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A design pattern defines constraints that restrict the roles of architectural elements processing, connectors, and data and the interaction among those elements. Adopting a design pattern causes tradeoffs among quality attributes. Our pattern collection includes three patterns about interaction between blockchain and the external world, four data management patterns, three security patterns, and five contract structural patterns. The pattern collection provides architectural guidance for developers to build applications on blockchain.
When we speak about consensus, we mean the collaborative process that participating nodes of the network use to agree that a transaction is valid and to keep the distributed ledger synchronized at all times. These consensus mechanisms lower the risk of malicious or fraudulent transactions because they would have to occur or be executed across many locations at the same time, or else the tampering will be noticed almost immediately by other nodes.
To reach consensus, the majority of the participants need to agree that the transaction is valid before it is permanently recorded in the ledger. Once a transaction is permanent, no one, not even a system administrator, can delete the transaction from the ledger. The cost and time needed to reach consensus depends on the mechanism in place and the number of nodes participating in the consensus. A permissionless, or public, blockchain has relatively higher costs as compared to a trusted network of participants permissioned or private blockchain.
A wide variety of consensus mechanisms exist and are available to choose from in order to run an enterprise blockchain. When trust is high between nodes, a simple consensus mechanism, such as a majority vote, may be all that is needed. Alternatively, the network may choose to use a more hardened method. The following example mechanisms and capabilities demonstrate how a network can reach consensus.
In the world of Bitcoins and Altcoins cryptocurrencies based on the blockchain developed by the Bitcoin core team , the Proof of Work PoW mechanism is used for consensus. The idea behind PoW was first published in by Cynthia Dwork and Moni Naor, and used in the Bitcoin white paper as it allows for trustless and distributed consensus. This protocol requires participating nodes to perform an intensive form of calculations also called mining in order to create a new group or block of trustless transactions on the blockchain.
The mining of transactions is necessary for two reasons:. To verify these transactions, the miners need to solve a mathematical problem or puzzle. The first miner that solves this puzzle gets the reward in the form of new cryptocurrency and a transaction fee amount supplied by the transaction owners. Verified blocks of transactions are permanently added to the public blockchain ledger, and with every new block, the puzzle gets a bit more difficult.
This requires miners to work more efficiently over time. Miners who can deliver more computing power are usually the ones that solve the puzzle the quickest. Luckily, there are other ways to verify transactions. However, the way it achieves the objective is different.
The main difference between PoW and PoS is that with the latter, participation is restricted to the participants that have a legitimate stake wealth in the blockchain. Instead of all participants or stakeholders trying to confirm the validity of the information submitted, this consensus method chooses an individual to approve it by running a type a lottery. For each X amount of stake a participant holds, they get a lottery ticket.
When it is time to verify and create a new block of transactions, the network chooses a lucky winner to announce their conclusions. Where a PoW-based blockchain rewards a miner for solving mining the mathematical puzzle to create a new block, a PoS-based blockchain does not reward an individual for creating a new block. Rather, the individual receives compensation in the form of collected transaction fees. PoW requires expensive computer calculations to create a new block of transactions, which can be done by anyone.
The preceding diagram shows the main difference between the two consensus methods. The PoS consensus method has advantages over the PoW method, as it does not perform useless calculations in order to create a block. This prevents a lot of energy from being wasted and is more cost efficient. With a DPoS, the participants choose an entity to represent their collective stake in the blockchain.
Thus, you decide which entity, also called a delegate node , will represent your stake in the blockchain. This allows you to join a team in order to magnify your stake. This helps balance out the power of large stakeholders. In a business environment, where trust between participants is high or at least partially present, you can come across one of the following more lightweight consensus methods.
It is used by many enterprise blockchain providers. The difference between the previously-discussed sophisticated methods and PBFT is that this protocol is much more lightweight, since it does not require nodes to perform computations in order to create and verify blocks of transactions.
With PBFT, every peer in the network maintains its own internal state, or their view on the current plan of actions. Transactions that are submitted to the network reach the validating peers at different times, so the order of transactions received doesn't have to be the same. In a given time period, peers that are fully in sync vote for a validating leader who chooses the sequence of transactions.
The other peers use this sequence, in conjunction with their internal state, to perform a computation until they have the same sequence and consensus. With PBFT, each peer might receive the same transactions in a different order, but broadcast their sequence to all other peers in order for validating peers to vote regarding the correct order. With PBFT, a consensus is reached based on the total number of decisions submitted by all peers.
Another similar consensus mechanism is the federated Byzantine agreement FBA. It assumes that participants in a network know each other, and they can distinguish which participants are important to them and which are not. The same goes for the other validating peers in the network.
A transaction is considered verified once enough peers considered important by enough nodes have agreed on its legality. Another up-and-coming consensus mechanism is called the Tangle protocol. It works a bit differently than the ones I have explained up until now, and it is not considered a blockchain.
Therefore, it is different from the others since, at any given time, no single node helps maintain the entire ledger. Each node helps by adding or editing two transactions at a time. Transactions connected into a DAG. Arrows are drawn from the child to the parent. G is the genesis transaction.
The Tangle protocol does not know the concept of miners either. Since each edge holds only one transaction, other users can easily perform validation and PoW. Thus, there are no fees or rewards for confirming transactions in the ledger, but in order to submit your own transaction, you need to proof two other transactions first. When setting up a private or consortium blockchain between well-trusted entities, you might not need a full-blown consensus protocol.
It might be sufficient to work with a permissions-only consensus. This capability describes a consensus method in which there is no PoW to be done to verify transactions. Rather, it is based on the authorization and granted permissions that a user has on the data. If a user has write privileges on a certain entity, then they are allowed to modify that entity's data.
Some users might have all permissions on a system, whereas others only have read permissions on a specific type of entity. This consensus model is more in line with permission models used by a traditional database or web application.
A number of blockchain platforms currently available support a capability called sharding consensus. Sharding is a type of data partitioning that separates large databases into smaller, faster, and more manageable parts called shards. Some blockchains try to use sharding consensus to make the blockchain faster and more efficient by not having every validating peer validate the same data blocks.
Participants who want to form a channel must be explicitly authenticated and authorized on that channel to transact and share updates on the ledger. Each channel has its own shared digital ledger and transactions log, and it must coexist in the same blockchain. This layer deals with the distribution of rewards that are earned by nodes in the network for the work they do to reach consensus. The capabilities of the incentive layer, including the distribution of rewards and transaction fees.
The incentive layer include capabilities that describe what kinds of incentives are given by the network, when and how incentives can be earned by nodes, and the minimum amount of transaction fees needed to perform actions on the blockchain. To run a successful public blockchain, there needs to be some kind of incentive program for individuals to join the network and to participate in the validation of transactions.
The node receives an amount of cryptocurrency in return. For example, Bitcoin currently has a block rewards of With blocks mined each day, it halves on average every four years. The miner that mines the block also receives all of the transaction fees. The total amount of transaction fees that the miner receives depends on the kind of transactions included in the block. The individual fee of a transaction is based on its size in bytes , the age of its inputs how long ago the coins spent were received , and the speed at which you want your transaction to be validated and verified.
A blockchain that uses PoS does not have a reward system for mining, or, in this case, forging a block of transactions. All of the digital currency is created in the beginning and can, for example, be bought and sold through exchanges and may also distributed as transaction fees.
The node that does the proofing of the transactions will only receive the transaction fees included by the original submitters of the transactions. The amount of transaction fee the forger receives depends on the complexity of each individual transaction and the fuel needed to execute it.
When the amount is too low, it is possible that your transaction will remain in a pending status for a long time. You can then choose whether to resend it with a higher fee. There are also consensus mechanisms that combine the two systems, such as Proof of Activity PoA. With PoA, miners first have to solve a cryptographic puzzle to create a block.
The winner then receives a block reward. Next, a group of validating nodes forgers is chosen to verify the transaction that will be added, and they receive a reward for validating transactions. This layer deals with providing the interfaces to access, program, and use the blockchain. The application layer includes capabilities that provide application interfaces on top of the blockchain, both out-of-the-box functionality and custom implementations. The capabilities describe how the digital ledger is implemented and exposed to the world, how smart contracts can be built and run on the blockchain, and how third-party applications can interact with the digital ledger and smart contracts.
One of the core capabilities of the blockchain is the digital ledger, a type of database or system of records, which is distributed shared, replicated, and synchronized by the network layer among the participants in the network. The digital ledger records the transactions, such as the transfer of assets or data, from one participant to another, or among multiple participants in the network. More advanced digital ledgers, such as the one used by Ethereum, NEO, and Hyperledger, also record smart contract code in the ledger as its own asset.
It is computer code that directly controls certain aspects of transactions under certain conditions. A smart contract not only defines the terms and conditions rules and penalties of an agreement, but it is also capable of automatically facilitating, executing, and enforcing the negotiation or performance of an agreement. A smart contract does this by taking the input, putting that input through the rules set out in the smart contract, and executing the required actions defined by those contractual clauses.
For example, a smart contract could stipulate the pay-out on a shipping of perishables depending on when the shipment arrives. For external clients and applications to interact with the blockchain, its ledger, and smart contracts, most platforms offer both a CLI command-line interface and a RESTful API application programming interface.
For example, you can use the command-line interface to control the settings of your node, whereas RESTful APIs can be used to invoke and query data on the blockchain. A capability that is still a very new concept is a decentralized application. A decentralized application dApp is a blockchain-enabled website that runs independently on every node of the peer-to-peer network, rather than on a single serve.
They are comprised of both a frontend web application and a backend application, where the smart contract backend application allows it to connect to the blockchain. For example, a decentralized application includes the data model it uses participants, assets, and transactions , an authorization and permissions model, smart contracts backend , and a frontend web application.
A public blockchain is not specifically owned by anyone, whereas a private blockchain can be owned by a single entity or by a consortium group of entities. As explained throughout this chapter, both public and private blockchains use the same technologies, but this is where the similarities end.
The private blockchain is mandated when a consortium of parties wish to participate in trading, but sometimes do not fully trust one another, or when some information should only be accessible to some of the trading partners.
It leads to lower costs and the faster throughput of data, since there are fewer nodes that need to reach consensus. The downside of a private blockchain is that you have to decide which participants have the power of granting permissions.
I will discuss the differences between public and private blockchains and their advantages and challenges in more detail in Chapter 7 , Public Versus Permissioned Blockchains and Their Providers. Both public and private blockchains provide a certain level of out-of-the-box security for your data.
The consensus mechanism is the main driver behind the security and correctness of the blockchain. With a public blockchain, all users need to abide by the consensus algorithm that verifies all transactions, and when doing so they need to prove that they made a sufficient amount of effort by solving a mathematical problem. In many cases, the first user to solve the problem, or who is chosen to solve the problem, gets rewarded.
Each new solution then forms the basis for the next block of transactions to be solved. It becomes almost impossible to manipulate data that is confirmed in an earlier block, since it directly affects the blocks that were created after that block. A private blockchain is even more secure, since you need to have secured permission to participate on the network.
The changes on the ledger can be tracked back to an actual person, whereas with a public blockchain, it is only tied to a network address that can be owned by anyone. Nonetheless, there are still some security risks that the software and the network rules cannot fix for you. Public blockchains, for example, that use cryptocurrencies to fuel their network have also led to black market trading.
Since transactions are bound to an address and not a personal identity, it is hard to figure out who is actually trading. Because of this, public blockchains increasingly draw the attention of cybercriminals who steal cryptocurrencies or other available assets.
Another security issue relates to the method of reaching consensus. This may lead to centralization or the possibility of collusion, because the majority of the network nodes are run in countries with cheap electricity, or even within a single country. With a private blockchain, operators can control who is allowed to connect to the network and operate a node.
Some concerns include the fact that a node can restrict the transmission of information or transmit incorrect information. Such nodes must be identified and bypassed in order to maintain the integrity of the system. Besides security, you need to think about the participant's privacy on the blockchain. Privacy is much more nuanced, and addressing this issue can lead to uncomfortable questions. What needs to be kept private? From whom? Many of these solutions are compatible with the currently existing blockchains, but it depends on what you want to achieve as to whether they will prove satisfactory.
Technologies that allow users to do absolutely everything on blockchain without the possibility of being tracked are more difficult to create. The application still has the same underlying logic, and it also returns the same outputs for the given inputs. However, because the data is encrypted along the way, it's impossible to determine any details of how it works.
Each party initially receives access to a share of the input by the sender and computes a function over that share. The outputs are returned to the sender, who can assemble the final output without any party knowing more than their initial share. Another powerful technology is zero-knowledge proofs. This allows you to construct a mathematical proof that, when executing a given program on some input by the user, returns a particular output without revealing any other information.
I want to conclude this chapter by going over some of the applications that you can imagine running on some of the public or private blockchains currently available. The most widely- used or anticipated public blockchain platforms on which to run your own decentralized application are Ethereum and Blockstack. Either of these platforms lets you build applications.
Ethereum is more basic and broadly accepted, but it only supports smart contracts backend code. Blockstack, on the other hand, is a platform for decentralized applications that contains both frontend web application and backend smart contracts. Examples of decentralized applications that don't necessarily use these platforms are Storj , UjoMusic , and OpenBazaar.
Storj pronounced: storage is a decentralized cloud storage platform that uses the blockchain technology and end-to-end cryptography to secure your files in a decentralized manner. Storj protects your data by encrypting your files client-side, shredding them into little chunks called shards , and storing these pieces in a decentralized network of computers.
Because the files are shredded into little pieces, nobody has a complete copy of your encrypted files. Beyond serving as a platform, it is also a cryptocurrency and a suite of decentralized applications. The applications can be used to store your files on the network or rent out your hard drive space. One platform that tries to address the issue of ownership creator's identity and music licensing is UjoMusic.
The platform provides a portal where the artist can own their creative works, and the use of those works always remains in the control of the artist. It uses Ethereum, so it is no longer necessary to register a copyright and sign with a publisher in order to ensure that an artist gets paid when somebody uses or listens to their creation.
Who hasn't bought something online from Amazon, eBay, or Alibaba? These companies offer a marketplace where you can buy goods from sellers worldwide. Instead of directly interacting with the seller to conduct a transaction, the data is owned by the online service, and the payment goes through a provider such as VISA or MasterCard.
The blockchain project OpenBazaar aims to cut out the middleman. It still provides a platform for e-commerce, but it uses a different approach. It uses the blockchain technology to put the power back into the customer's hands. To use OpenBazaar, you download the client application. With this application, a seller can create a new product listing, including the details that you would normally see on an e-commerce website. When you publish the listing, it becomes accessible and is distributed over a peer-to-peer network to other users.
Anyone can search for the item based on the keywords you applied. If someone buys your item, they pay with a cryptocurrency, like Bitcoin, and, when purchased, the client application creates a contract between the buyer and the seller with both digital signatures. Payments are sent into an escrow account for holding.
Once the seller has sent the item to the buyer and they are satisfied with it, the buyer releases the funds and the seller receives the cryptocurrency for example, Bitcoins. Surely it can all go wrong, just like any other marketplace?
A buyer can receive something totally different from what they ordered or receive nothing at all. The last three examples discussed were of public applications that could be used by anyone. In some cases, however, you don't want to build and run a decentralized application that is accessible to everyone in the world. Certainly, with enterprise or mission-critical applications, you want to control access and secure the privacy of the data on the blockchain.
You can build applications on both platforms. One example of a permissioned, decentralized application that uses the Hyperledger Fabric project is Medicalchain. This is one blockchain that I currently follow with much interest.
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