• As soon as a new block is created, a ledger for that block is also
simultaneously created.
• Each ledger is maintained and kept up-to-date by the different
nodes or servers and computers associated with the blockchain
(as is the case with Ethereum) or by the miners of a blockchain (as
is the case with Bitcoin).

Ledgers are not just to provide transparency to a blockchain’s users. They are also pretty useful
when it comes to confidentiality. Thus, confidentiality and transparency are two things that set
public and private ledgers apart.
Public Blockchain Ledgers
• Public blockchain ledgers are accessible to all participants without a single entity controlling
the network due to their permissionless nature.
• Anyone can join the blockchain without prior request and has the power to access, read, and
write transactions on the ledger.
• Each transaction must be verified by all nodes, which can be time-consuming and require high
processing capacity due to the complete decentralization of the system.
• However, this decentralized verification process also makes public ledgers highly secure, as
once transactions are verified and recorded in the blocks, they cannot be changed or modified.
• Examples of popular public blockchains include Ethereum and Bitcoin.

Private Blockchain Ledgers
• Unlike public blockchains, private blockchains or permissioned
ledgers are only accessible by authorized participants.
• These systems restrict public participation through control
systems, meaning that third parties or the general public cannot
access transaction records without permission.
• To become a member or access transaction records, users need
to obtain permission, which can be issued through licenses or
certifications.
• Ripple and Hyperledger are popular examples of projects that
use private ledgers in some sections of their blockchains.

Distributed Ledger
Blockchain platform don’t use a centralised database instead each node has a
copy of the ledger.
Cryptocurrencies such as Bitcoin only stores balance information in the distributed
ledger.
Blockchain platform such as Ethereum can store any kind of information such as
identity information, patient information,real estate information etc. in Distributed
Ledger.

bitaddress.org
• Hot wallets are online wallets through which
cryptocurrencies can be transferred quickly.
• Private keys are stored on cloud for fast
transfer.
• E.g
• Cold wallets are offline wallets where the
transactions are signed offline and later
disclosed online.
• Private keys are stored on hardware or
paper documents.
• E.g.

Hot Wallet –
These wallets are used for online day-to-day transactions connected to the
internet. Hackers can attack this wallet as it is connected to the internet. Hot
wallets are further classified into two types –
a. Online/ Web wallets
These wallets run on the cloud platform. Examples – MyEther Wallet, MetaMask
Wallet.
b. Software wallets
It consists of desktop wallets and mobile wallets. Desktop wallets can be
downloaded on a desktop and the user has full control of the wallet. An example
of a desktop wallet is Electrum.
c. Mobile wallets
They are designed to operate on smartphone devices. Example – mycelium.

Cold Wallet
These wallets are not connected to the internet. It is very safe and hackers cannot attack it. These wallets are
purchased by the user. Example – Paper wallet, hardware wallet.
a. Paper wallet
They are offline wallets in which a piece of paper is used that contains the crypto address. The private key is
printed in QR code format. QR code is scanned for cryptocurrency transactions.
b. Hardware wallet
It is a physical electronic device that uses a random number generator that is associated with the wallet.
Multi-signature wallet
Multi-signature wallets are those wallets that require more than one private key to execute a transaction. The
number of private keys required depends upon the initial configuration of that
wallet. It can either be 2-of-3 keys, or 3-of-5 keys.

Multi-currency wallet
Multi-currency wallets, as the name suggests, are those types of wallets that allow the
user to store more than one cryptocurrency in the same wallet. This means that it can
perform transactions that require Bitcoin, Ethereum, etc. using the same wallet. Also, an
additional feature that allows converting one cryptocurrency to another.
The focus of wallets is on these three things –
1. Privacy, 2. Transactions should be secure ,3. Easy to use
Privacy of a wallet is maintained using public and private key pairs. Transactions are
made secure as a private key is used both to send fund and to open the encrypted
message.

Benefits of Blockchain Wallets
The following are some of the benefits of blockchain wallets:
No geographic barriers:
Blockchain wallets helps to facilitate borderless transactions across different geographic locations without
difficulties of conversions and expenses of foreign exchange.
No intermediaries:
There are no intermediaries in transactions carried out using blockchain wallets. Thus, there is no single
point of failure as there is a central governing authority.
Fewer transaction fees:
There are fewer transaction costs using blockchain wallets, especially when transacting huge amounts of
money.
Security:
Blockchain wallets provide better security and privacy of transactions due to the use of cryptography.
Simple signups:
Blockchain wallets have simple sign-up procedures compared to bank accounts that have strict legal and
complicated procedures and verification needs.
Easy to manage: They are easy to create, and manage.

Nonce
A nonce is an abbreviation for “number only used once,” which is
a number added to a hashed or encrypted block in a blockchain.
It is the 32-bit number generated randomly only one time that assists
to create a new block or validate a transaction.
It is used to make the transaction more secure.

What is Blockchain Mining?
• Blockchain mining is the process of verifying transactions on the blockchain
network by solving complex mathematical puzzles.
• The process is performed by a network of computers that compete to solve
the puzzle, and the first computer to solve it is rewarded with new units of
cryptocurrency.
• Nonce generation is a key component of the mining process.
• It involves generating a random number that is added to the block header,
along with other data, to create a unique block hash.
• The miner who generates the correct block hash is rewarded with new units
of cryptocurrency.
• The difficulty of generating the correct block hash increases as the number
of miners on the network increases, making it more challenging to mine new
blocks.

What is Blockchain Mining?
• It is hard to select the number which can be used as the nonce.
• It requires a vital amount of trial-and-error.
• First, a miner guesses a nonce.
• Then, it appends the guessed nonce to the hash of the current header.
• After that, it rehashes the value and compares this to the target hash.
• Now it checks that whether the resulting hash value meets the requirements or
not.
• If all the conditions are met, it means that the miner has created an answer and
is granted the block.

Here are some in-depth insights on how nonces are generated in cryptocurrency mining:
• 1. Nonce generation is a trial and error process where miners keep guessing the nonce until they find a
hash that meets the target difficulty level. The process can be time-consuming and requires a lot of
computational power.
• 2. The nonce is added to the block header, which contains information such as the previous block hash,
transaction data, and timestamp. Changing any of these parameters will result in a different hash value.
• 3. Miners use specialized hardware called application-Specific Integrated circuit(ASIC) to generate
nonces. ASICs are designed specifically for mining, and they can perform the necessary calculations
faster and more efficiently than traditional computer hardware.
• 4. Nonce generation is a probabilistic process, meaning that there is no guarantee that a miner will find
the correct nonce. The probability of finding the right nonce depends on the target difficulty level and the
amount of computational power being used.
• 5. Once a miner finds the correct nonce, they broadcast the block to the network, and other miners verify
the validity of the block. If the block is valid, it is added to the blockchain, and the miner who found the
nonce is rewarded with a certain amount of cryptocurrency.
• Nonce generation is a crucial aspect of cryptocurrency mining and the blockchain technology.

Application-Specific Integrated circuit (ASIC)

Hash
The data is mapped to a fixed size using hashing. It plays a very important
role in cryptography. In a blockchain network hash value of one transaction
is the input of another transaction. Properties of the hash function are as
follows –
Collision resistant
Hiding
Puzzle friendliness
• Hashing in blockchain is a cryptographic process used to generate digital
fingerprints for secure transaction verification and password storage.
• Hash functions are essential components of the Proof of Work consensus
algorithm, providing security and stability to blockchain networks.

• The Role of Hash Functions
• A cryptographic hash function operates as a cryptographic tool,
generating a unique digital fingerprint for data.
• Different algorithms produce different output sizes, but a good hash
function should be deterministic, meaning that the same input will
always produce the same output.
• This property ensures that regardless of how many times the input
is hashed, the output will remain consistent, allowing for easy
verification of data consistency.

Cryptography
(Private and public keys, Hashing & Digital Signature)
• Cryptography is one significant element, a major technology that blankets
blockchain with ultimate security, making it all tamper-proof.
• Blockchain makes use of two main cryptographic primitives :
Hashing and Digital Signature.
• Before heading towards the Digital Signatures, let’s quickly stroll through a
set of terms that closely resides to Cryptography.
• Cryptography is a kind of “secret writing”. A study of techniques of sending
private messages between two without allowing any third party to gain
access.
• Here, the original message (plain text) is converted to an unintelligible form
(cipher text) from its readable form. This process is called Encryption.

Cryptography
(Private and public keys, Hashing & Digital Signature)
• Symmetric cryptographic techniques makes use of the same key for both
encryption and decryption.
• On the other hand, the Asymmetric cryptographic techniques makes use of
different keys for encryption and decryption. Modern cryptography relies on
mathematical theory and computer science.

Cryptography (Hashing & Digital Signature)
• Hash functions take a potentially long message as the input and generate a unique output value
from the content. The output of a hash function is commonly referred to as the message digest.
• Hashing is a one-way function and with a properly designed algorithm, there is no way to reverse
the hashing process to reveal the original input.
• Compare this to encryption (two-way function) which allows encryption and decryption with the
correct key or key pair.
• Another specific use case of hash functions is in data structures like hash tables . The goal here is
not security but rapid data lookup.
• Hash functions in the context of digital signatures are supposed to produce the same output for the
same input (deterministic).
• This enables the recipient of a message to recompute the message digest with the same hash
function and compare it to the transmitted digest to verify that the message wasn’t modified in
transit.
• If the message has even a minor difference in spacing, punctuation, or content, the message
digest will be completely different.

There are five requirements for a cryptographic hash function:
• The input can be of any length.
• The output has a fixed length.
• The hash function is relatively easy to compute for any input.
• The hash function is one-way (this means it is extremely hard if not impossible to determine the
input from the output).
• The hash function is collision-free (there can’t be two different messages producing the same hash
value).

Digital Signatures
• With secure hash functions, we can implement a digital signature system. A digital signature infrastructure has two goals:
• Digitally signed messages assure the recipient that the message came from the claimed sender. This provides nonrepudiation.
• Digitally signed messages provide the recipient with the assurance that the message was not altered while in transit. This
protects against malicious (man in the middle) or unintentional (communication interference) modification.
Digital signatures rely on the combination of two concepts, public-key cryptography, and hash functions.
• Alice is sending a digitally signed but not encrypted message to Bob:
• 1: Alice generates a message digest of the original plaintext message using a secure hash function like SHA-256.
• 2: Alice then encrypts the message digest using her private key. The output is the digital signature.
• 3: Alice appends the digital signature to the plaintext message.
• 4: Alice then sends the appended message to Bob
• 5: Bob removes the digital signature from the appended message and decrypts it with the public key of Alice.
• 6: Bob calculates the hash of the plaintext message with SHA-256.
• 7: Bob then compares the decrypted message digest he received from Alice with the message digest Bob computed. If the two
digests match, he can be assured that the message he received was sent by Alice.

Types, Components Architecture of blockchain.pptx

Consensus mechanism
• E.g. Bank as central Authority
• We know that Blockchain is a distributed decentralized network that provides immutability, privacy, security, and
transparency.
• There is no central authority present to validate and verify the transactions, yet every transaction in the Blockchain is
considered to be completely secured and verified.
• This is possible only because of the presence of the consensus mechanism which is a core part of any Blockchain
network.
• A consensus algorithm is a procedure through which all the peers of the Blockchain network reach a common agreement
or common decision about the present state of the distributed ledger.
• In this way, consensus algorithms achieve reliability in the Blockchain network and establish trust between unknown
peers in a distributed computing environment.
• Essentially, the consensus protocol makes sure that every new block that is added to the Blockchain is the one and only
version that is agreed upon by all the nodes in the Blockchain.
• The Blockchain consensus protocol consists of some specific objectives such as coming to an agreement, collaboration,
cooperation, equal rights to every node, and mandatory participation of each node in the consensus process.
• Thus, a consensus algorithm aims at finding a common agreement that is a win for the entire network.

Consensus mechanism algorithms

Types, Components Architecture of blockchain.pptx

More Related Content

What's hot (20)

Similar to Types, Components Architecture of blockchain.pptx (20)

Recently uploaded (20)

Types, Components Architecture of blockchain.pptx