Understanding the tech stack of Blockchain in 2017, 8 years after its launch
If you interested to work on blockchain, you should read this
I understood what a ‘CAR’ is, now tell me how it actually ‘WORKS’?
A lot is being written and spoken on blockchain (referred as car above)around the world. I have explained about the basics of blockchain in my previous article Simplest explanation of Blockchain in 10 minutes and this article is to help you understand what is blockchain made up of (referred to Works above)
Do you have these two questions in mind ?
I want to build something in Blockchain but no idea what to do ?
How does a blockchain startup work ?
then read further
Before we move further, I like setting up a context for you to make it easier later. To all non techies like me you need to first know how Internet application stack works.
Just for your understanding, current internet applications are built over decentralised protocols called HTTP & TCP/IP which are a minor percentage of the complete technology stack. Everything else in the stack is centralised and owned by certain firms.
Here is the Technology stack of Blockchainas per “The Blockchain Application Stack.” https://www.coindesk.com/blockchain-application-stack/
Things to keep in mind
a) All boxes in the white are shared protocols and not owned by single firm or corporation.
b) It’s a bottom up approach.
Let me take you through one by one with examples
- Blockchain(s): This is the base of all blockchain based applications. It is a network of miners across the world. These miners network continuously run algorithms to verify the transactions in case of Bitcoin. This is a decentralised network who maintain the ledgers and entries of transactions done by people across the world. You cannot monetise this part of the stack.
- Overlay Networks : The Bitcoin or a blockchain protocol is just a distributed network. Whereas overlay network helps you do some really cool things over an existing blockchain network like
a) Creating smart contracts ( sort of a crypto agreements between two parties to decide terms of a transaction)
b) Storage renting network on mobile phones, laptops etc
c) Sidechains help you transact tokens from one blockchain network to a completely different blockchain network in a secure manner.
you can create token system (sidechain) over a bitcoin blockchain network so that users could move their currency to your sidechain and go back to the main chain if needed.
Example 1
You can use cryptocurrency from the main chain and buy some tokens of the in a sidechain of a platform like Unikoin (platform for online games) and use those tokens to transact within the platform for playing games. You can choose to comeback to the main chain of cryptocurrency avoiding delay in approval time for transactions.
Example 2 :If you are playing POKER online
Smart contract is an agreement you decide when transactions should happen between the players.
Sidechains helps in super fast micropayments by using tokens for buying poker coins on a online platform. You gain or lose tokens after each game. You can choose to exchange these tokens with cryptocurrency whenever you want keeping the main chain intact.
Sidechain transactions are not recorded on the blockchain.
3. Decentralised Protocols: This is the most crucial part of Blockchain startups. With help of blockchain networks and Overlay networks you need not depend on single entities for validations, transactions etc.
Centralised Protocol
Uber — Depend on Uber for all taxi’s
Decentralised Protocol:
decentralised protocols helps peers to connect to a decentralised datasets.
a) You can plug into a data of other riders to share a ride and have peer to peer payments (using bitcoin or ether) instead of depending on uber for a cab where uber has a chance to earn from you and the driver too.
4. Support System This is the most interesting layer to build startups right now. There will be a spurge of Bitcoin based apps in future and developers will need API’s for specific protocols.
If you want to build a blockchain based startup, look for API’s and create applications over existing blockchain networks with a basic UI/UX.
Create API’s or use API’s for building applications if you interested to work in blockchain
5. User Interface
This is what the end user will be using on a daily basis. The users will find the apps to be more directly connected to people like a peer to peer app and no third party requests are needed.
This is the tech stack of Blockchain Technology. People will try to monetise at every step of this stack. If you are wondering which part of the stack to start with and how its being done
