Decentralized Ecosystem

Hello,
The subject of today's article is "Decentralized Ecosystem: Blockchain Technology". Blockchain technology is a data structure in which transactions are verified and recorded without a central authority. In this way, in ecosystems created using blockchain, it becomes possible for transactions to be carried out entirely between parties and there is no need for a central authority.

In this article, we will examine in more detail how blockchain technology works and where it can be used. We will also touch upon important points regarding the use of this technology.

You can also contribute to our article by sharing with us the topics you are curious about.
Blockchain technology is more or less slowly taking over the digital world. One thing I can say for sure is that this technology will disrupt almost every industry currently on the market. So, now it's time to learn everything there is to know about it.

Certainly, blockchain is a sophisticated technology and there are many elements that need to be accounted for in the core system. In reality, all of this can be quite overwhelming for beginners. Therefore, in this guide explaining blockchain technology, I will explain all its features and characteristics that make blockchain so unique. So, I hope you enjoy it thoroughly. Let's start explaining!

1: What is Blockchain Technology?

Let's start with the most basic question of all time – “What is the definition of blockchain technology?” Blockchain technology is a distributed ledger system that supports decentralization, transparency and data integrity.

Does it seem confusing?

Let me explain Blockchain technology in a simple way. Consider multiple blocks linked together in a chain-like format. Here all blocks will be connected to the previous block and the block in front of it.

Additionally, all blocks in this chain contain some type of data, and the chain represents the link structure. In effect, each block will be linked using cryptography. Additionally, all blocks in this chain will have a cryptographic hash ID along with transaction data and timestamps.

And so you end up with a growing blockchain, and that my friend is a blockchain. You can think of it as a database that stores information in a unique way. But blockchain and databases, although both store information, are quite different in nature.

By default, blockchain technology does not support any modification of data. Therefore, any data that goes into the block can never be deleted or modified. So it will stay there forever. Another important fact about the blockchain technology explained is that the network is a peer-to-peer network.

Therefore, there is no central link lurking in the shadows trying to steal your information. I mean, who doesn't love that much freedom, right?

How Does Blockchain Technology Work?

Well, it's time for you to learn how the technology actually works in this blockchain guide. But before we get started, take a look at some important features to know in advance.

Blockchain stores all information in a ledger system. Additionally, any kind of data exchange is called “transaction”. Previously blockchain was only for transacting digital currencies, but now it can use other forms of data as well.

Each user on the network is called a "node" and receives a copy of the updated ledger. Additionally, the way each node communicates with each other is different. The system evolves from blockchain to blockchain.

Now let's start explaining blockchain technology!

First of all, a user will request a transaction on the network. Here you will get two keys – public and private. However, the user can only make transactions using the private key. And to find the other person you sent money to, you'll need their public key.

Anyway, after the request a block is created containing all the information of the transaction. In reality, everything on the block is encrypted to increase security.

Once created, it will be broadcast to all nodes in the network. We explained that in blockchain technology, you need to verify from other nodes that what you claim is valid. And so other nodes use a consensus algorithm to verify the information (I'll explain what it is in a moment).

Once your block is verified, it will receive a place on the blockchain. At the same time, the transaction you have made will also be carried out.

It doesn't seem so hard to understand how it works anymore, does it?

2: Layers of Blockchain Technology

Now let's talk about the different layers of blockchain technology in this explanation of the blockchain guide. First of all, there are 5 different layers of technology and we will reach each of them here.

So let's start.

Application Layer

First, let's talk about the application layer. In reality, dApps come with dApp browser, UI, and application hosting.

You can access decentralized applications using the DApp browser. Unfortunately, typical browsers like Chrome or Firefox cannot browse decentralized applications. So, in this, you will get a completely different user interface similar to typical browsers.

However, you can also browse the regular internet with them.

Then, application hosting allows you to run all decentralized applications on this layer. Without this element, no dApp can be alive on the internet. It is clear that the hosting protocol will also be completely decentralized. Moreover, these hosting servers are absolutely safe to maintain as they have a low risk.

Then come decentralized applications. Typically these are similar to today's practice, but with a distinct change. They all have a decentralized network. Plus, these are extremely easy to make nowadays.

Services Layer

It is the second layer after the application layer. In this, you will have access to all the basic tools that will help you build and run the dApps layer. In reality, this blockchain covers all the vital elements in its described layer.

Moreover, you will cover governance, off-chain computing, state channels, data streams, and sidechains.

Data feeds is a process that helps get the most up-to-date information from all reliable sources. Therefore, it will help nodes get the latest update information about the network.

On the other hand, off-chain computing is here to do the computing process outside of the blockchain. Additionally, it promotes additional privacy and eliminates the burning of the core network system.

Additionally, you will have a management structure here as well. In reality, they are basically an unmanned autonomous organization that can promote a fair environment. Also, the real state channel is the path between two nodes. Thus, two nodes can communicate with each other using state channels.

Apart from these, there are other elements in blockchain annotated layers. Basically these are Oracles, Multi-signatures, Smart contracts, Digital Assets, Wallets, Distributed file stores, Digital identities, etc. These are optional because a blockchain technology may or may not have this.

Oracles: Oracles are necessary for smart contracts because they act as an intermediary to collect information from outside the network.

Multiple Signatures: This element provides a different type of security protocol. In reality, you need to sign any transaction without a unique signature to make a transaction. And here you can choose how many of these signatures you want to trade with.

Smart Contracts: These are essentially self-executing legal contracts between two participants in the blockchain technology network. In effect, the entire system gets rid of the trust issue and allows you to quickly trade any type of asset.

Digital Assets: Now in the blockchain technology stack, digital asset can refer to anything. In reality, it can mean cryptocurrencies, stocks, gold, and even other types of documents. Additionally, any digital items that have real values ​​in the real world will be known as digital assets.

Wallets: Here in blockchain technology, wallets are for storing all the digital assets you will have on the network.

Distributed file storage: In the explanation of blockchain technology, I can easily say that distributed file storage is actually a server location where all data will be stored. Obviously, you'll need authentication to access them.

Digital Identity: In reality, Digital Identities are the identities of users on the network. Additionally, you will need it for proper authentication on the network.

Semantic Layer

There is no blockchain network without consensus algorithms. In reality, consensus algorithms are absolutely necessary to maintain an agreement among all nodes. Practically speaking, it is a process where all nodes reach the same agreement on the information in the ledger.

Then there are the participation requirements. In reality, these are essentially rules that help the network decide who can and cannot participate in the system. Also, this item is mainly for private blockchain technologies out there.

Network Layer

Another layer after semantics is the network layer. It includes Trusted Execution Environment (TEE), Run your own mechanism, RLPx, Block distribution network and much more.

Fundamentally, the reliable execution environment helps the architecture to maintain scalability issues. It not only helps the network overcome this problem but also makes it more secure. It also helps to store data away from the main network to take some of the load off.

Infrastructure Layer

This is the final layer in the blockchain technology architecture. In this, you may encounter mining as a service protocol. But now, mining is slowly disappearing due to the excess power it requires.

On the other hand, virtualization includes servers, network, storage, operating system, etc. It is a tool to create all kinds of virtual resources. Moreover, it works on three levels: hardware, system and server. Nodes are also part of this layer. Any device connected to the network is considered a node.

In reality, without practically any nodes, there would be no blockchain technology at all. Another great element of this layer is the decentralized storage of the network. It's more secure than ever because it's decentralized.

3: What are Smart Contracts?

Now let's talk about one of the important features of blockchain technology in this descriptive guide to blockchain technology. Previously, you've had a little introduction to smart contracts. But now we will go a little deeper into this topic.

The usual definition would be:
Smart contracts are self-executing legal contracts between two participants in the blockchain network.

Typically, with a smart contract, you can practically exchange any asset such as money, property, shares, anything that is considered valuable. Moreover, it allows you to do this safely and transparently. Additionally, there is no need for any intermediary in smart contracts.

How do Smart Contracts work?

First of all, a party creates a contract after the complete agreement of two or more parties. Once the contract is created, all parties can choose to remain anonymous. In a typical private network space, you essentially need to have a proper authentication process in place to get into the system.

Therefore, when someone initiates a smart contract with you, they will likely know your identity as well. Well, you should at least give them information about the public address.

The parties will then determine any rules that must be met for the contract to be valid. It could be anything or any triggering event. So, when this condition occurs, it will automatically trigger the next event.

Once everything is set up, it will be verified and stored in the ledger. From now on, everyone tied to that contract will be able to see the progress directly from the network. Also, in case of monitoring, everything will be in real time.

Once he meets all the conditions to fulfill the contract, he will execute and distribute the money himself. Basically, it's a great way to automate any contracting process. It saves a lot of money and time as everything is automated and tracked right from the user interface.

Why is Smart Contract So Useful?

These are the advantages of smart contracts.

Uninterrupted: Since it gets rid of intermediaries, there are no annoying interruptions in the process.

High Security: You can see everything directly from the blockchain apps UI, so there is no way anyone can scam you as you can see what the process is. Additionally, no one can hack the data in the smart contract to change the outcome.

Pretty Fast: Usually processing everything manually takes a lot of time. However, when it is on the blockchain applications network, it will flow quite fast.

No Human Error: Practically in most contracts, human error costs a lot of money and time. But with these blockchain applications digital contract, the chances of this are completely low.

More Earnings: In reality, getting rid of the middleman also eliminates the option of paying extra. So this means more profits for you.

4: Different Consensus Algorithms

Proof of Work, It is the first consensus algorithm in the blockchain network. As you know, bitcoin had the first working blockchain network and used proof of work. After that, many other blockchain networks have used this method so far.

However, proof of work consumes a lot of power and is relatively slow. In this, miners tend to solve complex mathematical problems using the computing power of their devices. Basically, it is to verify each block in the chain.

5: Web3: The New Internet

Understanding blockchain technology is easier than you think. We've talked about the layers of blockchain technology before. However, this architecture will actually feed the next generation of the internet.

Artificial intelligence

First of all, this is definitely not about super robots. In reality, AI will provide a better output when it comes to results and analysis of data in the ledger. While it may not sound like a big deal, the experience will change drastically.
Typically, it gets you the content you are looking for on the internet. This means more accurate results, better prediction of your actions. In reality, it is a simple mechanism that helps you learn your tastes and gives you the best output to do so.

Omnipresence
To better understand blockchain technology, you need to know what ubiquity really is. Just look around and see what all people are using any device to use the internet.

Moreover, all smart TVs, refrigerators, smart home accessories, assistants, tabs or smartphones do the same thing. So they're all connected to the internet. By doing this, they create a network. Often, this network is actually called the Internet of Things. However, in some cases, people call it prevalence.

Advanced Connectivity
The new internet web 3.0 is based on the fact that it will be user-centered. This means you'll see more links than you did on the web 2.0 internet. In addition, no one will control your data or use it for their personal benefit. Here, semantic metadata helps a lot. In reality, it helps users stay connected more easily and quickly. Thus, it improves the connection.

6: Enterprise Blockchain Examples

Now that you know all about blockchain technology, it's time to take a look at the popular enterprise blockchain platforms on the market. Let's see what they are, shall we?

Hyperledger
Hyperledger is one of the best blockchain platforms that you can use in almost every industry. Really, all kinds! You can even rely on it if you are looking for blockchain technology in banking. Not to mention the extreme popularity of Hyperledger blockchain technology. And why wouldn't it be popular?

It offers some of the most profitable features on the market:
*Modular architecture that allows you to connect and use any application.
*Permitted network that you can use to add privacy to your network.
*High scalability ensures you always enjoy the best performance.
*Security protocols to protect your information.
*Data availability based on need to know the concept.

Ethereum Enterprise

Ethereum is another one of the popular blockchain platforms on the market that is only suitable for businesses. In reality, Ethereum is also great for all kinds of industries. However, since it is public, it may not be suitable for blockchain technology in banking.

Ripple

Ripple is another blockchain technology in banking that is currently more suitable for financial sectors. The best part about Ripple is that it offers an almost free trading platform. It also provides a relatively faster output when it comes to the financial sector. The platform is so fast that you can complete the payment in just 4 seconds!

7: Conclusion Context: Decentralized Ecosystem, Blockchain Technology

Blockchain Technology is relatively one of the coolest innovations of all time. Just 10 years ago, we didn't even know that decentralized applications were possible. But look at the tech industry now. Everyone is looking for a way to integrate this new system into their existing system.

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