Blockchain Technology: Essay On Architecture, Characteristics, And Operational Phenomenon.

The major usage of this technology is cryptocurrency, which allows the user to exchange value with secure and more utilisable nonphysical units. The strength of this emerging technology is its operational structure and adoptability in any networking platform. The Blockchain architecture emphasise the data structure and distribution schema of the entities within the blockchain network system. From 2008, blockchain architecture changes the way of network based database works while increasing the number of utilisers up to enormous level. 

Structure

Blockchain technology has become on f the most emerging technologies especially in the business transition and value change operation. This new technology advances the assets exchange operation across the globe while assuring the security, privacy and the optimization. Blockchain has some remarkable key properties in terms of changing the efficiency of traditional commercial and data processing based operation with its key characteristics namely decentralization, persistency, anonymity and auditability. The major usage of this technology is cryptocurrency, which allows the user to exchange value with secure and more utilisable nonphysical units. The strength of this emerging technology is its operational structure and adoptability in any networking platform. The Blockchain architecture emphasise the data structure and distribution schema of the entities within the blockchain network system. From 2008, blockchain architecture changes the way of network based database works while increasing the number of utilisers up to enormous level. Several new implementation such as cryptocurrency, Bicton mining, crypto-wallet, Hash code generation, digital signatures and others are becoming more and more popular. Along with the advancement of Information Technologies the blockchain has become intensely connected with several new interventions such as Internet Of Things (IOT), Cloud Computing, Big Data, Software automation, Business Intelligence and others.  

In this era of globalised economy and digitalised technologies blockchain architecture will be increasing the potential way of utility. Therefore, the data structure and operational phenomenon of blockchain technologies should be discussed as a part of the evaluation procedure. This paper will focus on the operational structure of the blockchain architecture while indentifying the key characteristics of the blockchain. This paper will also discuss the advantages as well as disadvantages of utilising blockchain architecture. Along with analysis of the strength and weakness this paper will also discuss the potential improvement as well as the current challenges considering both legal regulations and illegal operations. After that the existing utilisation of blockchain architecture and other parts of blockchain technology will be discussed. After exploring the exiting usage the possible future direction will be also discussed while considering the strength, weakness, opportunities and threats simultaneously.

The purpose of this paper is to analyse the various essential components of the blockchain technology including the architecture, utility, optimisation and others in order to find the future direction of improvement.  In this era of globalised economy and digitalised technologies blockchain architecture will be increasing the potential way of utility. Therefore, the data structure and operational phenomenon of blockchain technologies have to be discussed as a part of the evaluation procedure. Another essential aim of this paper is to provide an overview of blockchain architecture while comparing various consensus algorithms used for operating different blockchain systems.

Purpose

In order to understand the operational structure of the blockchain technology the fundamental of blockchain architecture has to be explored properly. In this section the report will discuss the structure of the blockchains considering its major components. The key characteristics and the utility of Consensus Algorithms have been also analysed.

The online or offline database network can have three types of structure dependent on the connectivity between different nodes of the network. These three types of networks are Centralised Network, Decentralised Network and Distributed Network. Each of individual network structure has its specific set of merits and demerits [1]. Blockchain is a digital ledger based on distributed network structure operated with specific data structure. It comprises of specific in data about various transactions or events in linked and synchronised dataset. A particular blockchain is replicated and shared among the other participants or user of the blockchain network. These participants are identified as the Nodes or Stations of the blockchain network.

                                                                      Figure 1: Types of network architecture [1]

In some specific cases, the blockchain network can also use the decentralised as well as centralised structure to formulate a temporary private network structure. However, the distributed network increases the accessibility of the data while reducing the false data insertion or alternation. In Blockchain network architecture, the stations or nodes are connected with each other in a distributed manner that allows them to validate a new information before incorporate it in the main block chain database.

                                                                 Figure 2: Sequence of blocks in block chain [5]

Blockchain is a chain of sequentially stored blocks. Each of these boxes holds a complete list of transaction records like conventional public or private ledger. When the new records has to be inserted in the records through a particular station, it is recorded in a new block created after approval from the other sections of the network [6]. In this way the old records remain unchanged and unforgeable. The new blocks contains the address of the previous block which contain the older record. The address of the block is encrypted in a Hash address, which can be decrypted through authorised permission. Blockchain has adopted this information handling strategy from the ancient use of Cryptography.  The structure of the block is subdivided into 2 sections namely the block header and Transaction counter. The transaction canters store the transaction record and the header block stores the record and block properties including parent block Hash address, nBits, Nonce and others.

Fundamental of Blockchain Architecture

                                                                      Figure 3: Structure of the Block [3]

Hash code is the most essential part of the block chain technology which ensure the security of the blocks address. The Hash code is a encrypted code that consists of the location of the blockchain as well as the address of the target blocks with its sequence. As discussed earlier the purpose of the blockchain architecture is to maintain a secure and distributed ledger. When an new transaction needs initiation the sender node or station request the blockchain network to initiate the transaction process. In this phase sender applies for the transaction with the Public key of the receiver. This public key consists of the encrypted block chain address. After analysing the authenticity of the proposer after comparing with the Private key from the receiver side, the connected nodes initiate the new block developing procedure. In this phase the new block with transaction records is added in the next position of the last block of the target blockchain.

                                                        Figure 4: Process of Block chain based transaction [2]

Each and every Node or Station has a particular user access id that contains the address of a particular blockchain sequence. This key is known as the Public Key, which is known by the users who want to make value transactions with the Key holder. Each user has a Private Key, which defines the security of the transaction process. This private key give the access to the key holder to read his or her information from the particular block. Using this Private Key to authorised the accessibility is also known as Digital Signature. Digital signature allows a transition process to secure and to be peer to peer. Peer To Peer connection allows the user to complete a transaction process without allowing any third party access on the information of the data. Peer To Peer connection is also used in online monitory transactions though banks.

Structure of Blockchain

Because of the unique data handling system and network structure the blockchain has some unique characteristics that defines its utility as well as properties of functionalities. Distributive data structure, Persistent transaction support, Anonymity and Auditability are some of the most significant characteristics of the Blockchain Architecture and Blockchain technology.

In traditional centralised network system a transaction requires to be permitted through the central trusted agency, which was known as the centre of the network system. As a result it increases the cost while making the performance bottlenecks at the central servers. On the other hand, the decentralised mode, no specific third party is needed to authenticate the transaction system in blockchain. In this system, Consensus algorithms are used to maintain the consistency of the data within the distributed network structure of Blockchain technology.

Persistency is another unique characteristic of the Blockchain network architecture. Through this blockchain system, the executed transactions is validated quickly. In case of any invalid or duplicate transactions, the linked miners or nodes would not permit this transaction to be happened or stored as a record [3]. At the same time, because of block based record storing system it is not possible to drop or delete or even rollback transactions once they are recorded in the data storing system of blockchain. As an additional benefit in the Blockchain system, it can immediately identify any invalid Blocks that contain invalid transactions or duplicate or false record.

Enhanced Privacy is another unique characteristic of the Blockchain network architecture. During the transaction procedure, each active user is able to interact with the blockchain through a temporarily generated accessibility address. This temporary address helps the user to hide the real identity to anyone, even to the miners who are operating through the separate connected Nodes or Stations.  However, it has to be also considered that the blockchain is not able to completely ensure the privacy preservation because of its the intrinsic constraint within the network system.

Blockchain is widely used for non physical value transaction. This value units are also known as cryptocurrency [5].  Bitcoin, Litecoin, Monero are some of the well known cryptocurrency used across the globe. Among all these Cryptocurrencies , Bitcoin is the most popular one. In the database architecture of the Bitcoin, blockchain stores record data that include the user balances, Unspent Transaction , Output  of previous transaction and other essential information. After the first time record of latest transaction into the blockchain, the state of transactions are switched by the system from unspent to spent. Through this specific way of operation, the transaction details and its validity can be tracked and verified easily.

Another essential character of the Blockchain systems is its polymorphism. This characteristic allows the blockchain system to be utilised though three types of architecture namely public blockchain, private blockchain and consortium blockchain. In public blockchain, everyone could take part in the consensus process and all available records are visible to the public. On the contrary, in consortium blockchain, only a group of previously chosen nodes are capable to participate in the consensus process of the transaction system and in block creation operation. In case of private blockchain, the nodes with specific authorisation can have the accessibility to join the consensus process.

In blockchain architecture, the process of reaching consensus among the untrustworthy nodes can be understood by the transformation problem of well-known Byzantine Generals (BG) Problem. For reaching to a secured consensus system in distributed environment, is very challenging as well as complex process [8]. Being a distributed network system, it is a challenging operation for any blockchain. Therefore, in blockchain network architecture, no particular central node is present to ensure the authentication and to control the Consensus system. To resolve this issue, some specific protocols are required to ensure the consistency of ledgers in different nodes. In the following section the major strategies of Consensus Algorithms have been presented.

PoW (Proof of work) is a specific consensus strategy, which is used mainly as a major part of the Blockchain technology. In the decentralised network of blockchain, in order to store a particular transaction record a specific node is required to be selected [2]. The most simple way to execute this process is random selection of the proof node. In PoW system, each node of the blockchain  network calculates a hash value of the block header which can be used as a viable block in the next transaction recording. In this distributed network, blocks with valid header could be simultaneously generated within different individual nodes. In this fast paced process, a lot of computer calculations is required by Miners do to find the appropriate Header Hash for the next node in PoW.  Therefore, it is clear that this PoW system requires too much resources in terms of time and manpower. To diminish the loss, some specific PoW protocols have been designed in which the system can have some additional application.

PoS or Proof of stake is a less resource consuming process and alternative to PoW. In this consensus, the Miners need to prove their ownership on the total value of the currency. In practical situation, it has been seen that people with less currencies would likely to attack the Blockchain network [3]. PoS Consensus uses a specific mathematical equation that seeks for the lowest hash value through various combination of the stake size.

PBFT or Practical byzantine fault tolerance is a replication algorithm, which is used handle and overcome the byzantine fault. In this PBFT consensus, a new block is identified in a round based selection system where in each round, a primary key is selected abiding by some constrains. PBFT is able to handle up to one third of the malicious and corrupted byzantine replicas. Therefore, like a consensus algorithm,  Hyperledger Fabric utilises the PBFT system. The primary key is completely responsible for ordering the transaction.

DPOS or Delegated proof of stake is representative democratic conisation process. In this DPOS consensus system, the associated stakeholders chose their delegates for generating and validating the particular blocks through election [7]. Very limited number of nodes for the block validation, the validation procedure usually takes long time. This process leads to the quick confirmation system for transaction period.

Ripple is another consensus algorithm, which uses sub-networks within the larger Blockchain network collectively trusted by other nodes. Nodes can be divided into two types namely server and Client. Server is there for executing consensus process and client for the monetary transaction, in which every server has and Unique Node List (UNL). On the other hand, another byzantine consensus algorithm is Tendermint. In this system, a new block is slected through a selection round. A proposer is selected for broadcasting an unconfirmed block of this selection round.

The blockchain is becoming bulky because of the increasing amount of transactions in every day. All transactions have to be stored by each node has in order to validate them on the blockchain.  The reason behind this is they have to validate the source node of the existing transaction to find that unspent or not. At the same time, because of the specific restriction on the size of the block and the time interval for generating a completely new block, a Bitcoin blockchain is able to process only 7 transactions in each second. As a result, this limitation hinders the blockchain system to fulfil the increasing requirement of processing huge number of transactions in a small amount of time [6]. On the other hand, because of the very limited storing capacity of blocks, many small transactions use to be delayed. In this situation, most of the miners prefer only the transactions with high transaction fee. In order to avoid this discrepancies Redesigning blockchain strategy has been developed and the Bitcoin-NG (Next Generation) has been developed [1]. The main concept behind the Bitcoin-NG is to separate the conventional data block into two parts where one part is key block for leader election and another part is microblock to store the details of the transaction. As a result, this protocol divides time into different epochs. In every epoch, every active miners have to hash  in order to generate a key block. After the generation of the key block, the particular node who has successfully generated the microblocks becomes the leader. Besides, Bitcoin-NG can hold and extend the heaviest and longest chain where the microblocks cannot carry any weight. Through this strategy, blockchain can be redesigned while enhancing the compatibility between size of the block and network security.

Blockchain technology is able to secure the privacy to some extent through its public key and private key based operation. Users can use the blockchain to transact their value through private key and public key without exposing their real identity during transaction. At the same time, it is also proven, that blockchain cannot completely ensure privacy of the user during transaction because the publicly visible values of the transactions and the balance details of the public key [9]. If required the Bitcoin transactions of a user can be tracked through linking the transaction history, in order to reveal the detailed information about the user node. Several methods have been presented as the process of linking the user pseudonyms to IP addresses even at when the user is logged out from the Network Address Translation (NAT) or firewalls [4]. At the same time, each client can be uniquely identified by a set of nodes with which it is connected and  the origin of a transaction can be found. Multiple methods are there to improve anonymity of blockchain namely Mixing and Anonymous.

From the last 5 to 10 years it has been found that, Blockchain is being attacked multiple time by the colluding selfish miners. The blockchain network can become exposed even if a very minimum segment of the hashing power is utilised unethically. In selfish mining tactics, the miners use to keep their mined blocks hidden without bringing out among the entire blockchain network. The private block chain is only revealed to some specific authenticated miners. Since this type of private block chain is longer than the usual public chain, all miners can admit the private chain. As a result, before the publishment of this private blockchain, honest miners use to west their resources on a useless branch while at the same time selfish miners mine their preserved private chain without any competitors [8]. Hence, selfish miners get more revenue than the honest miners do. On the other hand, in stubborn mining, miners can be able to amplify the gain by composing non-trivially mining attacks on the secured network-level eclipse attacks. This situation can enable the stubborn miners to mine the blocks when the private chain is even completely lost. It can cause further discrepancy in monetary transaction on this virtual platform.

Blockchain technology has been widely applied for financial transaction also known as cryptocurrency. Nowadays, cryptocurrencies is one of the most emerging financial transaction based technological  systems [6]. One of the most valuable opportunity for the adaptation of blockchain in commercial operations is the facility of quick and efficient cross-border transactions. Blockchain technology is capable to develop and maintain borderless network architecture through the globe that can be used for cross-border transactions with ease. Utilising the Blockchain technology can eliminate the use of third party agents in the commercial transactional ecosystem that can also remove the burden of extra transaction cost.

Along with the increment of rapid utilisation of Internet of Things (IoT) has several advantages in terms of delivering an inter-connection between objects and humans [5]. This phenomenon helps to develop e-business architecture developed for IoT environment. In this system, the Distributed Autonomous Corporation (DAC) can be used as an entity that gives automated transaction services even in the absence of human intervention. It also based on autonomously peer to peer transaction due to the blockchain technology. At the same time, Many global business organisations can adopt Bitcoin and IoTcoin as the value change units and currency system. In agri-food supply chain, the  RFID identification system and blockchain technology can be used together in order to increase the efficiency significantly [2]. On the other hand, the cloud computing is utilised as fog computing or edge computing, has been used to develop a transparent and fair value change and  transaction system using Bitcoin value change and blockchain architecture.

Blockchain has a huge potential to address the interoperability issues in the existing healthcare systems. Blockchain can allow the stakeholders of the healthcare service namely healthcare entities, medical researcher and others in order to share electronic health record (EHR) through a secured platform. Sharing of HER allows the healthcare system to improve the overall quality of medical care while enhancing the recommended options for doctors. Besides,  to have better access of these issues, a healthcare data gateway (HDG) can be made based on the blockchain storage platform [7]. This operational data architecture helps to design new system to prioritize patient urgency through MedRec. MedRec is basically a distributed ledger protocol, which can use public key cryptography to create a new blockchain when required. The particular blockchain can be replicated and distributed across each node in the healthcare network. Besides, blockchain technology is also used to access control on automatic system while tracking specific tasks including appending a new record, change in viewership rights and others

A government system has to handle verities of duties and responsibilities that must be executed properly for the benefit of the people. In this structured way of execution the data processing, record maintaining, financial transaction and others have a huge role that play as the skeleton of the government system. In this situation, Blockchain technology can play a vital role in government system through its advanced record management and transaction handling system. Blockchains can also be utilised in identity management systems, document processing, financial security and public service operations and transmitting sensitive information [4]. Utilising the blockchain technology in government, a huge number of these processes that usually requires countless work force, money and time, can be executed through the digital ledger of block chain with spontaneous smart contract protocols. As a result of this accurate, efficient, quick and flawless working process more mission can be accomplished in less time while having a high satisfaction and support from the citizen.

Recently various types of blockchains have been innovated that have over 700 listed cryptocurrencies [5]. Any blockchain developer can falsify the performance of their dishonestly, to attract investors for generate huge profit completely unethically. Apart from that, before combining a particular proposed blockchain into business, the utility and compatibility of blockchain need to be tested to satisfy the requirements. Therefore, it is clear that blockchain testing mechanism is essential for maintain the quality and tangibility of the blockchain technology. The process of blockchain testing has two phases, namely standardization phase and testing phase. The authority and the users has to mutually agreed upon the criteria of the blockchain in the Standardise phase. After the creation of each blockchain, it can be tested through utilising the criteria chart agreed mutually in order to test the functionality of the particular blockchain as per the developer’s claims. Similarly in the testing phase, the testers need to perform with different criteria supported by the platform integrity and accuracy measurement.  

The design of Blockchain Architecture is based on distributed network system. However, there is a trend within the global miners to centralised the Blockchain network in the mining pool by rewriting the link and station addresses. This centralisation can be destructive for the security of the privacy assurance of blockchain based network system. Surprisingly, the top 5 bitcoin mining pools have the ownership of more than 51% of the total hash power across the global Bitcoin network [2]. At the same time, through strategy of selfish mining, pools, which have more than 25% of total computing power, are able to generate more revenue. On the other hand, rational miners or honest miners may become attracted to the selfish pool. After this, with higher number of selfish miner the pool could easily overshoot the 51% of the total ownership power in global Blockchain network. For preventing these situations, strategic methods are required, to make the Blockchain Network completely decentralised and distributed.

Blockchain can be structurally  combined with big data in order to increase the efficiency and utilisation o both technologies. These utilisations can be categorised into two different type of operations namely data management and data analytics. In data management operation, blockchain could be used to store data, which would be securely distributed within the network [7]. Blockchain is also able to maintain the originality of the data. As an example, if a particular blockchain is used to store the health related detailed information of the patients. The stored information in blockchain cannot be altered of deleted and even stolen. For data analytics process, and data transactions the blockchain technology could be used as a integrated system in big data analytics. As an example, the user trading patterns can be extracted and stored in a cloud network. By analysing this data, the users can predict the potential trading behaviours of their partners very easily.

Conclusion: 

The purpose of this paper was to analyse the various essential components of the blockchain technology including the architecture, utility, optimisation and others in order to find the future direction of improvement.  From the discussion it has been found that, Blockchain technology has become on f the most emerging technologies especially in the business transition and value change operation. This new technology advances the assets exchange operation across the globe while assuring the security, privacy and the optimization. It has been also found that blockchain architecture changes the way of network based database works while increasing the number of utilisers up to enormous level. Several new implementation such as cryptocurrency, Bicton mining, crypto-wallet, Hash code generation, digital signatures and others are becoming more and more popular.

It has been found from the above discussion that the address of the block is encrypted in a Hash address, which can be decrypted through authorised permission known as Privet Key. Consensus is specific way of operation through which the transaction details and its validity could be easily verified and tracked. Consensus Algorithms is the problem solving approach of the Consensus related problem in Blockchain operation. Along with the popularity of using Internet of Things (IoT), it has brought many advantages that enhance the accessibility and the utility of the network based database system. It has been found that Blockchain can become useless because of unethical operation of selfish miners. However, with appropriate problem solving strategy and decentralisation the blockchain architecture can be used in financial service, health services, business operations and even in Government system. Apart from that, Blockchain can be structurally  combined with big data in order to increase the efficiency and utilisation o both technologies.

Reference:

[1] V. Dhillon, D. Metcalf, and M. Hooper, “Foundations of Blockchain,” Blockchain Enabled Applications, pp. 15–24, 2017.

[2] Z. Zheng, S. Xie, H. Dai, X. Chen, and H. Wang, “An Overview of Blockchain Technology: Architecture, Consensus, and Future Trends,” 2017 IEEE International Congress on Big Data (BigData Congress), 2017.

[3] X. Xu, I. Weber, M. Staples, L. Zhu, J. Bosch, L. Bass, C. Pautasso, and P. Rimba, “A Taxonomy of Blockchain-Based Systems for Architecture Design,” 2017 IEEE International Conference on Software Architecture (ICSA), 2017.

[4] C. D. Clack, “A Blockchain Grand Challenge: Smart Financial Derivatives,” Frontiers in Blockchain, vol. 1, 2018.

[5] I. Eyal, “Blockchain Technology: Transforming Libertarian Cryptocurrency Dreams to Finance and Banking Realities,” Computer, vol. 50, no. 9, pp. 38–49, 2017.

[6] H. Hassani, X. Huang, and E. Silva, “Big-Crypto: Big Data, Blockchain and Cryptocurrency,” Big Data and Cognitive Computing, vol. 2, no. 4, p. 34, 2018.

[7] S. Corbet, C. J. Larkin, B. M. Lucey, and L. Yarovaya, “Kodakcoin: A Blockchain Revolution or Exploiting a Potential Cryptocurrency Bubble?,” SSRN Electronic Journal, 2018.

[8] V. Dhillon, D. Metcalf, and M. Hooper, “Recent Developments in Blockchain,” Blockchain Enabled Applications, pp. 151–181, 2017.

[9] M. V. Rijmenam, “Blockchain and Fair Trade,” Blockchain, pp. 114–124.

[10] V. Morabito, “Blockchain Value System,” Business Innovation Through Blockchain, pp. 21–39, 2017.