When people talk about blockchain, they are usually talking about the visible parts: cryptocurrencies, wallets, tokens, or applications built on top. But underneath all of that sits the whole architecture that makes the system work.

Like any structure, the underlying architecture matters. In blockchain, the structure determines how transactions move through the network, how they are validated, how the ledger stays synchronised, and why some blockchains can process payments or smart contracts much more efficiently than others.

In this article, we will take a look “behind the scenes” of the intricacy of a typical blockchain architecture built around a proof of stake consensus mechanism. We will also look at why Layer 2 networks exist, and how rollups help blockchains scale without simply pushing all activity through the main chain. But let’s begin at the beginning.

We start with the user

Every blockchain transaction begins with a user and an application.

The application might be a wallet, a decentralised finance platform, a marketplace, or another decentralised app. The user signs the transaction with their private key, which proves that they are authorised to move assets or trigger a smart contract action.

At this stage, nothing has yet been added to the blockchain itself. The transaction is simply a request: “I want to send these funds,” or “I want to interact with this application.”

The next step is getting that request into the network.

The role of RPC nodes and the gateway layer

Like all networks, traffic and requests go through several different stages before they are completed. Most users do not connect directly to the deepest parts of a blockchain network. Instead, transactions are usually submitted through an RPC node — short for remote procedure call node.

Think of the RPC node as an access point, or a gateway that will get you there. It receives requests from wallets, apps, and developer tools, and passes them into the blockchain system. In high-traffic environments, this layer may also include load balancers, proxies, or caching systems to help distribute demand and keep services responsive.

This matters because blockchain networks are not just ledgers. They are also live digital systems that need to handle large volumes of incoming activity. If the access layer is poorly designed, the user experience will suffer long before validation even begins.

Once the transaction has entered the network through this gateway layer, it moves on, closer to the validation process.

The mempool: the “waiting room” for transactions

After passing through the access layer, the transaction usually enters the mempool, or transaction pool.

The mempool is essentially a waiting area for transactions that have been submitted, but not yet finalised. The network checks that the request is valid in basic ways: that the signature is correct, that the sender has the required funds, and that the transaction format meets the network’s rules.

At this stage, the transaction has been submitted to the network, but it is not yet officially part of the blockchain. It is waiting in a queue until validators choose it, place it in the right order with other transactions, and add it to a block.

This matters because a transaction can be visible to the network before it is fully confirmed. In other words, the network can see that the transaction exists before it becomes a permanent part of the shared ledger.

How proof of stake validation works

Ready? This is where proof of stake comes in. The most important part of any blockchain network is validation, which checks the transaction ahead of being incorporated into the block.

In a proof of stake blockchain, the network does not rely on miners solving complex mathematical puzzles, as happens in proof of work systems. Instead, validation is handled by validators: participants who lock up a stake in the network, check the transaction, and are then rewarded for helping to secure it.

When transactions are ready to move forward, validators play a role in checking them and helping the network agree on what should be added next. A block proposer assembles valid transactions into a block, and other validators help confirm that this proposed block is legitimate.

The precise mechanics vary between networks, but the broad idea is the same: the chain moves forward because the network reaches consensus on the next valid state of the ledger.

This process is far more computationally lightweight than proof of work. Why is this useful? Because proof of stake is generally more energy-efficient than proof of work, and it is often better suited to blockchains that need higher throughput and lower latency. That efficiency is attractive to many enterprises.

From execution to block creation

Once a transaction has been selected, the network has to do more than simply store it. It must also process what that transaction means.

For a simple transfer, that may just mean moving a balance from one wallet to another. For a smart contract interaction, it may involve executing code. In Ethereum-based environments, for example, this happens through the Ethereum Virtual Machine, or EVM.

This execution layer matters because blockchains are not static databases. They are state machines. Every new valid transaction changes the state of the network, and the system must determine exactly what that new state is.

After execution, the transaction is incorporated into a block. That block is then proposed, validated, and distributed across the network.

Once consensus is reached, the block is added to the chain. The transaction is now confirmed as part of the shared ledger.

Full nodes, propagation and the distributed ledger

Let’s move on. After a block is accepted, it does not stay in one place. It is propagated across the peer-to-peer network so that the blockchain remains synchronised.

This is where full nodes play an important role. Full nodes store the blockchain’s history and verify the validity of blocks and transactions. Together, they help maintain the integrity of the distributed ledger.

That distributed structure is a core part of blockchain’s appeal. Instead of one central authority updating one private database, many participants maintain and verify the ledger together. That is what gives blockchain its combination of transparency, resilience, and decentralisation.

Why Layer 2 exists

So far, this all sounds logical. But it also raises a problem — read on.

If every transaction has to move through the main chain, validated and recorded in the same shared environment, what happens when activity explodes?

What happens is congestion.

Layer 1 blockchains are powerful, but they are not infinitely scalable. If too many low-value or high-frequency transactions compete for space on the main chain, speed can drop and costs can rise.

This is why Layer 2 networks have become so important.

Layer 2 sits above the main blockchain and handles part of the workload elsewhere, while still ultimately relying on the security of the Layer 1 chain.

In practical terms, this means that large volumes of activity can happen off the main chain, with results later passed back and settled on Layer 1.

How rollups work

If you’ve gotten this far, you’re doing well. Now it’s time to learn about one of the most important Layer 2 approaches: the rollup.

A rollup gathers many transactions together, processes them off the main chain, and then submits the result back to Layer 1 as a bundled update. This reduces pressure on the main blockchain and helps improve throughput. These transactions have to be verified as well, but when they are smaller transactions, networks can be less rigorous about verification. However, there are still processes involved, and

There are two major trust models here.

Optimistic rollups assume that submitted transactions are valid unless challenged. This makes them fast and efficient, but it also means there is usually a contest period during which invalid transactions can be disputed.

Zero-knowledge rollups, often called ZK rollups, use cryptographic proofs to demonstrate that the transactions are valid without revealing all of their underlying details. This can provide strong efficiency and privacy benefits, while reducing the need for long challenge periods.

Once the transaction has been verified in this way, it is incorporated into a block with many other smaller transactions, and passed back to the Layer 1 blockchain.

Both optimistic and ZK models aim to answer the same question: how do you scale blockchain activity without abandoning trust?

That is the real architectural challenge. Layer 2 systems are not simply shortcuts. They are engineering responses to the limits of Layer 1.

Why blockchain architecture matters

It is easy to think of blockchain as a single thing, but in reality it is a stack of interacting layers — a structural foundation.

First, there is the user-facing application. The gateway layer that receives transactions. Then the mempool that holds them. The validator layer that checks and orders them. The execution environment that updates the state of the chain. The full nodes that preserve and distribute the ledger. And, increasingly, the Layer 2 systems that help the whole model scale.

Understanding that architecture helps explain why blockchain performance depends on more than the chain alone. It depends on networking, validation design, software layers, and the infrastructure choices all working together.

That is also why blockchain architecture is now such an important topic for builders, operators, and IT leaders alike. The question is no longer simply “what is blockchain?” — it is “how does this system actually work at scale?”

And the answer lies in the masterful architecture behind it.

For IT leaders, the important question is not whether blockchain is “the next big thing.” 

The question is actually much simpler: where and how does this technology solve real problems better than conventional architectures?

To answer that, let’s begin with the fundamentals.

What blockchain really is, and how it works

A blockchain is a distributed database made up of blocks of data linked together in chronological order. Each new block contains information about transactions or events, along with a cryptographic reference to the previous block. This creates an auditable chain of records that is extremely difficult to alter retrospectively.

Unlike a traditional database, which is generally administered by one organisation, a blockchain is maintained collectively by participants in the network. Copies of the ledger are distributed across multiple systems, helping to ensure synchronisation, resilience and transparency.

When a transaction is submitted to a blockchain network, it is checked according to the rules of that network. Once validated, it is added to a block and propagated across the network so that participants agree on the updated state of the ledger. This agreement process is known as consensus.

The result is a system designed to support tamper-resistant, highly available and traceable record-keeping.

Public, private, permissioned and permissionless blockchains

Not all blockchains work in the same way. For business leaders, one of the most important distinctions is the difference between public and private networks, and between permissioned and permissionless models.

Public blockchains are open networks. In general, anyone can access them, and they are often designed for broad transparency and participation. These networks are especially relevant where openness, interoperability and shared trust are important.

Private blockchains are restricted to a specific organisation or group of participants. They are usually designed for tightly controlled business processes, where governance, confidentiality or performance requirements call for more control.

A second distinction concerns permissions.

In a permissionless blockchain, participants can typically join the network and interact with it without prior approval, provided they follow the network’s technical rules.

In a permissioned blockchain, roles and actions are controlled more tightly. Specific participants may be allowed to read, write, validate or administer the network based on predefined permissions.

These models are not interchangeable. The right choice depends on the use case, the governance model, the sensitivity of the data, and the degree of openness required.

How infrastructure factors in

Blockchain discussions often focus on tokens, protocols or applications. But for IT decision-makers, infrastructure is just as important.

A blockchain environment depends on reliable underlying systems to ensure performance and trust. Three requirements stand out in particular: security, speed and uptime.

1. Security

Security is indispensably foundational. Blockchain networks are designed to preserve data integrity, but they still need to be protected at the infrastructure and operational levels.

This includes safeguarding validator or node environments, protecting sensitive data during processing, enforcing strict identity and access controls, and defending services against network attacks such as DDoS events. In some blockchain contexts, security solutions must also be tailored carefully so that legitimate high-volume traffic is not mistaken for malicious traffic.

2. Speed and low latency

Many blockchain applications are highly sensitive to latency. Validation, data propagation and user-facing responsiveness all depend on fast, stable connectivity.

This is especially relevant for environments such as decentralised finance, exchanges, validator operations, RPC services and analytics pipelines, where milliseconds can affect performance and user experience. The network layer matters a great deal: bandwidth, routing quality, geographic distribution and private interconnection can all influence outcomes.

3. High availability and resilience

Blockchain systems are expected to operate continuously. Downtime can mean missed transactions, degraded service, failed validations or loss of trust.

That makes blockchain’s resiliency critical. Distributed hosting, strong service-level commitments, redundancy, and multi-regional design can all play an important role in keeping blockchain workloads available and synchronised.

For IT leaders evaluating providers or architectures, blockchain should therefore be treated as both an application question and an infrastructure question.

Blockchain goes beyond cryptocurrency

Perhaps the biggest misconception for blockchain is that it begins, and ends, with crypto.

Cryptocurrency is just one application of blockchain, and it is far from the only one. The technology can also support a wide range of business and public-sector use cases where transparency, traceability, automation or shared trust are needed.

Examples include:

• Digital identity and access models, where blockchain can help verify claims or credentials while preserving control and traceability
• Supply chain tracking, where organisations need reliable visibility into provenance, handling and transfers across multiple parties
• Smart contracts, which can automate actions when predefined conditions are met
• Decentralised applications, where services run on distributed infrastructure rather than a single central backend
• Enterprise recordkeeping, where multiple stakeholders need a shared, verifiable source of truth

The key point is that blockchain is valuable beyond the fact that it is decentralised. It is valuable when decentralisation, immutability and shared verification solve a real business or operational challenge together.

A practical view for IT leaders

For IT leaders, blockchain should be approached with the same discipline as any other architecture decision.

And that means asking:

• What trust problem are we solving?
• Do we need a shared ledger across multiple parties?
• What governance model fits the use case?
• What are the performance, security and compliance requirements?
• Which infrastructure will support this reliably at scale?

In some cases, a conventional database will still be the right answer. In others, blockchain offers a stronger foundation for transparency, resilience and distributed trust.

The important thing is to move beyond the hype. Used in the right context, blockchain is a practical architectural model with applications that extend well beyond cryptocurrency.

As adoption grows, IT leaders who understand both the technology and its infrastructure requirements will be those best placed to identify where it can deliver meaningful business value.

This article is based on the guide “The Blockchain Blueprint”, available to download for free.

In an era where digital security is paramount, blockchain technology emerges as a transformative force for cloud services. Offering unparalleled transparency, immutability, and trust, blockchain stands to revolutionize how we secure our data and transactions in the cloud. For our clients and partners, this means an elevated layer of security through immutable audit trails, guaranteed data integrity, and innovative approaches to identity management. By decentralizing security, blockchain technology not only enhances protection but also redefines trust in the digital space.  

As we navigate this journey together, the integration of blockchain into cloud services promises to fortify our digital defenses and pave the way for a more secure and trustworthy digital ecosystem. 

Blockchain: a game-changer for healthcare and finance sectors 

Widely known as a disruptive technology with the potential to transform many industries, blockchain has evolved much over the years. In the early days, blockchain was primarily used for cryptocurrency transactions. Today, blockchain is being used by a multitude of businesses and organizations for a broad spectrum of applications including supply chain management, healthcare and finance. The global blockchain market is expected to grow at a compound rate (CAGR) of 87.7% from 2023 to 2030¹. The growth of blockchain is propelled by a number of factors including: 

• Rising demand for secure and transparent transactions 
• Need for a more efficient way to track and manage data 
• Potential for blockchain to disrupt traditional industries 

Cloud computing can offer the foundational infrastructure that is needed to support blockchain applications. Here, we explore the challenges that partners encounter during the deployment of blockchain solutions for their clients, and how OVHcloud can help partners to overcome these challenges. 

Decentralization: enhancing your blockchain technology 

Decentralization is a key feature of blockchain technology and refers to the distribution of nodes across a network. However, any hosted node can be vulnerable to attacks from malicious actors targeting any hosting service, making it difficult to defend. Distributed denial-of-service (DDoS) attacks, a common security threat in blockchain that have caused significant disruption to blockchain networks, can disrupt and prevent legitimate users from conducting transactions leading to financial losses for businesses that rely on its functionality.  

By default, all OVHcloud products are delivered with Anti-DDoS protection. We operate our own large distributed global network that provides enough throughput to mitigate attacks, no matter where they originate. Partners can also customize protection rules via the control panel if they have additional requirements. As such, OVHcloud’s partners are reassured by our commitment to ensure optimal security for their infrastructure, hosted with OVHcloud. 

In addition, the decentralised nature of blockchain networks makes them reliant on multi-locality of a cloud service provider. With OVHcloud’s 37 datacenters globally, partners can leverage on OVHcloud solutions to scale their resources as needed when their network grows, without having to worry about managing the hardware. Blockchain platforms are designed to be scalable, meaning they can be easily expanded to accommodate more nodes. We help partners to quickly adapt their infrastructure to meet changing demand. 

Costs: how to make the most out of OVHcloud best price-performance ratio? 

The cost of setting up and maintaining a blockchain network can be significant, and typically includes cost of blockchain application development, hardware and initial node deployment. Ongoing maintenance costs involve hardware maintenance, security and compliance adaptation. OVHcloud offers pay-as-you-go pricing to help clients reduce cost and save on unused resources. We provide a transparent pricing structure to allow partners to budget efficiently and keep their clients well informed.  

Depending on the blockchain network, ingress and egress traffic may be high if the network is used to process a large number of transactions. Simply put, ingress is the flow of data into the cloud while egress is the flow of data out of the cloud. OVHcloud does not charge ingress and egress traffic for all data moving in and out of our European and North American data centres.  Our performance/price ratio is among the best in the market, enabling partners to stay competitive with predictable pricing structure. 

Compliance 

Compliance in blockchain is an ongoing process. As laws and regulations evolve, organizations need to be prepared to adapt to the changes. Some of the most common compliance-related issues that arise with blockchain technology are data security and data sovereignty.  

We certify our solutions to the highest security standards to demonstrate our commitment to data security and sovereignty. In sectors such as supply chain, banking and finance, and healthcare, where blockchain is finding new uses, we are taking a tailored compliance approach to meet the specific needs of these industries. For instance, ISO 27001/27017/27018, ISO 27701, ANSSI SecNumCloud, PCI DSS and GDPR.  

Partnerships: Use OVHcloud Know-How to Leverage Your Business 

At OVHcloud, we work with partners like Zeeve DeepTech which has a wealth of expertise in blockchain technology. Zeeve DeepTech helps clients with their enterprise-grade automation platform that provides deployment, monitoring and management of blockchain nodes and networks while OVHcloud offers the underlying infrastructure that businesses need to run the blockchain applications on. 

As blockchain technology develop, OVHcloud will continue to work with partners to harness the full potential of the technology and address any challenges they may face.  

Sources: 

1. https://www.grandviewresearch.com/industry-analysis/blockchain-technology-market 
   
   Find out more on blockchain!
   Our dedicated web page: https://www.ovhcloud.com/en/learn/what-is-blockchain/
   Our labs page: https://www.ovhcloud.com/en/case-studies/bware-labs/
   Our other blog post on How To Use Cloud to Solve Blockchain Challenges: https://blog.ovhcloud.com/how-to-use-cloud-to-solve-blockchain-challenges/
   Our Whitepaper: https://www.ovhcloud.com/en/powering-your-blockchain-technology-with-cloud/

Choosing a cloud provider

Before we dig deeper into any discussion about underlying cloud technology, it is important to recognise the differences between cloud service providers (CSP). They may offer very different solution sets and not all will meet the needs of your ideal blockchain infrastructure.

When it comes to developing your blockchain infrastructure, hybrid and multi-cloud options are crucial, as they open the door to blockchain interoperability and decentralization. Some CSPs are multilocal, which is an advantage for the decentralized nature of the blockchain back-end. However, only providers with a large portfolio of implemented solutions are likely to offer both hybrid and multi-cloud networking services.

A cloud provider’s stance on regulatory policies is also important. Not all providers will offer industry-specific compliance guidelines and data sovereignty regulations, such as GDPR within the EU. Some providers operate within these frameworks and are fully compliant. A provider might also offer the benefits of open-source solutions, which is a huge asset for interoperability, reversibility, and multi cloud strategies.

Very few cloud service providers offer their cloud products with no ingress and egress data traffic fees. These assurances are vital, as they are likely to save you money in the long run. 

Cloud technology to power the blockchain industry

Cloud solutions appear to be the logical choice when it comes to powering your blockchain technology. There are a range of viable cloud technologies that cater to blockchain infrastructure requirements, including:

Bare-metal

A dedicated server gives the user total flexibility to design the software layer, so you get the control you need to design and manage your machine. With cloud-based bare-metal servers, the hardware is maintained by the provider. The solution is delivered with networking features such as enhanced public connectivity bandwidth options, and private vLAN connectivity, helping you meet clustering, and scalability requirements.

Additionally there are built-in hardware capabilities that are a great fit for enhanced blockchain security, such as Intel Software Guard Extension (SGX) allowing dedicated servers equipped with specific CPU chipsets for confidential computing based on hardware encryption.

Public Cloud

Public Cloud solutions are well-suited to the needs of blockchain companies. The technology’s underlying bare-metal resources are shared with more than one business, on top of which the cloud service provider has built the product itself.

Public Cloud solutions enable users to increase efficiency through automation. For example, when using Public Cloud services hypervised via open-source software, such as OpenStack, users can – using the OpenStack CLI, Terraform, or Ansible – achieve this for VM-based automation and management. 

There are also specialised orchestration tools like Kubernetes, with a fully managed master node layer and automations. This form of cloud-based infrastructure, known as Managed Kubernetes, is often used by blockchain developers because it decreases the time-to-market as well as the need for hardware maintenance. By harnessing this technology, DevOps talents can spend more time focusing on proper R&D.

Hosted Private cloud

Hosted private cloud platforms help tackle the pain point of shared resources. Unlike Dedicated Servers, which are Infrastructure as-a-Service (IaaS), Hosted Private Clouds are more likely to be Platform as-a-Service (PaaS) solutions. These clusters are equipped with specialised Hypervisor solutions, from companies such as Nutanix, and VMware. They specialise in building software that manages underlying infrastructure. These solutions include integrated, ready-to-use features offering capabilities such as infrastructure management and monitoring, custom virtualised networking, automation, plus disaster recovery and backup.

These solutions offer improved redundancy features, such as service uptime due to high availability. This improves fault tolerance as the product itself is designed with a minimum of two hosts. If one of the underlying nodes goes down, the overall infrastructure is still operable. In short, there is no single point of failure.

Cloud-based Platform as-a-Service solutions are best suited to the blockchain industry. More specifically, hosted private cloud products offer orchestration tools to develop private containerised environments. VMware and Nutanix offer orchestration products, such as  Tanzu or Nutanix Kubernetes engine. These solutions are fully scalable, secure, and private.

Key considerations when choosing Cloud infrastructure

The use of Cloud in the blockchain industry is growing exponentially. Many cloud services and products support blockchain infrastructure needs – whether it’s Bare-metal, Public Cloud, or Hosted Private Cloud solutions.

Choosing your ideal infrastructure provider for blockchain requires careful consideration. To make this easier we have devised a set of criteria that will help you assess the attributes of key suppliers:

Companies should choose a cloud provider based on key attributes, including:

Blockchain and Cloud may well be a match made in heaven, but the combination requires careful selection and planning with your Cloud provider and a strong partnership to stay ahead of the challenges that are sure to come your way.