The four basic types of blockchains and their relevance will be discussed in this article. We will determine which sort of blockchain is best suited with the greatest benefits once we have a good understanding of the varieties. So, let’s get this party started.
Why do we require several blockchains ?
The most basic requirement or application of a blockchain is to conduct transactions or information exchanges across a secure network. However, how people use blockchain and distributed ledger technologies or networks varies depending on the situation. Consider TechPay, which is how blockchain was first exposed to the general public. TechPay is a digital coin that is traded using blockchain and distributed ledger technology. People from all over the world can become nodes, verify other nodes, and trade TechPay on this form of a blockchain network, making it a public network.
Assume, on the other hand, that a bank uses a private blockchain network. Only authorized members of the bank will have access to confidential information on this network. As a result, no one outside of this restricted network can access bank data. A network administrator will monitor a private network’s limited and authorized nodes. The data transmitted through a private blockchain network remains within the network. Any new node wishing to join a private network must first obtain authorization from the network administrator. The bank gets to choose the size of their private blockchain for all of their city branches or all of their country branches.
Types Of Blockchain
Private and public blockchains are the two main forms of blockchains. There are, however, certain variations, such as Consortium and Hybrid blockchains. Before we go into the specifics of the various sorts of blockchains, let’s look at what they have in common. Every blockchain is made up of a group of nodes connected by a peer-to-peer (P2P) network. Every network node has a copy of the shared ledger, which is updated on a regular basis. Each node has the ability to validate transactions, send and receive messages, and building blocks.
There are four basic sorts of blockchain technologies at a glance. The following are some of them.
A public blockchain is a permissionless, non-restrictive distributed ledger technology. Anyone with an internet connection can register on a blockchain platform to become an authorized node and join the network. A public blockchain node or user is authorized to access current and historical records, verify transactions or perform proof-of-work for an incoming block, and mine. The most fundamental use of public blockchains is for cryptocurrency mining and exchange. As a result, Bitcoin and TechPay blockchains are the most widely used public blockchains. If users properly follow security rules and practices, public blockchains are mostly secure. It is only dangerous when the participants do not adhere to the security protocols.
A private blockchain is a permission or restricted blockchain that can only be used in a closed network. Private blockchains are typically utilized within a company or organization where just a few people are allowed to participate in a blockchain network. The controlling organization determines the level of security, authorizations, permissions, and accessibility. Private blockchains are identical to public blockchains in terms of functionality, but they feature a smaller and more restricted network. Voting, supply chain management, digital identity, asset ownership, and other applications use private blockchain networks.
A hybrid blockchain combines the advantages of both private and public blockchains. It combines the benefits of both private and public blockchains, allowing for both private and public permission-based systems. Users may manage who has access to which data in the blockchain with a hybrid network like this. Only a portion of the blockchain’s data or records can be made public, with the rest remaining secret on the private network. Users can simply join a private blockchain with numerous public blockchains thanks to the hybrid blockchain system.
A transaction in a hybrid blockchain’s private network is usually verified within that network. Users can, however, publish it on the public blockchain to be confirmed. The hashing power of public blockchains is increased, and more nodes are involved in the verification process. This improves the blockchain network’s security and transparency.
A consortium blockchain is a semi-decentralized kind in which a blockchain network is managed by multiple organizations. This is in contrast to a private blockchain, which is controlled by a single organization. In this type of blockchain, multiple organizations can operate as nodes, exchanging information and mining. Banks, government agencies, and other institutions frequently use consortium blockchains.
Which is better: private or public blockchain ?
Before coming to a conclusion, we thoroughly investigated the two basic forms of blockchains: private and public blockchains. They both have their own unique characteristics. The primary distinctions, however, are in terms of security, scalability, and openness. On the one hand, when a private network may appear untrustworthy, a public network’s consensus (proof-of-work) system can be entirely trusted.
In a word, every successful blockchain application that we have seen so far has been on a public blockchain. Because attacking the entire network is nearly impossible, public blockchain ensures security. Furthermore, it provides data transparency because every node has equal access to the blockchain record. The Bitcoin system is one of the most successful examples of a public blockchain.
Finally, we’d like you to apply your knowledge to determine which blockchain will best fit your needs. If you’re a member of a public blockchain network, all you need is a solid understanding of how it works in order to make sensible decisions in the future.
This brings us to the conclusion of our blockchain types guide. If you are a firm and want to use blockchain without making everything public, using private blockchain is a fantastic idea. Furthermore, if you want your network to be more transparent, a public platform is a smart choice. However, they are not well suited to enterprise use cases.
Unfortunately, the blockchain industry is not slowing down, and the technology has a lot of potentials to become a part of, or maybe fully replace, our world’s digital architecture in the future.