In this article, we will explore the different layers of blockchain technology. With the blockchain being a continuously developing field, there is no single right answer to what the best layer to work on is. But with six layers to consider, you can be sure that your next project will be easier to organize and implement because you are aware of all the different tasks that need completion.

1. What is Blockchain?

A blockchain is a digital ledger of all cryptocurrency transactions. It is constantly growing as "completed" blocks are added to it with a new set of recordings. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Bitcoin nodes use the block chain to differentiate legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.

2. The six layers of blockchain are:

a. Application layer: This is where users interact with the blockchain to access or store data. b. Data layer: This is where data is stored on the blockchain. c. Communication layer: This is how nodes communicate with each other to share information about the blockchain. d. Consensus layer: This is how nodes reach agreement about which blocks should be added to the blockchain and in what order. e. Cryptography layer: This is responsible for ensuring that data on the blockchain cannot be tampered with and that transactions are secure. f. Physical layer: This is the underlying infrastructure that allows the other layers to function, such as computers and networks

3. Layer One: Data Layer

The data layer is the most basic layer of the blockchain. This is where transactions are recorded and blocks are created. Each block contains a hash, or unique identifier, that links it to the previous block. This forms the chain of blocks, or blockchain.

4. Layer Two: Network Layer

In the second layer of the blockchain, we have the network layer. This layer is responsible for ensuring that all nodes in the network can communicate with each other. In order to do this, the network layer must first establish a peer-to-peer network. Once the network is established, each node can then send and receive transactions from other nodes.

5. Layer Three: Consensus Layer

The third layer of the blockchain is known as the consensus layer. This is where all the nodes in the network come to an agreement on the state of the blockchain. For example, when a new transaction is added to the blockchain, all the nodes in the network will check to see if it is valid and then reach a consensus on whether to add it to the blockchain or not.

Reaching consensus can be done through different algorithms, but the most popular one used by blockchains is called Proof of Work (PoW). PoW works by having all the nodes in the network compete against each other to solve a complex mathematical problem. The first node to solve the problem gets to add the next block of transactions to the blockchain and receives a reward for doing so.

The consensus layer is important because it ensures that all the nodes in the network have an accurate copy of the blockchain and prevents anyone from tampering with it.

6. Layer Four: Activating Layers

Layer Four is responsible for activating the smart contracts on Layer Two. It does this by providing a mechanism for users to trigger the execution of smart contracts. This layer is still in development, but there are already some projects that are working on solutions for it. One example is the EOSIO software from Block.one.

7. Layer Five: Contract Layers

The fifth layer of the blockchain is the contract layer. This layer is responsible for executing smart contracts and ensuring their accuracy and security. Smart contracts are self-executing contracts that can be used to facilitate, verify, and enforce the negotiation or performance of a contract. They are written in code and stored on the blockchain, making them tamper-proof and immutable.

Smart contracts can be used to automate a variety of transactions, including financial transactions, asset management, supply chain management, and more. By using smart contracts, businesses can streamline their operations and reduce costs. Additionally, smart contracts can help to reduce counterparty risk and fraud.

8. Layer Six - Application Layers

The sixth and final layer of the blockchain is the application layer. This is where users interact with the blockchain to send and receive transactions. Bitcoin, for example, is a decentralized application that runs on the blockchain. Other examples of decentralized applications include Ethereum, Litecoin, and Monero.

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