We have discussed blockchain in previous blogs. Do you know how many types of blockchains there are? With the rise of Bitcoin and other cryptocurrencies, blockchain technology has become more familiar to the public. More companies are planning to adopt blockchain technology into their existing businesses, but limited understanding can make choosing a chain difficult. This article introduces three different types of blockchain.
Three types of blockchain
1. Public blockchain
Public blockchains are chains that anyone can access, send to, receive from, or authenticate transactions on. People around the world can participate through the internet. A public blockchain is often considered completely decentralized because it does not belong to any group or organization and does not involve a third party. Once data is published, it cannot be modified, and transactions are anonymous and public. Bitcoin and Ethereum are examples of public blockchains.
Although public blockchains represent blockchain technology well, they still have operational shortcomings. Because they are completely decentralized, governance requires participants to reach consensus, which can slow updates and iteration. The initial cost of developing a public blockchain is also extremely high, making it difficult to build your own chain without expert support.
2. Permissioned blockchain
A permissioned blockchain uses an access-rights mechanism, which makes it more limited than a public blockchain. It is often considered an undisclosed or private blockchain because authority belongs to an organization and it is not completely decentralized. It is still a decentralized ledger, but it uses specific intermediaries to assist with consensus or transactions.
Although a permissioned blockchain is only partially decentralized, which seems to conflict with blockchain’s original characteristics, it still keeps some important features, including immutable data. Because it uses specific intermediaries to assist consensus, transaction speed is faster and cost is lower. Ripple is an example of a permissioned blockchain.
However, because a permissioned blockchain is not fully decentralized, tokens issued on it may be manipulated and risks can be high. Its more centralized software characteristics can also make it vulnerable to attack, and asset protection may be difficult without a dedicated support team.
3. Consortium blockchain
A consortium blockchain is essentially a type of permissioned blockchain. It is also partially decentralized and does not involve a third party in transactions. The difference is subtle: a permissioned blockchain is usually applied to one enterprise, while a consortium blockchain applies to an entire production chain and is operated by an alliance formed by multiple organizations.
Consortium blockchain applications can make production-chain information more transparent and allow specific personnel to view records at any time. Because of its partially centralized features, entered data cannot be easily modified by a single organization. Its encryption mechanism also addresses important privacy and security issues among enterprises. Hyperledger is an example of a consortium blockchain.
In short, blockchains can broadly be divided into public and permissioned blockchains. Permissioned blockchains run faster and cost less, but their permission mechanisms restrict participation and identities are not completely anonymous. Businesses that want to adopt blockchain technology should review the latest market information and consult a blockchain technology company before making a decision.
Translation supported by AI.