Summary

In this session, you learnt about the fundamentals of the Bitcoin blockchain network. The topics that you covered in this session were

• How blockchain has evolved: Blockchain being an open source community has evolved over time and there are two main types of blockchain networks over time: 

                            a. Enterprise Blockchains 

                            b. Cryptocurrency Blockchains

• Layers of blockchain network: The various layers in the blockchain network are as follows: 

1. Hardware Layer: The hardware layer can be a cloud or a server that hosts the entire network. 
2. Ledger or Fabric Layer: It forms the base of the blockchain network and comprises blocks, also known as a ledger, that hold the transaction data.
3. Smart Contract or Logic Layer: It forms the business logic of the network and ensures that the network follows all the rules and regulations that govern the blockchain network.
4. Interface layer: It is the set of APIs that are used to communicate with the blockchain and get the required result such as retrieval of data, the addition of data, etc.
5. User Interface or Application Layer: This layer is the front end of the application and runs the entire network. It interacts with the rest of the layers.

• Fundamentals of the Bitcoin blockchain network: Bitcoin was the first implementation of blockchain and it has many use cases. In the bitcoin network, a transaction is performed between two nodes and the transaction is flooded across the entire network. All the nodes in the network validate the transaction and add it to their transaction pool in case the transaction is valid; otherwise the transaction is rejected. Each node has its own transaction pool that it maintains. All the transactions that are validated as valid are placed inside the transaction pool. These transactions are then mined into blocks that form the blockchain.

• Consensus mechanism: In blockchain, mathematical algorithms are used to verify transactions and ensure trust between transacting parties. Transacting parties have to trust the output achieved using these mathematical algorithms. These algorithms together are known as the consensus mechanism in the blockchain. The consensus can for a transaction or for an entire block. 
  The consensus for the transaction verification of transaction includes the checks for the following:
          a. Sender Balance
          b. Valid Authority
          c. Valid signatures
  The consensus for a block is for the following condition:
          Hash(HDR) < Difficulty Level