Types of Blockchains – Blockchain technology has taken the world by storm and with good reason. It is a decentralized ledger system that eliminates the need for intermediaries to authenticate information and transactions. Bitcoin, the first blockchain, introduced this technology to the world and has been growing ever since.
An essential part of understanding this technology is knowing what type of blockchain is utilized. In this article, we will be discussing the different types of blockchains available today.
Public Blockchains
Public blockchains are open and transparent systems where anyone can participate. There is no control over who can join the network or the data it contains. This type of blockchain is the most common and is utilized in cryptocurrencies like Bitcoin and Ethereum. The main advantage of a public blockchain is that every user has equal access to the information contained within the network.
Private Blockchains
In private blockchains, only verified members are allowed to join the network. Organizations typically use these blockchains to improve their internal processes and record-keeping. The main advantage of a private blockchain is that it offers a higher level of security and eliminates the risk of external interference.
Consortium Blockchains
Consortium blockchains are a hybrid of public and private blockchains. In this type of blockchain, a group of businesses or organizations come together to form a network. Only these members have access to the blockchain and can participate in validating transactions. Consortium blockchains are perfect for businesses that require trusted partners to work together towards a common goal.
Hybrid Blockchains
As the name suggests, this type of blockchain combines two or more blockchain technologies to create a hybrid. The most common is the combination of public and private blockchains, such as using a public blockchain to store data publicly and a private blockchain for more secure data.
Federated Blockchains
Federated blockchains are similar to consortium blockchains, except that the network is governed by a group of top-tier trusted nodes instead of a group of businesses coming together. This type of blockchain is commonly used in banking and finance due to the need for a higher level of security.
Sidechains Blockchain
Sidechains are separate blockchains that operate in conjunction with the main blockchain. They allow for creating specialized systems that can function independently yet provide valid data to the main blockchain when required. Sidechains are used to address scalability issues that arise in large public blockchains.
Permissioned Blockchains
Permissioned blockchains are private blockchains typically used in enterprise settings. They require user authentication before they can access the information within the network. It offers a higher level of security to the data on the blockchain, as users can be verified and authorized to participate in the blockchain.
Conclusion – Types of Blockchains
There are different blockchains available today, each with advantages and disadvantages. Each blockchain offers a unique solution to a problem, from public to private and federated. Understanding the different types of blockchains available can help businesses and individuals choose the suitable blockchain for their needs.
FAQs
What is a blockchain?
A blockchain is a decentralized digital ledger system that records transactions and stores information.
What are public blockchains?
Public blockchains are open and transparent systems in that anyone can participate. There is no control over who can join or the data it contains.
What are private blockchains?
Private blockchains are only accessible to verified members. They are used to improve internal processes and record-keeping within organizations.
How do hybrid blockchains work?
Hybrid blockchains combine multiple blockchain technologies to create a hybrid. The most common is the combination of public and private blockchains.
What are sidechains?
Sidechains are separate blockchains that operate in conjunction with the main blockchain. They allow for creating specialized systems that can function independently yet provide valid data to the main blockchain when required.
