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The 10 Layers of a Blockchain
A blockchain is not a single entity. It has multiple functions – some working
together, some working independently, and all working in concert. Here are
the ten most powerful, according to William Mougayar.
1. Digital Cryptocurrency
The most visible element of a blockchain, for example, Bitcoin (BTC) or Ethereum (ETH). Like any other
currency, it can be traded on exchanges and used to buy and sell goods and services. The challenge –
how it trades with traditional (“Fiat”) currencies.
2. Decentralized Computing Infrastructure
A blockchain binds a number of networked servers together that commonly follow a consensus
process for releasing and recording information. However, developers do not need to set up these
servers. This is contrast to the Web, which uses an HTTP request sent to a server. With a blockchain,
the network makes the request to the blockchain.
3. Transaction Platform
A blockchain network validates value-related transactions of digital money or assets. Each time a
consensus is reached, a transaction is recorded on a “block” (a storage space). The blockchain keeps
permanent track of every transaction for future verification. A private blockchain can perform up to
10,000 transactions per second (TPS), and by 2019, it’s estimated that the TPS will be virtually unlimited.
4. Decentralized Database
A blockchain stores data semi-publicly in a linear container space (the block). Anyone can verify you’ve
placed the information because the container has your signature, however, it remains secure: only you
can unlock what’s inside.
5. Shared, Distributed Accounting Ledger
A blockchain is also a distributed, public, time-stamped asset ledger that keeps track of every
transaction ever processed on its network. The ledger can be shared across multiple parties, and can
be private, public, or semi-private.
6. Software Development Platform
Developers see blockchains first and foremost as a set of software technologies that are decentralized
and cryptographically secure. Blockchains can possess a variety of APIs for ongoing application
7. Open Source Software
The source of the software for most robust blockchains is public, enabling collaborative development
of further enhancements on top of the core software.
8. Financial Services Marketplace
As cryptocurrencies continue to gain broader acceptance as valid currencies, blockchains can provide
a next-generation option for traditional financial products and services, including derivatives, options,
swaps, synthetic instruments, investments, loans, and many others.
9. Peer-to-Peer Network
A blockchain is purely peer-to-peer: its network is really the computer itself. This decentralized
approach enables any user to connect with any other user instantly, no matter where they are. No
intermediary is needed to filter, block or delay a transaction, creating a marketplace of users.
10. Trust Services Layer
All blockchains commonly hold trust as an atomic unit of service. A function or a service can be
delivered via blockchains, and can comprise data, processes, identity, business logic, or agreement
terms – essentially, anything that can be digitized and that has an inherent or related value.
Adapted from The Business Blockchain: Promise, Practice, and Application of
the Next Internet Technology by William Mougayar, Wiley, 2016
© 2016 Cogeco Peer 1