Blockchain for beginners

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Blockchain technology is the storage of data and information in a chain of digital blocks that are connected to one another by hash algorithms, ensuring the security of the data in each block. The most well-known application of blockchain technology is in cryptocurrencies, which function as a distributed record of digital transactions. These chains are linked together in immutable blocks.

This article will help us understand the following chains as used in blockchain technology,

The Mainchain

The Main chain is the foundational layer of a blockchain architecture on which every transaction is processed and verified. applications and sub-layers are built on the mainchain. The entire ecosystem benefits from increased decentralization, security, and privacy. It serves as the foundation for the entire blockchain network and links every block in the network and preserves the transaction history. It is not possible to modify data once it has been stored on the blockchain.

However, these blockchains regularly become overloaded and slow because of the heavy traffic. These made the concept of supplemental layers initially established.

The secondary layers like the side chains serve as intermediaries between the main blockchain and the decentralized programs (DApps), allowing users to carry out transactions. Every network transaction is permanently settled solely on the mainchain.
An excellent example of a secondary layer is the Lightning Network of the Bitcoin blockchain. It allows rapid transactions between relevant wallets.

But note that All transactions on any secondary layer require confirmation on the mainchain in order to be termed complete.

Sidechain
The main-chain has some drawbacks like limited block sizes, poor efficiency, and low throughput. In order to solve all of these problems, sidechains were developed. They support a blockchain network’s expansion, efficiency, and scale. Through a two-way peg, they are connected to the parent blockchains.

Sidechains were developed to also address the crucial speed issue that the cryptocurrency industry was facing. They help to make calculations easier while maintaining the same level of security as the main blockchain.

Despite the fact that they have independent nodes, they function by attaching their own nodes to the mainchain already in place.

One of the main advantages of sidechain technology is that it makes transactions happen more quickly. This technology helps the blockchain address scalability difficulties. Processing efficiency improves as operations are split over each sidechain, and depending on the desired use case, key features like speed and computational power are readily available. These qualities have led to the widespread usage of sidechain technology in several industries.

Sidechains uses consensus algorithms like PoA, PoS, DPoS, and BFT. Since they offer lower costs and a quicker transaction processing time, they can easily get over the mainnet’s constraints. In addition, sidechains serve as a link between several cryptocurrencies. If sidechains are used effectively, the performance of different cryptocurrencies can be improved.

Crosschain

Cross chain is an easier way to make exchanges between two different cryptocurrencies without complicated steps or procedures. It expands the size of a blockchain by linking to other blockchains,

The cross-chains function mainly by tying together different blockchains. Let’s say, for example, that it is not really possible to connect cryptocurrencies like Bitcoin and Ethereum because they are built on different blockchains. So in order to exchange Bitcoin for Ethereum, one needs to first swap Bitcoin for fiat currency, which you can then use to purchase Ethereum. And this can lead to wasting a lot of time and money, and the transaction method is rather inconvenient.

Instead, if you use a cross-chain that supports direct exchanges, transactions will be more convenient and efficient. Cross-chains act as intermediary bridges to help smooth the interoperability of transactions and exchanges between two cryptocurrencies. They make it possible to exchange different cryptocurrencies directly and connect between various blockchain platforms. So with cross chain you can exchange Bitcoin and Ethereum easily without having to convert to fiat.

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The consortium blockchain combines several private blockchains from various businesses into a single network, where each forms a node as a stakeholder (as an alliance) and can only quit or join the network with the consent of the stakeholders. Each institution maintains its own node or blockchain, but the consortium’s members can access, share, and distribute the data therein. By doing this, cross-organizational and cross-technological solutions can be created to enhance the workflows, accountability, and transparency of individual blockchains while solving the problems and difficulties they face.

A consortium blockchain occurs inside a constrained group of member organizations that share comparable goals and purposes, in contrast to public blockchains that increase their user base to create decentralization. This makes it considerably simpler for stakeholders to come to an agreement and speed up transaction time, improving its scalability. It is also simpler to modify block data once an agreement has been established by the majority of the participating organizations because a consortium blockchain has fewer nodes.

A consortium blockchain fosters greater decentralization than a private blockchain, where the consensus is centralized, in addition to saving time, money, and resources. Each organization involved in a consortium blockchain will have a stake in the decision-making process, ensuring that no single organization will have control over the blockchain. With checks and balances in place, the probability of corruption is decreased as a result of the sharing and spreading of control across the participating entities.

Additionally, because the information in the consortium blockchain is limited from public access and shared exclusively among participating firms, it offers a level of security that will inspire confidence in clients of participating organizations.

Therefore, working together in a consortium blockchain among private firms offers several advantages, from resolving common problems to reducing operating costs and time.

To compete with legacy systems of payment processing, blockchain networks need to become highly scalable — capable of accommodating an exponentially growing number of users, transactions, and data. And only by improving the sidechains, crosschains and encouraging more consortium chains will the blockchain networks express their full potential.

Blockchain technology has scalability issues. As the number of users increases, the technology finds it difficult to accumulate the ever-growing volume of transactions compared to some other technologies. That is a major problem the side chain and crosschain are solving. The consortium chain aims to make it easier for a collection of complementary blockchains to work together. As a result, everyone is better able to handle their unique problems and create solutions that the entire consortium can use. Solutions may be created more quickly with shared resources by building on the existing mechanisms in each blockchain. Through economies of scale, fewer development costs are necessary for this approach.

Additionally, there are no service or transaction fees while using a consortium blockchain. The advantages of joining a consortium blockchain will be greatest for smaller firms.

Improving these alternative chains increases scalability and transaction speed while maintaining privacy. Such collaborations can be advantageous for industries including finance, banking, healthcare, and supply chain logistics.