Different Types of Blockchain Explained
Know Your Blockchain!
Since the inception of bitcoin in 2009, blockchain has served as a disruptive technology by crossing almost every industry's boundaries. Blockchain as a distributed ledger technology is now being utilized in all main industries, including retail, insurance, healthcare, life sciences, agriculture, and scientific research.
Different types of blockchain technology include public, private, consortium, and hybrid blockchains. Here's a video to help you out,
What is Public Blockchain
Public blockchains are open source and therefore allow everyone and anyone included in the consensus to view transactions. A public blockchain is accessible publicly and puts no restriction to can be a validator or participate. In this blockchain, no one has complete control over the network. This helps maintain data security and aids immutability since one person has no authority or power to manipulate the blockchain. This power or authority is divided equally among every node present in the network, so public blockchains are referred to as fully distributed. Examples of public blockchains are ethereum and bitcoin.
All transactions in public blockchains are completely transparent, which is why anyone can evaluate the details of any transactions. Public blockchains are fully decentralized, with no entity or individual controlling the transactions recorded in the blockchain. Additionally, no entity or individual can change the order of how they are processed. Public blockchains are also highly censorship -resistant because any individual can join the network irrespective of nationality, location, etc. This is the reason why authorities have no ability to shut them down. Lastly, all public blockchains have a token linked with them, which is generally designed to reward and incentivize network participants.
What is Private Blockchain
Private blockchains are also called permissioned blockchains. Private blockchains have restrictions as to who can participate and access it in both transaction and validation. Permissions to access the blockchain are only given to pre-chosen entities and individuals. These entities or individuals are selected by the respective authority and are provided permission by blockchain developers while creating the blockchain application.
The network administrator is tasked with giving permissions to new users or revoking them from an existing user. Private blockchains are primarily utilized in private organizations to keep sensitive information only available to certain entities or individuals in the organization. Since private blockchains are closed, the data becomes out of reach from external entities as it is only available within the organization. Examples of private blockchains are R3 Corda and Hyperledger.
What is Consortium Blockchain
In this blockchain, certain nodes are tasked with controlling the consensus process, while other nodes are only allowed to participate in the blockchain transactions. Consortium blockchain has certain features of both private and public blockchains. It is public since various nodes share the blockchain and private since the nodes with access to the blockchain are restricted.
There are two types of users in consortium blockchain. The users who have control of the blockchain and can decide who has permission to access the blockchain. Another user can only access the blockchain. This blockchain is utilized when organizations can share the blockchain but can restrict data to themselves and keep it secure from public access.
What is Hybrid Blockchain
Dragonchain is an example of a hybrid blockchain. Hybrid blockchain combines the privacy of private blockchain and the transparency and security of a public blockchain. This gives organizations great flexibility to select what data is transparent and public and what data is kept private.
Why We Need These Types of Blockchain
Public blockchains are trustable since entities or individuals are not required to personally know or trust the other nodes as the proof-of-work process ensures that there can be no fraudulent transactions. They are also secure because of the cryptogenic encrypting methods employed.
Transparency and being open source is also key, and it is achieved through having copies of digital ledgers and blockchain records available at each authorized node. These blockchains have issues with energy consumption, which is high. This is because of the proof-of-work process, which highly consumes energy because of the specialized systems required to run special algorithms.
Private blockchains have greater speeds compared to public blockchains. This means that its transaction per speed (TPS) rate is greater in private blockchains that public blockchains. Private blockchains are also more scalable compared to public blockchains. This is because organizations can select the size of their private blockchain according to their needs.
For example, an organization that requires a blockchain of 50 nodes can easily implement one that can be expanded in the future. Nonetheless, this blockchain requires trust-building before the transmission of confidential information in the network. A private blockchain network has a reduced number of participants or nodes, which increases the risk of a security breach. Centralization is also a disadvantage for this blockchain.
You employ a suitable type of blockchain only when a certain requirement arises. But if you're someone who is trying to make a career in it, I'd recommend you to pursue this blockchain certification course to better land a job in this industry.
I know 2020 has been hard on all of us, but believe me, blockchain is growing and it'll not stop till it has changed our lives for good.