IEEE Consumer Electronics Magazine - July 2018 - 11
The necessary steps for block validation are summarized
as follows:
▼ All of the transactions contained in the current block are
verified by the steps discussed in the "Claiming Ownership" section. After individual verification, the transactions' chronological order conforming to their occurrence
and reference is confirmed.
▼ The previous block's hash referenced by the current block
is determined to exist and be valid. This is usually checked
from the genesis block.
▼ The accuracy of the timestamp is verified.
▼ The proof of work for the current block is valid.
NETWORK OPERATION
The network operation steps are defined as follows by the
order of their execution.
1) Transaction broadcast: There should be no direct transactions between the source and destination. Instead, all
transactions should be announced to the entire network for
verification through broadcasting.
2) Transaction collection and verification: The nodes verify all
of the transactions as per the steps in the "Claiming Ownership" section and accumulate them in a block, depending
on the block size, which is 1 MB for bitcoin.
3) Running the consensus protocol: To add this block to the
blockchain, nodes put their resources to work and start the
mining process to solve the cryptographic puzzle by finding proof of work. Upon solving the puzzle, the block is
broadcast to the entire network.
4) Block acceptance and chain update: Upon receipt of
blocks by nodes, two scenarios can occur:
- The nodes can accept the block, provided that all of the
transactions contained in it are valid and the computed
proof of work is correct. Nodes show their approval and
acceptance by adding the block to their copy of the ledger and advancing to find the next valid block, with this
block as a predecessor and taking its hash as the previous hash for the successive block. If two miners find a
valid solution at the same time, only the longest blockchain is considered valid. This is how the blockchain is
made tamper-proof and how changes once made cannot
be reversed.
- If the transactions in the block or proof of work are not
valid, the block is discarded, and the nodes continue to
search for a valid block.
5) Earning incentives: Miners earn incentives upon successful acceptance of blocks; this is to keep nodes honest and
make the system robust.
mine. There are no restrictions on any of these factors. Therefore, these are also called permissionless blockchains. Every
participant is given full authority to read and write transactions,
perform auditing in the blockchain, or review any part of the
blockchain at any time. The blockchain is open and transparent,
and there are no specific validator nodes. All users can collect
transactions and begin with the mining process to earn mining
rewards. The availability of the copy of the entire blockchain,
synchronized with all of the nodes, makes it immutable.
With complete decentralization, the vastness of existing
networks, and an open platform for anyone to join, consensus
is achieved by any of the decentralized consensus mechanisms, such as proof of work, proof of stake, and so forth. Of
course, the public availability of the ledger in a private blockchain system exposes it to attacks. However, the robust mechanism of proof of work, combined with cryptographic
validation of the entire blockchain each time a new block is
added, offsets this shortcoming.
PRIVATE BLOCKCHAIN
A private blockchain system is set up to facilitate the private
sharing and exchange of data among a group of individuals
(in a single organization) or among multiple organizations,
with mining controlled by one organization or selected individuals. It is also called a permissioned blockchain, since
unknown users cannot gain access to it unless they receive a
special invitation. Nodes' participation is decided either by a
set of rules or by the network that controls access. This
inclines the network more toward centralization, while derogating the elementary blockchain features of complete decentralization and openness as defined by Nakamoto. In a private
blockchain system, once nodes become part of the network,
they contribute in running a decentralized network, with each
node maintaining a copy of the ledger and collaborating to
reach a consensus for updating. But, unlike public blockchain, the writes are restricted.
CONSORTIUM BLOCKCHAIN
A consortium blockchain can be considered to be a partially
private and permissioned blockchain, where no single organization is responsible for consensus and block validation but
rather a set of predetermined nodes. These nodes decide who
can be part of the network and who can mine. For block validation, a multisignature scheme is used, where a block is
considered valid only if it is signed by these nodes. Thus, it is
a partially centralized system, owing to the control by some
Blockchain Classifications
CLASSIFICATION OF BLOCKCHAIN SYSTEMS
Based upon several criteria, blockchain systems are classified
as public, private, or consortium, as shown in Figure 6.
PUBLIC BLOCKCHAIN
A public blockchain provides an open platform for people from
various organizations and backgrounds to join, transact, and
Public
Blockchain
Private
Blockchain
Consortium
Blockchain
FIGURE 6. The classification of blockchains.
july 2018
^
IEEE Consumer Electronics Magazine
11
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