There are four main types of blockchains and in this article, we are going to discuss it’s basic and which type of blockchain is best suited for particular the industry with most benefits.
Why different types of blockchains?
The basic work or aim of a blockchain is to carry out transactions with a secure network. But the blockchain and distributed ledger network vary from one use case to another. If we consider Bitcoin which has introduced blockchain, is a digital cryptocurrency and gets transacted globally through blockchain. This type of blockchain network is called as a public network because people from all over the globe or world can become a node, verify other nodes and do trading of bitcoins.
In another case when any bank is using a private blockchain network, it will be a restricted one because only the authorized members of the bank can access confidential data. So, there will be no one out of the closed network who can have access to bank data. A private network always has limited and authorized nodes that are continuously monitored by a one network administrator. The transmitted information through the private blockchain network never goes out of the network. If any new node wants to get added to a private network, then it has to take permission from the network administrator.
Also Read: How to Build a Career in Blockchain Technology?
Types of Blockchains
There are basically two main types of blockchains: Private and Public blockchain. but there are several variations too such as Consortium and Hybrid blockchains. All types of blockchain share some similarities like Every blockchain has a cluster of nodes and every node can verify, initiate, or receive transactions.
1. Public Blockchain
A public blockchain has no restriction and it is a permissionless distributed ledger system. which means that any person can sign in on a blockchain platform with internet access and can become an authorized node and the part of the blockchain network. Any user of the public blockchain has access to check current and past records, can verify the transactions, and do mining. Basically public blockchains are used for exchanging cryptocurrencies and the most common and popular blockchains are Bitcoin blockchain. Public blockchains are safe and secure if all it’d users strictly follow security rules and regulations. There is only a risk when the participants don’t follow the security protocols in a sincere manner. Litecoin is also an example of a public blockchain.
Advantages: Trustable, Secure and Transparent
Disadvantages: Scalability issue, Requires more energy
2. Private Blockchain
A private blockchain is a restrictive type of blockchain that operates only in a secured and closed network. Such type of blockchains is usually used by the organization or enterprises where only particular members are the participants of its network. Security level, permissions, and accessibility is only in the hands of the organization. private and public blockchains are similar but the only difference is that private blockchain has a small and restrictive network. Private blockchain networks are mostly used for voting, supply chain, digital identity, etc.
Advantages: Speed and Scalability
Disadvantages: Lower Security, Centralization
3. Consortium Blockchain
This is a semi-decentralized type blockchain where a group of organization manages and operates a blockchain network. In Consortium blockchain, multiple organizations can act as a node and also can exchange information. This type of blockchain is generally used by banks or government organizations.
4. Hybrid Blockchain
as the name suggests hybrid blockchain is a combination of both private and public blockchain. It uses the features of both types of blockchains. The hybrid blockchain is flexible and users can join a private blockchain with public blockchains. A transaction in a private network is verified within that network and also, users can release it in the public blockchain to get verified. The public blockchains involve more nodes for verification which increases the security as well as transparency of the blockchain network. Dragonchain is the example of a hybrid blockchain.
Public and Private: Which type of Blockchain is better?
In this article, we have discussed both private and public blockchains and both of them have certain features that differ from one another. The main differences are in terms of security, scalability, and transparency. The private network of a blockchain is not very trustworthy, so one can completely rely on a public network.
Before choosing any blockchain system or your industry, first, it is very important to study about its basics, advantages, disadvantages, and features and mainly what your business requirements are. If you study all the factors in a good manner, you will be definitely achieved your predecided goal for using a blockchain network.
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