The document discusses the core components and architecture of blockchain technology. It describes the key elements like nodes, transactions, blocks, chains, miners, and consensus protocols. It also explains the three main types of blockchain - public, private, and consortium blockchains. Public blockchains allow anyone to participate, private blockchains are controlled by a single organization, and consortium blockchains involve multiple organizations with pre-defined roles. Permissionless blockchains like Bitcoin use proof-of-work, while permissioned blockchains have validated nodes.

1. Blockchain Types Architecture
Sk mohamed kasim

2. Core Components of Blockchain
Architecture: How Does It Work
These are the core blockchain architecture components:
● Node - user or computer within the blockchain architecture (each
has an independent copy of the whole blockchain ledger)
● Transaction - smallest building block of a blockchain system
(records, information, etc.) that serves as the purpose of blockchain
● Block - a data structure used for keeping a set of transactions which
is distributed to all nodes in the network
● Chain - a sequence of blocks in a specific order
● Miners - specific nodes which perform the block verification process
before adding anything to the blockchain structure
● Consensus (consensus protocol) - a set of rules and
arrangements to carry out blockchain operations
● Any new record or transaction within the blockchain implies the
building of a new block. Each record is then proven and digitally
signed to ensure its genuineness. Before this block is added to the
network, it should be verified by the majority of nodes in the system.

4. blockchain sequence diagram

5. ● Each blockchain block consists of:
○ certain data
○ the hash of the block
○ the hash from the previous block

6. Key Characteristics of
Blockchain Architecture
● Blockchain architecture possesses a lot of benefits for businesses. Here are
several embedded characteristics:
○ Cryptography - blockchain transactions are validated and trustworthy
due to the complex computations and cryptographic proof among
involved parties
○ Immutability - any records made in a blockchain cannot be changed or
deleted
○ Provenance - refers to the fact that it is possible to track the origin of
every transaction inside the blockchain ledger
○ Decentralization - each member of the blockchain structure has access
to the whole distributed database. As opposed to the central-based
system, consensus algorithm allows for control of the network
○ Anonymity- each blockchain network participant has a generated
address, not user identity. This keeps users' anonymity, especially in a
public blockchain structure
○ Transparency - the blockchain system cannot be corrupted. This is

7. All blockchain structures fall into three
categories:
● Public blockchain architecture
○ A public blockchain architecture means that the
data and access to the system is available to
anyone who is willing to participate (e.g. Bitcoin,
Ethereum, and Litecoin blockchain systems are
public).
● Private blockchain architecture
○ As opposed to public blockchain architecture, the
private system is controlled only by users from a
specific organization or authorized users who
have an invitation for participation.
● Consortium blockchain architecture
○ This blockchain structure can consist of a few
organizations. In a consortium, procedures are
set up and controlled by the preliminary assigned

8. Permisionless or Public
Blockchains
● In the case of Bitcoin, mining is done by solving complex mathematical equations which in return validate
the transactions saved on the network – anyone is free to download the bitcoin blockchain and begin
mining operations, in exchange for mining fees and block rewards.

9. ● Additionally, for digital currencies such as Ethereum, the blockchain network also supports smart
contracts, which are automated transactions that self-execute when certain criteria are met. As Ethereum
also employs a permisionless blockchain, anyone can develop and add smart contracts onto the network,
with no limitation imposed by the developers.

10. characteristics associated with the
permissionless model
● Decentralization:
○ permissionless networks need to be decentralized,
which means that no central entity has the authority to
edit the ledger, shut down the network, or change its
protocols.
○ Many permissionless networks are based on
consensus protocols, which means that network
changes of any type can be achieved as long as 50%
+ 1 of the users agree to it.
● Digital assets:
○ Another characteristic is the presence of a financial
system on the network.
○ Most permissionless networks have some kind of
user-incentivising token, which can grow or fall in
value depending on the relevancy and state of the
blockchain they belong to.

11. ● Anonymity:
○ granted the way blockchains operate, anonymity has become
quite relevant in the industry.
○ Many permissionless networks do not require users to submit
personal information prior to being able to create an address, or
submit transactions.
○ However, in certain cases, personal information is required for
legal purposes.
○ Bitcoin, for instance, does not offer full anonymity, as user
identity is indirectly tied to the addresses they have the private
keys of.
● Transparency:
○ blockchain networks are bound to be transparent by design.
○ This is a required characteristic, given the fact that users who get
involved must be incentivised to trust the network.
○ Therefore, a transparent network needs to freely give users
access to all information apart from the private keys – from

12. Permissioned or Private
Blockchains
● Permissioned blockchains
○ act as closed ecosystems, where users are not
freely able to join the network, see the recorded
history, or issue transactions of their own.
○ Permissioned blockchains are preferred by
centralized organizations, which leverage the
power of the network for their own, internal
business operations.
○ Company consortiums are also likely to employ
private blockchains to securely record
transactions, and exchange information between
one another.
○ Ripple is one example of a semi-pemissioned
blockchain, run by Ripple Labs.

13. ● private blockchains are run by specific
members of consortiums or companies, and
members need to opt-in for the creation of
such a network.
● Additionally, only approved people or
computer entities have the possibility of
running nodes on the network, validating
transaction blocks, issuing transactions,
executing smart contracts, or reading the
transaction history.

14. Main characteristics of
permissioned blockchains include:
● Varying decentralization:
○ members of the blockchain network are free to negotiate
and come to a decision concerning the level of
decentralization that the network will have.
○ For private blockchain, it is entirely accepted if they are fully
centralized or partially decentralized.
○ Some form of central control is required, given the fact that
businesses people-managed entities.
○ Additionally, private blockchains are free to choose which
consensus algorithms they wish to employ, yet the
governance model is more important in this scenario, as
power on the network cannot be evenly distributed among
all members.
○ This has led to the creation of level tiers of private
blockchain users, hence allowing individuals to do only
what their job entails them to.

15. ● Transparency & Anonymity:
○ private blockchains are not required to be transparent,
but they can choose to do so freely, depending on the
inner organization of the businesses.
○ In terms of privacy, it isn’t needed on a central level,
and can be individually determined on a user-case
basis.
○ Many private blockchains store an extensive amount
of data relating to the transactions, and operations
carried out by users.
○ Lastly, as there is no internal economy for most
private blockchains, there is no need to see how
monetary tokens are being sent or used.

16. ● Governance:
○ F or permissioned blockchains, governance is decided by members of the business network –
○ there are numerous dynamics which can determine how decisions are made on a central level, yet there is no need for
consensus-based mechanisms, where the entirety of the network must agree to a change.

17. Algorithms
● Permissionless networks use proof of work
algorithms. This means you only need your
hashing power to build trust. For Proof of
Stake systems, you actually have to own a
certain amount of coins to gain trust.
● Because of this, permissioned networks do
not require a lot of computing power that
makes bitcoin mining extremely power
hungry.
● Proof of Stake networks often uses
consensus algorithms such as Paxos.

18. Permissioned vs Permissionless
Networks
● With that understanding of decentralised networks, we can now delve into permissioned and permissionless
networks.
● Permissioned Blockchains
○ You can consider permissioned networks as closed or private. This means that only a few people can
access and read the data contained on the blockchain. They may also have different levels of access.
Banks, for example, might need to share some information between themselves while keeping certain
information private. This can include sensitive information such as transaction volumes.
○ In such a network only selected validators verify transactions. A good example is the Ripple network.
There is debate whether networks that do not use proof-of-work algorithms should be considered
blockchains. Some view them simply as shared ledgers.
● Permissionless Blockchains
○ Permissionless networks, on the other hand, have some level of control and can suffer from the
problems of centralised networks.
○ With permissionless networks like bitcoin, anyone can be a validator. Virtually anyone can read the
blockchain and help verify transactions and create smart contracts. They just have to follow the rules
of the network. All you have to do is avail your processing power. Bitcoin has maintained its integrity
for about ten years. That’s mostly because of its decentralised nature. Having no one controlling the
network is a major advantage. Ethereum is another example of a permissionless network although
there are plans to make it a proof-of-stake network.

19. Advantages of Permissioned and
Permissionless Networks
● Permissioned and permissionless networks
have their own unique strengths.
● As mentioned before, permissioned networks
are strong on privacy because only the actors
can view the transactions. Permissionless
networks are however ideal as a common
shared database.
● One of the major problems facing bitcoin is
scalability. Permissioned networks do not
have this problem as consensus can easily be
built.
● Hybrid networks that bring the best of both
worlds, however, do exist.

20. Comparison