Blockchain Revolution: Part Two
The key types of blockchain
This is the second post of the series ‘Blockchain Revolution’. Now that we have talked about basics of blockchain and its application, let’s turn our attention to the different types of blockchain.
When it comes to blockchain, there are mainly three types including- public blockchain, private blockchain and consortium blockchain. Apart from these they are also classified as public and private permissioned blockchains, but those are not covered in this post. We have rather focused on the basic types to help you better understand the fundamentals of blockchain.
Public blockchain
A public blockchain is completely open where anyone can contribute to it. This type of blockchain is not controlled by a central authority, anyone can participate, make transactions on the blockchain and review it at any point of time. However, this begs the question that if there is no centralized authority, who makes decisions and validates the chain? The answer is, the participants of the network who contribute to the blockchain. And the validation is done by consensus algorithms — a topic that will be covered in our next post. Common examples of public blockchains include Ethereum, Bitcoin blockchain and Litecoin blockchain.
Private Blockchain
Private blockchain is controlled by an individual or an organization. Unlike public blockchain it is controlled by a centralized authority, who reviews the blockchain and contributes to it. The disadvantage with this type of blockchain is that it makes the whole process centralized. Transactions cannot be viewed publicly as the ledger is not accessible or available for public use, in a way this undermines the very purpose of this technology — decentralization.
Consortium blockchain
Consortium blockchain is a type of private blockchain but without the centralized authority feature, it allows multiple individuals or organizations to not just participate but also be a part of the decision-making process. Now, make no mistake, this is not open for public use, only individuals and organizations that are part of this network can review and contribute to the blockchain. The advantage of this type of blockchain is that while the network is partially centralized, it does not have a single authority controlling it, rather it enables a consortium of entities to control and make decisions. This type of blockchain is particularly applicable where two entities want to keep the data only between them and not make it public. Common consortium blockchain includes HyperLedger and R3.
The focus of our next post is the different consensus protocols used by the blockchains. Stay tuned to further understand how this peer-to-peer network functions and what is the mechanism used to achieve consensus decisions-making.
