What Is Blockchain?
A digital ledger of transactions by recording information in a way that makes it difficult or impossible to change, hack, or get cheated by the system. The log is duplicated and distributed across the entire network of computer systems in blockchain, where each block in the chain contains several transactions. Every time a new transaction occurs, they are added to every participant's ledger.
Blockchain stores information in sets of batches called blocks and these blocks are linked together in a continuous line to form a chain-like structure. Hence it is called Blockchain.
Different Types Of Blockchain
There are mainly four types of blockchain technologies, let us have a look in detail at each of them:
1. Public Blockchain:
* Public blockchains are designed to be a non-restrictive, fully decentralized, and permission-less distributed ledger system.
* They allow anyone to be a part of the blockchain network and participate as users, miners, developers, or community members.
* Anyone can sign in on a blockchain platform to become an authorized node, and transactions made using public blockchains are fully transparent. Meaning anyone can access current and records transactions, verify transactions, or do proof-of-work.
* Public Blockchains are mainly used for mining and exchanging cryptocurrencies but can be highly censorship-resistant because it is open to use by all.
* Some public blockchains are bitcoins, Ethereum, and litecoin, and public blockchains are mostly secure. However, it can be risky if security protocol and methods are not followed properly.
2. Private Blockchain:
* A private blockchain is a blockchain that requires permission and is operative in a closed network. Thus, Private blockchains are more centralized.
* Many enterprises who want to collaborate and share data but do not want their sensitive business data visible on a public blockchain uses private blockchain technology. These are organizations where only selected members are participants of a blockchain network.
* The entities running the chain control the level of security, authorizations, permissions, accessibility and may or may not have a token involved with the chain.
* Public Blockchain technology is mainly used for identifying digital ID, checking asset ownership, voting, supply chain management, and many tasks.
* Some examples of private blockchains are multichain and hyper ledger projects-Fabric, Corda, and Sawtooth.
* Public blockchains are also called permissioned blockchains because they have small and restrictive networks.
3. Consortium Blockchain:
* A consortium blockchain is considered a semi-decentralized type because they are managed by a group of organizations rather than a single entity.
* This is contrary to a private blockchain governed by a single entity rather than a group of organizations.
* This collaborative model offers more than one entity to act as a node to exchange information, do mining, or compete against each other.
* Consortium blockchains can perform more efficiently. Hence they are typically used by banks, supply chains, government organizations, etc.
* Some examples of consortium blockchains are Quorum, R3, etc.
4. Hybrid Blockchain:
* A Hybrid blockchain, as the name “Hybrid” tells, is a combination of both the private and public blockchain.
* It uses the features of both types of blockchains, that is, the privacy benefits of a private blockchain as well as the security and transparency benefits of a public blockchain.
* With such a hybrid network, users can control what data they want to make public or transparent and who gets access to information stored in the blockchain.
* The hybrid system of blockchain is known for its flexibility, giving users complete control over their data and access control.
* The combined hash power from the public and private blockchain networks enhances the security and transparency of the hybrid blockchain network.
* Some examples of hybrid blockchain are IBM food trust and Dragonchain.
Why Do We Need Different Blockchain Technology?
Now that we know what blockchain is and the different types of blockchains, let us discuss why we need blockchain in our business.
There are various blockchain use cases and benefits, but primarily blockchain technology is used to make transactions or exchange information over the bitcoin protocol.
Bitcoin is a digital cryptocurrency and a public blockchain network because people worldwide can become a node and trade using bitcoins.
For instance, in the case of a bank, a private blockchain network is a regional network where only the authorized members of the bank can access confidential information. No one out of this closed network can gain access to bank data.
Like these scenarios, there are different ways in which the various blockchain networks come into action depending upon the problem statement and requirements of the organizations.
Hopefully, today's article will help you to choose the best blockchain technology for your entity.