Introduction to Blockchain and Types

Introduction to Blockchain

Blockchain is a decentralized, digital ledger that records transactions across a network of computers (called nodes). Each block in the chain contains a number of transactions, and every time a new transaction is added to the block, it is added to the chain and becomes part of the permanent record.

This makes the system very secure, as it is very difficult to alter or tamper with past transactions. The most well-known application of blockchain technology is the first cryptocurrency, Bitcoin. But it has many other potential use cases such as supply chain management, voting systems and many more.

Coming to the Several Types of Blockchain 

There are generally considered to be two major types of blockchain: public and private.

Public blockchain:

A public blockchain is a decentralized network that allows anyone to participate in the network, read and write data, and validate transactions. Bitcoin and Ethereum are examples of public blockchains. In public blockchains, the consensus mechanism is open for anyone to participate and validate the transactions, for example in Bitcoin it is Proof of Work (PoW) and in Ethereum it is Proof of Stake (PoS).

Private blockchain:

A private blockchain, on the other hand, is a network that is permissioned, meaning that only authorized participants can access the network, read and write data and validate transactions.

Private blockchains are often used in enterprise environments where privacy, security, and scalability are important. Private blockchain can use any consensus mechanism as it is permissioned, For example, it can be PoW, PoS, BFT(Byzantine Fault Tolerance) etc.

There are also other variations such as Hybrid and Consortium blockchains which are a mix of public and private blockchain where a group of organizations jointly operate a blockchain network.

Hybrid Blockchain:

Hybrid blockchain is a type of blockchain that combines the features of both public and private blockchains. It allows for both public and private access to the network, depending on the use case and the level of security required. 

This type of blockchain allows for a balance of decentralization and scalability, as well as the ability to keep certain information private while still allowing for transparency in other areas.

Consortium Blockchain:

Additionally, a consortium blockchain is a type of blockchain network in which a group of organizations jointly operate the network. Some aspects of the network are centralized and controlled by the consortium members, while others are decentralized and open to the public. This type of blockchain is often used in industries such as finance, supply chain management and healthcare for its ability to balance security and decentralization.

In summary, the main difference between public and private blockchain is the accessibility and control over the network. Public blockchain is open, decentralized, and accessible to everyone, while private blockchain is closed, centralized and accessible only to authorized participants.

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This information is for educational purposes only and does not constitute investment advice. No person should rely on it to make any investment. Investing carries risks, including the loss of capital. All opinions expressed are subject to change without notice. Past performance is not indicative of future results. Always seek the advice of a licensed investment professional before making any investment.