Rachel Willy A lot of questions are in the minds of people about what blockchain layers are, what they mean, and why they are important. In this blog, we will provide answers to these questions.
What is Blockchain Technology?
First, let’s start out with the basics. Blockchain technology is a DLT (Distributed Database Ledger) that computer network nodes share. Blockchain stores information digitally and they are more popular for the very important role they play in the cryptocurrency ecosystem.
Blockchain technology helps to keep transaction records decentralized and secure. Furthermore, it guarantees the security and fidelity of data records. These features make blockchain bring about trust without having to trust a third party.
The blockchain database has data structures, it collects all information and puts them in blocks. The block retains a group of information, these blocks can store information to a certain degree. When one block reaches its capacity limit, the block closes and another one opens.
The new block will be linked to the old block by a chain, these blocks and the linking chains are why we have the name BLOCK-CHAIN. The process of entering information into blocks, getting them filled and closed, then new blocks opening continues.
The data in the blockchain network is immutable. They have a permanent time stamp making them irreversible and decentralized. A full block is arranged in stone and joins the timeline.
If you still don’t have the slightest idea about blockchain, the recommendation would be to learn about blockchain technology first in easy, simple words. It’s not too difficult to grasp, I promise.
How does Blockchain work?
Blockchain technology aims to permit the recording and distribution of information digitally. This information will not be changed, altered, or modified. Through this, blockchain technology forms the basis for immutable transaction records or ledgers. These records cannot be removed, changed, or altered. These features of the blockchain are the reason it is called DLT (Distributed Ledger Technology).
The first blockchain proposal was in 1991, in a research paper. The concept of the blockchain gained its first practical application in 2009 through Bitcoin. Since that time, people have applied this technology in other cryptocurrency creations, including Defi (Decentralized Finance), DApps (Decentralized Applications), smart contracts, and NFTs (Non-Fungible Tokens).
Blockchain technology has a lot of advantages like unbreakable security, transparency, low cost of operation, and taking out middlemen.
People talk about Web 3, the DLT, and their connections with blockchain technology. One of the core aspects of blockchain is its different blockchain layers.
The Layering Architecture in Blockchain
Blockchain technology is built on decentralization, which means that all the data on the network must be safe, and kept in a distributed ledger. The protocols that the DLT follows are already predetermined, with more than one node on the network coming together to form a consensus for transactional data confirmation.
The arrival of new entries prompts every node to examine, change or add the entries. This unique way of authenticating transactions is possible because blockchain technology has designed layers.
These designed blockchain layers are five in number:
- Infrastructure or hardware layer
- Data layer
- Network layer
- Consensus layer
- Application and presentation layers
Also, in a more categorized manner, blockchain layers are classified as:
- Layer 0
- Layer 1
- Layer 2
- Layer 3
What are Layers in Blockchain?
1. Infrastructure or Hardware Layer
Blockchain platforms work on an architectural peer-to-peer network. In this network, nodes connect for easy and quick data sharing. This architecture is responsible for data exchange and sharing between large networks of interconnecting devices. This construction is responsible for the distributed ledger. Each node on the network is allowed to randomly monitor the data during transactions.
2. The Data Layer
The blocks for storing data on the blockchain network are hashed. The first is the Genesis Block. Every other block is linked via a process called iteration. Every transaction has a digital signature by the private wallet key of the sender. This data layer ensures that the private key is inaccessible except by the sender. Also, it is responsible for protecting the identity of the sender through digital signatures.
3. The Network Layer
This layer allows connections between several nodes. These nodes validate transactions through a consensus. The network layer ensures inter-node communication by allowing nodes to find themselves for quick communication. The layer manages block addition and generation, and node detection. Therefore, it is called The Propagation Layer also.
4. The Consensus Layer
This layer is responsible for authenticating transactions. It is so important because, without this layer, the blockchain system will fail. After all, transactions will not be authenticated. This layer initiates the transaction protocol, and it will require some nodes for validating each transaction. All the nodes must reach a consensus before the transaction is agreed on as legitimate. This layer powers the decentralization feature of the blockchain network. Another name for this layer is the Consensus Mechanism layer.
5. Application and Presentation Layer
This layer is responsible for end-users programs on the blockchain network. They are responsible for building decentralized applications, smart contracts, application programming interfaces, user interfaces, scripts, and chain codes. Every decentralized application responsible for developing transaction validation is built on this layer.
Categories of Blockchain Layers
Now, let’s look at the categories of blockchain layers.
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Layer 0
Layer 0 comprises the foundational components of blockchain technology. These components are connections, protocol, hardware, and so on.
The layer is responsible for the interoperability of interchains as it is also known as the network of chains. The layer also permits blockchain communications, and it helps in addressing difficulties in scalability. Finally, it enables development and participation via native tokens.
Examples of Layer 0 blockchain are Cardano, Avalanche, Cosmos, and Polkadot.
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Layer 1
This layer carries out large tasks that keep the fundamentals of the blockchain network running. These fundamentals include the resolution of disputes, restrictions, programming languages, and consensus mechanisms. The actual representation of the blockchain is Layer 1.
Examples of Layer 1 are Bitcoin, Solana, Ethereum, Binance Smart Chain.
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Layer 2
This layer is responsible for revamping layer 1 and managing all huge transactions and their validation. Layer 2 is built on layer 1 as an integrated solution, and it is constantly exchanging data and information with Layer 1 since layer 1 is just responsible for adding new blocks.
An example of Layer 2 is Lightning Network integrated into the Bitcoin Blockchain.
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Layer 3
This Layer is the part of the blockchain that everyone can see. This layer allows human interactions with UI (User Interface). Layer 3 wants to give users simplicity and ease when they work with Layers 1 and 2. Layer 3 also provides inter-chain operability like provisions for liquidity, decentralized exchanges, and decentralized and staking applications.
Examples of Layer 3 are Uniswap, Coinbase, Tornado Cash.
Summary
Blockchain technology is getting widespread acceptance, but as more people are looking into the blockchains, they might experience issues in scalability and interoperability. These networks will need to keep expanding to sustain the workload they might receive in the nearest future from mass adoption.
These blockchain layers are the foundations that ensure that the blockchain maintains its operations. They are as important as blockchain tech is to our freedom in the future. If the blockchain will last and outlive this generation, the blockchain developers and engineers will have to pay crucial attention to ensure that these Layers are modified from time to time.
