In our earlier blogs, we introduced the concept and working of blockchain governance. However, to dig deeper for a fully functional and effective blockchain governance system to work there needs to be a smooth interaction between various layers that enable the blockchain technology.
These layers are called stacks as they are placed one on top of the other and the functioning of one layer hugely impacts the operation of the layers lying above and below it.
Therefore, let us learn about the various layers of blockchain technology in detail. This article will cover the areas of the working, interaction, and the relative effects of these layers in the working of a blockchain-based system.
Blockchain Technology Stack
The blockchain technology stack can be said to be comprised of four layers — namely the internet layer, the blockchain layer, the application layer, and the user experience layer.
Let us now look at each of these layers in detail.
1. The Internet Layer
This is the bottom-most layer of the blockchain technology stack. The operation of each blockchain solely depends on the availability of the internet. Without a proper internet connection, one cannot access any blockchain whatsoever.
Blockchains rely on Transmission Control Protocol / Internet Protocol ( TCP/IP ) which is a system to govern the movement of data packets across various nodes on the internet. Though a blockchain can be censorship-resistant, it cannot however be censorship-proof. To understand this, we need to first know about a few factors that play a major role in the working model of the internet we know today.
The Internet Service Provider (ISP)
The Internet Service Providers (ISPs) play an enormous role in governing the transmission of data by controlling the transportation layer of the internet. Hence, the internet layer is centralized, and building a decentralized blockchain on top of this layer is a struggle in itself. An ISP can discriminate packages based on the location of their origin and delivery. The concept of net neutrality makes a huge difference in this aspect.
It is the principle that all internet traffic should be considered equal and no discrimination should be done whatsoever. Information should be transmitted as it is received without any alteration or manipulation irrespective of its origin.
This is very important while developing a decentralized network like blockchains which demands the network to be censorship-resistant. Countries like India have better net neutrality laws than that of the US or China where the ISPs play a major hand in deciding the flow of information on the internet.
Deep Package Inspection
Deep Package Inspection permits a government or an ISP to not only inspect the contents of a data packet but also change the route to an unintended destination. Because of this, even encrypted data can be viewed, altered, and misdirected by these institutions to favor their personal interests and benefits.
This can be used by ISPs to hinder particular network traffic and also weed out unwanted competition. Nowadays, certain institutions provide the service of blocking Bitcoin transactions to their customer companies by this method.
ISP Data Caps is another problem faced in blockchain governance. Any blockchain needs a minimum network bandwidth for its stakeholders to interact with the chain.
On-Chain blockchain governance relies heavily on this factor as everything happens on the blockchain itself and any hindrance in the participation of the users can directly affect the governance of the blockchain. By restricting the network bandwidth or by charging heavily for extra bandwidths, ISPs can control the operation of a blockchain.
Country-based Firewalls pose a threat to the very nature of decentralization of a blockchain by monitoring and altering the network traffic of a particular country or locality. The Great Firewall of China is one such example that prohibited the participation of miners with their desired blockchain network and ultimately profited participants from outside of China. However, it’s worth noting that there are still over 150 Bitcoin nodes running from China, most probably through VPN services.
2. The Blockchain Layer
This layer lies above the Internet layer and all its limitations are primarily caused by the underlying layer. A high level of centralization in the internet layer demands the blockchain layer to be more innovative and dedicated to overcompensating for the problems caused by the internet layer.
We have already studied how blockchains employ different governance models to operate their networks in my previous article. Various external factors can also influence the governance of a blockchain.
3. The Application Layer
The Application Layer lies above the blockchain layers and consists primarily of two components namely the dApp frameworks and the dApps themselves. This layer provides a medium for users to interact with the blockchain network. Like any blockchain network, dApps can be designed to carry out a specific function while operating autonomously and in a decentralized fashion.
dApp frameworks are loosely coded contracts built on top of a blockchain which acts as a basic building block for any developer to design a more complex and purpose-specific dApp by combining and altering various pre-existing dApp frameworks.
Once deployed, though dApps are immutable, they can still be changed to some extent by methods like changing the state of its underlying blockchain to overwrite its code or by alteration to small pieces of code (proxy contract) that a particular dApp relies on.
4. The User Experience Layer
Though blockchains provide a decentralized form of service and governance, it is still very new and complex for the general public to adopt in their day-to-day lives. Newer and better user interfaces are being developed daily to make the experience of a blockchain user smooth and effortless.
With such advancements, we can expect more and more people to start using this revolutionary technology and move towards a truly decentralized future.
I hope this article has helped you understand more about the ideas of DeFi and think about how you too can contribute to shaping its future. Readers like you keep me motivated to write these articles and any spark that these articles can cause in the minds of my readers serves its purpose.