Different Blockchain Types: Public, Private, Hybrid
The journey to the crypto basics continues! Today, Superorder tells about blockchains, their features, advantages, and disadvantages. The article will be useful for all traders, investors or crypto geeks who want to grasp the difference between blockchain types once and forever. We promise to keep things simple yet in-depth.
And if you already know about public and private chains, check out the guide dedicated to blockchain alternatives — other DLT versions.
Blockchains for Everyone
It’s a big question of whether Satoshi Nakamoto realized the consequences of the Bitcoin launch. But now we should be thankful for two things: cryptocurrencies and blockchains. Presented as the tech basement for crypto payments, the blockchain concept turned into an independent development area that is presented in nearly all sectors, from finance to government. And different parties use different blockchains today.
Hope, you know how the system works. Thus, let’s move to the next point — which features are common for all blockchain types. Here are these characteristics that define the blockchain system as it is:
- A sequence of linked blocks. According to the name, each blockchain is a database of serially connected elements. It’s possible to add new blocks but not modify, delete or replace the existing ones.
- Blockchain copies for nodes. Each blockchain structure relies on nodes — peer participants that hold copies of the whole chain. Thus, databases are shared between users and can’t be modified from one central point.
- Consensus. Put simply, it’s a mechanism used by nodes to agree on various network conditions. Consensus concepts help participants to validate data, control fraud, and keep blockchains secure and transparent simultaneously.
Overall, there are two main types of blockchains: public and private ones. Hybrid systems such as consortium blockchains exist on the edge of these two structures. Further, we review both basic types and their hybrids.
Public
Also known as permissionless blockchains, these systems are open for everyone. Any user can join the network by downloading the required software and becoming a node. All participants can view transactions and validate them — nobody can prevent volunteers from joining. Hence, permissionless systems rely heavily on consensus mechanisms such as PoS or PoW because they should prevent frauds from gaining an advantage.
Key features:
- Both decentralized and distributed.
- Focus on decentralization instead of scalability.
- No restrictions on joining the system.
- More difficulties in accepting changes.
- Traditional consensus options like PoW or PoS.
- Examples of public chains are Bitcoin, Ethereum, and other cryptocurrencies.
Private
Unlike the previous type, this one includes permissioned blockchains. They are located on the other pole, metaphorically. Private systems have strict rules on who and how can join the network, check info, and validate transactions. Generally, such blockchains take the distributed structure but remove the ideas of full transparency. They are just enterprise solutions with a clear hierarchy and role-based access.
Key features:
- Distributed but not decentralized.
- Focus on scalability instead of decentralization.
- Only the chosen members can join.
- Top-down control destroys P2P equality.
- Validators are appointed by leaders, without consensus.
- Examples of private chains are Quorum, Hyperledger Fabric, and R3 Corda.
Hybrid
The last type combines features from two previous ones. To be precise, there are different hybrid systems but we will focus on one example — consortium blockchains. Instead of “open-to-everyone” or “top-down” types, this version features a few peer parties that act as validators. Also, hybrids can include both permissioned and permissionless parts. Consortium chains often act as systems for companies that want to work together.
Key features:
- Decentralized and distributed but not open.
- Focus on parallel decentralization, scalability, and security.
- Members are chosen but also equal.
- Several permissioned and permissionless structures can exist.
- Used to connect different businesses.
- Examples of hybrid chains are XinFin and Dragonchain.
One Type to Rule Them All
At the end of the day, it’s meaningless to talk about better or worse types. All three versions are different, all of them have strengths and weaknesses. The case is that they were created for different purposes so it’s essential to choose relevant structures depending on your tasks. For instance, public chains foster decentralization at the cost of speed while private ones are centralized but powerful.
It looks like that consortium and other hybrid blockchains have all chances to rise soon. The question is: can they provide the required level of decentralization, security, and scalability to meet the demands of different parties?
