You are currently viewing 3. Blockchain: Working and Layer Infrastructure |  by Prakash Agarwal |  Coinmonks |  Sep 2022

3. Blockchain: Working and Layer Infrastructure | by Prakash Agarwal | Coinmonks | Sep 2022

source — Internet

As you may have already read about blockchain in my recent articles here. Now, We will understand how Blockchain works!

The genesis block is the first ever block recorded on its respective blockchain network, ie the starting of a blockchain network, which is occasionally referred to as Block 0. A Block has some constraints like It can store a certain amount of data(Limited Number of Transactions) and when it’s filled, the Next Block (A New Block) gets created by Network.

Let’s take an example of a blockchain that consists of 3 blocks with some transaction data stored in them. To link these blocks, a unique Hash ID is assigned to each block which is generated using the data stored in the block. So, whenever someone tries to change the block’s data, its hash id changes as well. which takes up a lot of computing power, making Blockchain data immutable.

What is a Hash ID? It’s a unique string of characters randomly generated for any data transaction over a blockchain and used to verify or locate that transaction.

Let’s say Radhe sends 1 BTC to Shyam. For an example of a real-world transaction, The Hash ID for this will look something like this:


What does BTC mean? BTC is the symbol for Bitcoin Cryptocurrency, the native currency for Bitcoin Blockchain. Every blockchain has its currency, which is used by users to do transactions and the blockchain and currency support each other to maintain sustainability. For example, Ether is the currency supported by Ethereum Blockchain Network.

Now, Let’s get a little technical, how about Blockchain layers?

Layer 0 It consists of components like the Internet, Hardware and Support system that enable the overall network to stay online.

Layer 1 known as the “implementation layer”, refers to the core architecture of the Blockchain Network. It provides the foundational base for a blockchain network. A layer one protocol defines a set of rules for operations like transaction throughput, block time, consensus algorithm, etc., that governs the entire network. Like Ethereum is temporarily using a proof-of-work (PoW) consensus algorithm before transitioning to a proof-of-stake (PoS) network.

Layer 2, Currently Layer 1 is facing some performance issues like low transaction throughput, Speed, etc. as the number of users is increasing. Layer 1 works on the PoW consensus algorithm, which is more secure but requires high computational power and affects performance.

To solve this problem, Layer 2 acts like a third-party integration that works in conjunction with Layer 1. Hence, the work gets divided between layer 1 and layer 2. Layer 2 also follows the same protocols as layer 1. Overall, We can say, Layer 2 is a framework that provides a full-fledged solution to Layer 1 to improve its overall performance. An example is Polygon Matic Network for Ethereum Network.

Layer 3 is on top of layers 1 and 2 which enable the development of applications and smart contracts over the base network, which are known as Decentralized Applications(DApps). It hosts these applications and allows users to interact with Blockchain directly. Some Examples of Programmable Blockchains are Ethereum and Solana.

Final Words:

  • Blockchain is an emerging technology and going to replace what we know as traditional data storage resources. It’s completely going to change the applications and online behavior of users.
  • I am bringing this series of blogs on Blockchain to explain the technology in the simplest explanation possible. If you still have some doubts or ideas, we can connect and discuss 👇

  • Next blogs will have a little more technical terminologies, as we will discuss about DApps and Smart Contracts, So BE READY!!!
  • You can write your views/ideas in the comment section below so that we can discuss them. If you found this helpful blog, please click the clap 👏 button below a few times to show your support…

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