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blockchain is a digital ledger that supports digital asset transactions. The technology is constantly evolving and becoming a prominent part of day-to-day life. One aspect of the technology that remains fairly unknown is that there are different types of blockchains available. In this article, we will cover what the different types of blockchain are and what they can be used for.

Different types of Blockchains

There are different types of blockchain that are suited for different purposes. Here is a brief overview of the most common types of blockchain:

Public blockchains: These are open and permission-less, meaning anyone can join and participate. Bitcoin and Ethereum are examples of public blockchains.

Private blockchains: These are closed networks, where only invited participants can join. Permissioned blockchains are often used by businesses and organizations looking to streamline internal processes.

Consortium or federated blockchains: These are semi-private networks, where multiple entities control the network. consortium chains are often used in situations where multiple parties need to trust each other to some degree, but not necessarily all parties need to be known or trusted by all other parties.

Hybrid blockchains: These are networks that combine aspects of both public and private blockchains. They are often used to give the best of both worlds to businesses or organizations.

Blockchain technology is still in its early stages, and more types of blockchain may emerge as it continues to evolve.

What are public Blockchains?

Public blockchains are open and permission-less, meaning anyone can join and participate. Bitcoin and Ethereum are examples of public blockchains. Public blockchains are often considered to be the most decentralized, because anyone can join and contribute. This also means that there is no single point of failure, as there is no central entity controlling the network.

Public blockchain examples

Bitcoin is the most well-known public blockchain. The Bitcoin network is a Peer-to-Peer Electronic Cash System, which means it is a decentralized system that allows users to send and receive money without the need for a third party, such as a bank or financial institution.

Ethereum is another popular public blockchain. Ethereum is a decentralized platform that runs smart contracts, which are programs that can automatically execute transactions when certain conditions are met. Ethereum was designed to be a more general purpose blockchain than Bitcoin, and has been used to create thousands of different decentralized applications.

Public blockchains: Pros and Cons

Pros:

Decentralization: Public blockchains are decentralized, which means there is no single point of failure. This makes them more resistant to censorship and attack.

Security: Public blockchains are often considered to be more secure than other types of blockchain, because they are constantly being validated by the network of users.

Transparency: Public blockchains are transparent, meaning all transactions are publicly visible on the blockchain. This can help to build trust in the system.

Cons:

Scalability: Public blockchains can often struggle to scale, because all transactions need to be validated by the entire network. This can lead to slow transaction times and high fees.

Privacy: Public blockchains are often not very private, because all transactions are publicly visible on the blockchain.

What are private blockchains?

Private blockchains are closed/permissioned networks, where only invited participants can join. Permissioned blockchains are often used by businesses and organizations looking to streamline internal processes.

Private blockchain examples

R3 is a consortium of over 200 financial institutions that is working on developing a private blockchain platform called Corda. Corda is designed to be used by financial institutions to streamline processes such as trade finance, syndicated loans, and insurance.

Another example of a private blockchain is Hyperledger Fabric, which is an open-source platform that was created by IBM. Hyperledger Fabric is often used by businesses to create private blockchains for supply chain management.

Private blockchains: Pros and Cons

Pros:

Scalability: Private blockchains can often scale more easily than public blockchains, because they don't need to be validated by the entire network. This can lead to faster transaction times and lower fees.

Privacy: Private blockchains are often more private than public blockchains, because only invited participants can join. This means that transactions are not publicly visible on the blockchain.

Cons:

Centralization: Private blockchains are often centralized, because they are controlled by a single entity. This can make them more vulnerable to censorship and attack.

Security: Private blockchains are not always as secure as public blockchains, because they may not be constantly validated by the network of users.

What are consortium blockchains?

Consortium blockchains, also known as federated blockchains, are semi-decentralized networks where only certain invited participants can join. Consortium blockchains are often used by businesses and organizations looking to streamline internal processes.

Like private blockchains, consortium blockchains can often scale more easily than public blockchains, because they don't need to be validated by the entire network. This can lead to faster transaction times and lower fees.

However, consortium blockchains are not always as private as private blockchains, because they may have a larger number of participants. This means that transactions on the blockchain may be publicly visible.

Consortium blockchain examples

One example of a consortium blockchain is Hyperledger Sawtooth, which is an open-source platform that was created by Intel. Hyperledger Sawtooth is often used by businesses to create private blockchains for supply chain management.

Another example of a consortium blockchain is R3 Corda, which is a platform that was created by a consortium of over 200 financial institutions. Corda is designed to be used by financial institutions to streamline processes such as trade finance, syndicated loans, and insurance.

Consortium blockchains: Pros and Cons

Pros:

Scalability: Consortium blockchains can often scale more easily than public blockchains, because they don't need to be validated by the entire network. This can lead to faster transaction times and lower fees.

Privacy: Consortium blockchains are often more private than public blockchains, because only invited participants can join. This means that transactions are not publicly visible on the blockchain.

Cons:

Centralization: Consortium blockchains are often centralized, because they are controlled by a single entity. This can make them more vulnerable to censorship and attack.

Security: Consortium blockchains are not always as secure as public blockchains, because they may not be constantly validated by the network of users.

What is a hybrid blockchain?

A hybrid blockchain is a type of blockchain that combines features of both public and private blockchains. Hybrid blockchains usually have a public part, where anyone can join, and a private part, where only invited participants can join.

Hybrid blockchains often offer the best of both worlds: the scalability of private blockchains and the security of public blockchains.

Hybrid blockchain examples

One example of a hybrid blockchain is Dragonchain, which was created by Disney. Dragonchain combines features of both public and private blockchains to allow businesses to create their own hybrid blockchains.

Another example of a hybrid blockchain is IBM Blockchain, which is a platform that allows businesses to create their own private blockchains or join existing public blockchains.

Hybrid blockchains: Pros and Cons

Pros:

Scalability: Hybrid blockchains can often scale more easily than public blockchains, because they don't need to be validated by the entire network. This can lead to faster transaction times and lower fees.

Privacy: Hybrid blockchains are often more private than public blockchains, because only invited participants can join the private part of the blockchain. This means that transactions on the private part of the blockchain are not publicly visible.

Security: Hybrid blockchains are often more secure than public blockchains, because they have both a public and a private part. The public part of the blockchain is constantly validated by the network of users, while the private part is only validated by the invited participants.

Cons:

Centralization: Hybrid blockchains are often centralized, because they are controlled by a single entity. This can make them more vulnerable to censorship and attack.

Complexity: Hybrid blockchains can be complex to set up and manage, because they have both a public and a private part.

What is a federated blockchain?

A federated blockchain is a type of blockchain that is managed by a group of trusted participants, called federates. Federated blockchains are often used by businesses and organizations to create a private blockchain.

Federated blockchains usually have a permissioned network, where only invited participants can join. This means that transactions on the blockchain are not publicly visible.

Federated blockchain examples

One example of a federated blockchain is Hyperledger Fabric, which was created by the Linux Foundation. Hyperledger Fabric is a platform that allows businesses to create their own private blockchains.

Another example of a federated blockchain is MultiChain, which is a platform that allows businesses to create their own private blockchains or join existing public blockchains.

Federated blockchains: Pros and Cons

Pros:

Privacy: Federated blockchains are often more private than public blockchains, because only invited participants can join the network. This means that transactions on the blockchain are not publicly visible.

Security: Federated blockchains are often more secure than public blockchains, because they have a permissioned network. This means that only invited participants can join the network and validate transactions.

Flexibility: Federated blockchains are often more flexible than public blockchains, because they can be customized to the needs of the business or organization.

Cons:

Centralization: Federated blockchains are often centralized, because they are controlled by a group of trusted participants. This can make them more vulnerable to censorship and attack.

Complexity: Federated blockchains can be complex to set up and manage, because they need to be configured to the needs of the business or organization.

What is the best type of blockchain?

There is no single best type of blockchain. The best type of blockchain for a particular application will depend on the needs of the business or organization.

Public blockchains are best for applications that need to be decentralized, while private blockchains are best for applications that need to be centralized. Hybrid blockchains are a good compromise between these two extremes.

Federated blockchains are best for applications that need to be private and secure, while permissionless blockchains are best for applications that need to be public and open.

When dealing with crypto or NFTs, it is important to choose an exchange that uses a secure blockchain network. SokuSwap is an excellent example that is already used by over 100,000 people. It is a decentralized exchange (DEX) that uses the Ethereum blockchain to trade ERC20 tokens.

SokuSwap is a secure and easy-to-use platform that allows you to buy, sell, or trade crypto without having to worry about the security of your funds.

Frequently asked questions:

How many blockchains are there?

There are many different types of blockchain, and the number is constantly growing. Some of the most popular types of blockchain include public blockchains, private blockchains, hybrid blockchains, and federated blockchains.

Do all cryptocurrencies use blockchain?

No, not all cryptocurrencies use blockchain. Some cryptocurrencies, such as Bitcoin, use a public blockchain. Other cryptocurrencies, such as Ripple, use a private blockchain.

How does a blockchain work?

A blockchain is a digital ledger that records transactions. Transactions are grouped into blocks, and each block is chained to the previous block. This creates a chain of blocks, which is why it is called a blockchain.

Is blockchain secure?

Yes, blockchain is secure. Blockchain uses cryptography to secure transactions. This means that only authorized users can access the data on the blockchain.

Posted 
May 27, 2022
 in 
DeFi Education
 category

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