The fundamental function of blockchain is to conduct transactions on a secure network. This is why people utilize the blockchain technology and also ledger in various situations. Multichains can be set up to block access by unauthorized persons to sensitive information.
This information is not accessible to the general public and is only accessible to authorized personnel within the company. It’s up to the organization what type of organization it needs to select to conduct their business.
Why Do We Need Different Types of Blockchain?
Before we begin a real discussion on blockchain-related kinds, let’s find out the reasons why we require blockchains in the first first place.
The first time blockchain technology was first introduced to the world it was a public type of blockchain with a cryptocurrency usage. It’s difficult to comprehend the motives of its creators, but in general, it was able to provide the idea that distributed ledger technology (DLT).
The DLT concept revolutionized the way we tackle problems within us. It enabled organizations to work independently of the central authority.
Distributed technology can eliminate the disadvantages of centralization. However, it has as a whole, it brought lots of additional issues to resolve when it involves applying blockchain technology to various situations.
Different Types of Blockchain Technology
Public Blockchain
The public blockchain a free unrestricted, permission-less distributed ledger. Anyone with access the internet can sign up on a blockchain platform in order to be an authorized node and be participant in the Blockchain network.
A user or node that is member of the blockchain public is legally authorized to be able to access past and current records, verify transactions , create proof-of-work for an inbound block, as well as perform mining.
The most basic uses of blockchains for public use is to exchange and mine crypto currencies. Therefore, the most popular publicly accessible blockchains include bitcoin as well as Litecoin blockchains.
Blockchains that are public are generally safe when users adhere to security guidelines and procedures. But, they are only danger if users fail to adhere to security protocols with a sincere.
What Are the Advantages?
Blockchains that are public can be very effective in what they accomplish. The advantages of this include.
- Anybody can be a part of the blockchain that is public.
- It creates trust within the entire community of users.
- Everyone is motivated to contribute to the improvement of the network that is public.
- The public blockchain doesn’t require any intermediaries in order to function.
- Blockchains that are public can be safe based on the number of nodes that participate
It gives transparency to the entire network because the information can be verified for purposes of verification.
What Are the Disadvantages?
They have a problem with an inability to process transactions. It could take anywhere from a few minutes to several hours until a transaction is completed. As an example, Bitcoin is able to perform the process of seven transactions every second, compared with 24,000 transactions per second processed by VISA.
This is due to the fact that it takes time to resolve the mathematic problems, then finish the transactions.
Another issue with public blockchain is the ability to scale. They are simply not scalable because of how they function. More nodes are joined, the more clumsier and more slow the network gets.
There are steps to address the issue. For instance, Bitcoin is working on making the network more efficient by taking transactions off chain in order to make the Bitcoin network faster and more flexible.
2. Private Blockchain
Private blockchains are one-way or permission-based blockchain which operates only within a closed network. Private blockchains are typically utilized within an organization or enterprise where only selected members can be part of a blockchain.
The degree of security the authorizations, authorizations, and access to the blockchain is in the control of the organization that controls it. Private blockchains have the same capabilities to a public one, however they are a smaller and less restrictive network. Private blockchain networks can be used to vote as well as supply chain management. digital identity, asset ownership and so on.
What Are the Advantages?
Private blockchains are very fast. This is due to the fact that there are fewer participants as compared those on the open blockchain. It requires less time to get the blockchain to achieve consensus, which results in quicker transactions.
Blockchains that are private can be more flexible. This is because that in a private blockchain, just a few nodes are permitted to validate transactions.
It does not matter if the network expands; this private blockchain can continue to function with the same speed and effectiveness. The main issue to this is the centralization aspect of decision-making.
What Are the Disadvantages?
Private blockchains aren’t decentralized. This is among the main negatives of private blockchains and is in opposition to the fundamental premise for blockchain technology that uses distributed ledgers or blockchain generally.
It is difficult to establish trust within the private blockchain isn’t easy since the central nodes make the final call.
Additionally, because there are just a handful of nodes in this network so the security isn’t very good. It is crucial to realize that it’s likely to be lost security in the event that one or more nodes are sabotage and break the consensus process used in the network.
3. Consortium Blockchain
The blockchain of a consortium is one that has multiple organizations manages a network of blockchains. This is different from the situation we encountered in a private one, which is controlled by one organization.
A number of organizations can be the node in this form of blockchain, and exchange data or conduct mining. The blockchains of consortium are generally used for institutions like banks or government institutions, etc.
What Are the Advantages?
It allows for better customization and more control over the resources.
- Blockchains that are part of a consortium have greater security and provide higher scalability.
- It’s also more efficient when compared to blockchain networks that are public.
- Uses well-defined governance systems.
- It provides access controls.
What Are the Disadvantages?
Although it’s secure however, the entire network may be compromised by the integrity of the member.
- It’s not as transparent.
- Regulations and censorship could affect the functionality of networks.
- It’s also less ad-hoc in comparison to other forms of blockchain.
4. Hybrid Blockchain
Hybrid blockchains are a mixture of both the public and private blockchain. It combines the advantages that are common to both types of blockchains, which means that it that can be an private permission-based system and an open permission-less system.
In this mixed network, people have the ability to determine who is able to access the data that is stored on the blockchain. Only a small portion of records or data from the blockchain is allowed to be made public, while with the remainder kept confidential within an encrypted private network.
The hybrid blockchain system allows users to be flexible and can connect a private network that is connected to several blockchains, including public ones.
Transactions in an encrypted private network in the hybrid blockchain is typically checked by the network. However, users are able to release it to the public blockchain to be verified. The public blockchains boost the hashing process and include more nodes to verify. This improves security and security in the network of blockchain.
What Are the Advantages?
It operates in a closed ecosystem without the requirement to make anything accessible to the public.
- Rules can be altered in accordance with the requirements.
- Hybrid networks also aren’t vulnerable to 51% attack.
- It provides privacy while connected to a public network.
- It provides good scalability when as compared to the traditional public network.
What Are the Disadvantages?
- Not totally transparent.
- The upgrade on to hybrid blockchain could be a problem.
- There isn’t any incentive for taking part and contributing to the community.
This brings us to the conclusion of our various types of blockchain-related guide. It is generally recommended to go with a private blockchains when you’re a business and wish to make all of your data publicly accessible.
Additionally, if would like to have more transparency on your network, then opting to a public blockchain is an alternative. But they’re not well-suited to enterprise scenarios.
