By AsianMarketCap Official on The Capital
There are mainly four types of Blockchains that have emerged after Bitcoin introduced Blockchain to the world.
1. Public Blockchain
2. Private Blockchain
3. Consortium or Federated Blockchain
4. Hybrid Blockchain
1. Public Blockchain
A public blockchain, as its name suggests, is the blockchain of the public. It is a kind of blockchain which is -‘ for the people, by the people and of the people’
It is non-restrictive, permission-less distributed ledger system. Here no one is in charge and anyone can participate in reading/writing/auditing the blockchain. Anyone who has access to the internet can sign in on a blockchain platform to become an authorized node and be a part of the blockchain network.
The most basic use of public blockchains is for mining and exchanging cryptocurrencies.
Example: Bitcoin, Litecoin, Ethereum
On Bitcoin, Litecoin, and Ethereum blockchain networks, anyone can do the following things that make it truly public blockchain.
— >Anyone can run BTC/LTC/ETH full node and start mining.
— >Anyone can make transactions on BTC/LTC/ETH chain.
— >Anyone can review/audit the blockchain in a Blockchain explorer.
2. Private Blockchain
Private blockchain, as its name suggests, is a private property of an individual or an organization. It is a restrictive network or permission blockchain operative only in a closed network.
Unlike public blockchain, here there is an in-charge who looks after important things such as read/write or whom to selectively give access to read or vice versa. The level of security, authorizations, permissions, accessibility is in the hands of the controlling organization.
That’s what makes it centralized again where various rights are exercised and vested in a central trusted party but yet it is cryptographical secured from the company’s point of view and more cost-effective for them.
But it is still debatable if such a private thing can be called a ‘Blockchain’ because it fundamentally defeats the whole purpose of blockchain that Bitcoin introduced to us.
Private blockchain networks are deployed for voting, supply chain management, digital identity, asset ownership, etc.
- Example: Bankchain, Multichain, Hyperledger
In such types of blockchain:
— >Anyone can’t run a full node and start mining.
— >Anyone can’t make transactions on the chain.
— >Anyone can’t review/audit the blockchain in a Blockchain explorer.
3. Consortium or Federated Blockchain
This type of blockchain tries to remove the sole autonomy which gets vested in just one entity by using private blockchains. It is a semi-decentralized type of blockchain where more than one organization manages a blockchain network.
Basically, there is a group of companies or representative individuals coming together and making decisions for the best benefit of the whole network. Such groups are also called consortiums or a federation that’s why the name consortium or federated blockchain.
It is a way of achieving things much faster and it also has more than one single point of failure which in a way protects the whole ecosystem against a single point of failure.
Consortium blockchains are typically used by banks, government organizations, etc.
- Example: R3, Energy Web Foundation
In such type of blockchain:
— >Members of the consortium can run a full node and start mining.
— >Members of the consortium can make transactions/decisions on the chain.
— >Members of the consortium can review/audit the blockchain in a Blockchain explorer.
4. Hybrid Blockchain
A hybrid blockchain is a combination of the private and public blockchain. It uses the features of both types of blockchains that is one can have a private permission-based system as well as a public permission-less system.
The hybrid system of blockchain is flexible so that users can easily join a private blockchain with multiple public blockchains. A transaction in a private network of a hybrid blockchain is usually verified within that network. But users can also release it in the public blockchain to get verified. The public blockchains increase the hashing and involve more nodes for verification. This enhances the security and transparency of the blockchain network.
- Example: Dragonchain
SUMMARY
We require more types of blockchain because keeping such blockchains would solve problems such as:
1. One no longer needs to rely upon huge servers.
2. They are cost-effective and fast.
3. They reduce the need for more trusted parties because you can implement smart contracts instead of them.
4. Gives options for rights and access management while leveraging the same blockchain technology and reaping its benefits.
5. Reduces redundant work.
6. Distributed consensus between interested parties becomes fast even though you are geographically segregated.
Because of all these, different types of blockchain are required for different types of industries. Where we require privacy and control, private & consortium blockchain will be a good option, and where we require openness, as well as censorship resistance public blockchains, are a must need.
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Understanding the Different Types of Blockchain in the Digital Market Today was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
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