Data Layer

A block is the basic unit of a blockchain which stores together various transactions. It is like a container for various transactions. Each block contains a header which is used to help differentiate it from other blocks. This is because the block header contains metadata which tells us specific information about it. Think of a block header as like an ID and the metadata being our name, age, birthday and such.

Typical block metadata comprises the following.

1. Version: Current version of cryptocurrency being used
2. Previous block hash: Encrypted number telling us about the previous block 
3. Time: Timestamp for when the block was created 
4. Bits: Difficulty level in creating the block 
5. Nonce (number used once): Encrypted number to be solved by a miner for verification 
6. Hash Merkle Root: Hash of the Merkle tree (all transactions in the block)

Recall: The data layer contains the details of various transactions. Once transactions are approved, their data is bundled up into a block, the fundamental unit of a blockchain. This block is then connected to all previous blocks forming a chain. Moreover, all this data is encrypted thus making it secure. 

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Let’s go over how the information in the data layer is actually secured:

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As mentioned in our previous module, blocks are secured through the process of hashing. It is deterministic in that each input of data gives a set output in the blockchain and is irreversible so no one can backtrack the input from the output. Hashing ensures that if a bad actor tampers with data, it would be detected easily. Learn more about hashing here. 

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Another reason blocks are secure is due to digital signatures. They act as verifiable real-life signatures but are not prone to tampering and counterfeit. Digital signatures allow for encryption of data and are able to prove others ownership of funds without giving them direct access to it like banks. Learn more about digital signatures here. 

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The organization of data within the blockchain architecture offers several advantages: 

• Reduced Costs: The decentralized nature of blockchain simplifies data management, eliminating the need for significant investments in infrastructure and cybersecurity, which are common in centralized server systems.
• Historical Data: Every transaction's historical data is readily accessible, providing a comprehensive record of past activities. This stands in contrast to centralized servers, which typically offer only snapshots of past events.
• Data Validity and Security: Once data enters the blockchain, it becomes exceptionally challenging to alter. The interconnection of various blocks ensures data integrity and security, making it an ideal solution for safeguarding information.

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Now that we've seen how data is securely structured within a block and understood the benefits of blockchain's data architecture, let's transition into exploring how this valuable data is accessed and communicated within the blockchain network. 

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One way to access data would be blockchain indexing. As more blocks are added to a blockchain, searching for specific data becomes more difficult. Generally, most data is collected in a scattered manner such that one would need to access specific transactions that occurred over a period of time. They would need to go over several blocks. This is because unlike other databases, blockchains lack a method to search for data. Blockchain’s node structure, though making it more secure, also makes it difficult to access data since they aren’t all stored in the same place. Blockchain indexing solves these issues by allowing you to search for specific data similar to using online search engines. 

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Another way to access data would be through Merkle trees. A Merkle tree is a data structure in computer science that allows for better security and encryption.  It is visualized in a tree-like structure with leaves, branches and a root which represents hashes of transactions in a block. This is made from hashing pairs of transactions in a block until one hash is left.

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The magic of the Merkle tree lies in its ability to simplify data efficiently by hashing pairs of transactions until a single hash remains. This is invaluable because, with the root hash in hand, anyone can verify whether a specific transaction is part of a block without the need to download the entire blockchain. This not only conserves storage space but also significantly speeds up the process of verifying and searching for information within the blockchain.

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All of these parts in the data layer ensure that the blockchain’s various data are accessible and secure. Let’s now look at how this data circulates within the network.