Blockchain

Different types of Blockchains

By August 27, 2018 No Comments
Blockchain

There are more than just one type of blockchains. Based on the problem that we are aiming to solve, we must understand which type of blockchain would be of most use to us and for this to be possible, we need to have clarity on the value that each type of blockchain can add as well as the limitations that it brings with it.

Public Blockchain:

Everybody can download and view information. Anybody can take part in the process of consensus to put this information or block into the public blockchain by coding it in. There are many blockchains that are public by nature. Bitcoin, the ever popular peer to peer cryptocurrency was the earliest developed public blockchain, after which came Ethereum. Ethereum enables anybody to develop smart contracts and decentralized application on its blockchain. Dash and Litecoin are other examples of a public blockchain.

Many believe that a public blockchain is not safe as it is open source. This is untrue. A public blockchain is made secure with the use of cryptography and consensus protocol.

Consortium Blockchain:

A consortium blockchain is under the control of a group of people or entities. It possesses a pre-agreed upon set of nodes as well as users who have the means required to code the information or block. In Trade Finance, the group may comprise of banks that are involved, import/export parties, the ports of the countries that are sending and receiving, customs officials, etc. A number of these involved parties will be provided with the means to code and some or all parties will be provided with read access.

This type of blockchain is different from a public blockchain in that it is not fully decentralized.

Ripple is an example of a Consortium blockchain.

Private Blockchain:

In this type of blockchain, all access or permissions are centralised or in the hands of an organisation. Organisations that have a goal to create their own currencies use this type of blockchain.

One big drawback of this type of blockchain is that as a result of not being decentralized at all, it can only serve as a distributed database. This is advantageous at certain times. One such advantage is that it allows organisations with needs related to compliance and privacy to use blockchain.

The thing to be aware of is that with a private blockchain, the main idea and most attractive feature of blockchain which is decentralization and open source protocols are not present.

An example of this type of blockchain is Blockstack.

 

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