Let us discuss about What are the different types of Blockchains.
Categories of Blockchain
Fundamentally, blockchains may be divided into permissioned and permissionless categories according to access and participation rights.
Permissionless blockchains: Anyone may join and take part in permissionless blockchains without any limitations or access control. Every node involved is at the same level. All users may see all transaction details, and since no special authorisation is required to participate, users frequently enjoy anonymity. It is not necessary to protect against bad actors.
- High transparency, resistance to censorship (since there is no central authority), and robust security (because it is impossible to hack or corrupt every node) are among the benefits.
- Low performance/speed (more users), resource consumption (particularly Proof-of-Work), and less privacy are some drawbacks.
Permissioned blockchains: Only authorized nodes or participants who have been invited or approved by the governing authority are allowed access to permissioned blockchains. Permission levels, security, authorizations, and accessibility are all determined by the governing entity. To ensure maximum privacy, data is usually kept in a centralized repository that is only accessed by authorized individuals.
- Benefits include flexibility/customizability, control (by the central institution), and privacy (outsiders cannot access).
- The fact that gatekeeping increases the possibility of corruption (collusion) and that they are not completely decentralized, which allows owners to alter the regulations, are drawbacks.
What are the different types of Blockchains
Public, private, hybrid, and consortium blockchains are the four basic categories into which blockchain networks may be generally divided. Every kind has distinct traits, advantages, drawbacks, and applications.
Below is a thorough description of each kind:
Public Blockchain
Meaning: A permissionless, non-restrictive distributed ledger system is called a public blockchain. Anyone with an internet connection can join the consensus protocol as a validator by sending transactions to it. Since it is open access, anybody may sign up for the network.
Characteristics: Public blockchains are intended to be totally decentralised and open. The network is not governed by a single body. They function on a peer-to-peer network instead, in which each member has access to a copy of the complete ledger. They use consensus methods like PoW or PoS to validate transactions and secure the network. Recording transactions on a public ledger allows everyone to check transaction history and data quality, ensuring transparency. Pseudonyms are frequently used by participants, who are identifiable by their public keys rather than their private information.
Benefits
- Participants don’t have to worry about other nodes because it is trustworthy and has algorithms to identify fraud.
- Because of its scale and wider spread of records throughout the network, it is secure. Once captured, data cannot be changed.
- Provides pseudonymity or anonymity, enabling safe transactions without disclosing personal information.
- Because the network is decentralized, no single platform is responsible for maintaining it; each user has a copy of the ledger.
- Totally independent of organizations; even in the event that the original firm goes out of business, the network can still function.
- There is a high level of network transparency.
- Users may decide on network upgrades democratically with consensus methods.
- Since source code is often open source, independent verification and bug detection are made possible.
Drawbacks
- Because of the amount and time needed for verification through intricate consensus procedures, transaction execution might be sluggish.
- A popular consensus method called Proof of Work (PoW) uses a lot of energy and substantial computer power.
- Governmental acceptability and implementation speed may be hampered by the absence of a central authority.
- Limited scalability as a result of the technology’s frequent need for real-time updates on all transactions, both past and present.
- excessive environmental effect due to mining-related energy use and e-waste.
- For instance, if a majority of users take control, the technology may be abused by a “51% attack” even if it is resistant to change.
- Due of their public character, they might not be appropriate for private enterprises.
Applications: Mostly utilized as a distributed ledger for digital currencies like Ethereum and Bitcoin. Can be used to digital assets such as non-fungible tokens (NFTs), electronic notarization, public property ownership records, and decentralized apps (dApps). They are perfect for organizations like NGOs or social support groups that are based on openness and trust.
You can also read What Are Smart Contract Challenges, Features & Developments
Private Blockchain
Meaning: A private blockchain is a network that is restricted or permissioned and only functions in a closed setting. Only authorized users are permitted to participate.
Characteristics: A private blockchain is usually governed by a single organization or organization, in contrast to public blockchains. Access control is crucial since only permitted users may connect, guaranteeing that every node is recognized and checked. Permission levels, security, authorizations, and accessibility are established by the governing entity. They may be tailored to a company’s unique requirements and are often smaller in scope than public blockchains. Sensitive information can be communicated only with approved parties or kept off-chain, improving privacy. Consensus procedures and other protocols can be tailored by organisations.
Benefits
- Faster transaction speeds since there are fewer nodes that need to be verified and the size is less.
- Scalability may be chosen and changed by hand.
- Businesses need a higher level of privacy for reasons of confidentiality.
- Balanced functioning and better performance because only certain people may access it.
- Permissions and access are completely within the discretion of the governing organization.
- Permits the blocking of access to certain information by third parties.
- Because of its small size, simpler consensus mechanisms are frequently employed.
Drawbacks
- Less distributed than blockchains that are open to the public. Critics contend that because they do not adhere to the fundamental decentralization principle, they are not “true” blockchains.
- Because there are fewer nodes and a greater possibility of manipulation, there is less security and greater susceptibility than with public chains. The consensus may be jeopardised by a few rogue nodes. Since the ruling entity most certainly owns 100% of the resources used to create blocks, a “51% attack” is not necessary.
- Building trust is more challenging because to their centralised character; they may be used by companies for misconduct.
- The system as a whole may be in jeopardy if a few nodes fall down.
- Because source code is frequently locked and private, external auditing and validation are limited.
- Participants cannot remain anonymous.
- Unlikely to exploit public chains’ enormous processing capacity for security.
- They can resemble unwieldy databases because they lack the competitive “race” seen in public chains. should be seen suspiciously in the absence of a well-defined security model.
Applications: Ideal for protecting data without making it public knowledge. Businesses use it for asset management, voting, and internal auditing. Can be used for corporate solutions needing data privacy, supply chain management for monitoring products, and the healthcare industry for sharing private patient information. Hyperledger Fabric, IBM’s blockchain technology, Hyperledger, and Corda are a few examples.
You can also read Consensus Mechanisms In Blockchain: How Networks Agree
Hybrid Blockchain
Meaning: Both private and public blockchain components are combined in a hybrid blockchain. It has a combination of limited (permission-based) and open (permissionless) systems.
Characteristics: This kind enables businesses to manage who has access to particular blockchain-stored data. While the remainder of the data or records are kept secret within the private network, a portion of them may be made public. Although records and transactions are normally kept private, they may be checked when necessary, for instance, by granting access via a smart contract.
Although it is stored within the network, confidential information may still be verified. The hybrid blockchain cannot change transactions, even if it is owned by a private company. Because of its adaptability, individuals may join a private blockchain that communicates with several public blockchains with ease. When a person first joins, they usually have complete access, and their identity is kept private till they transact, in which case the counterparty learns about it.
Benefits
- Because hybrid nature keeps hackers from launching a 51% attack, certain portions of the technology operate within a closed environment.
- Allows for contact and verification with third parties while maintaining privacy protection.
- Provides higher scalability by enabling transactions that are quicker and less expensive than those on public blockchains.
- Very adaptable architecture that upholds openness, security, and integrity.
- Gives the controlling company the ability to choose participants and determine whether transactions are suitable for public disclosure.
- Gives you control and freedom over your data.
Drawbacks
- Efficiency-wise, implementing and maintaining a hybrid blockchain might be difficult.
- Due to the possibility of information shielding, transparency is incomplete.
- There might not be any incentives for network membership in the closed environment.
- Network upgrades may be challenging.
Applications: Offers a solution for sectors where data must be both publicly accessible and privately shielded. Relevant to the government, financial institutions, real estate, and healthcare sectors. They can be used to simplify procedures in retail. The XRP coin and the Ripple network are two examples.
Consortium Blockchain
Meaning: A consortium blockchain, also referred to as a federated blockchain, is run by several organizations as opposed to just one. It blends aspects of private and public blockchains.
Characteristics: This kind involves a collection of organizations working together to develop and manage the blockchain. These consortium members are in charge of transaction validation and network management. Because it is permissioned, only specific people or organizations are permitted to take part. Preset nodes, which comprise validator nodes that send, receive, and validate transactions as well as member nodes that have the ability to send or receive transactions, are in charge of the consensus processes. Because so many organizations are involved, it is decentralized on all levels. Any consortium member can see the information on checked blocks, however it is not publicly available.
Benefits
- Because fewer nodes are usually required for validation, it can be more effective and scalable than public blockchains.
- Provides more security and dependability than private blockchains due to the fact that several participants collaborate to keep the network up to date.
- Fast transaction speeds are made possible by the small number of people participating in the verification process.
- Security is improved by decentralised authority among several institutions.
- Provides information privacy by keeping it hidden from the general public.
- Because flexible architecture is comparatively smaller than public chains, it enables quicker decision-making.
- Transaction costs are consistently cheap.
- Incorporates access restrictions.
- Removes the dangers of having only one organization in charge of the network.
Drawbacks
- It may be challenging to set up a consortium blockchain, and all participating parties must accept any modifications. It may become less Flexible if all members give their approval.
- Less open than a blockchain that is open to the public.
- May be jeopardized in the event that a member node is hacked.
- Permissions and regulations may hinder the network’s ability to function, for instance, if users are unable to agree during disagreements.
- Possibility of vision or interest conflicts amongst the participating organizations.
- Information may be concealed from users by organizations.
- Greater susceptibility in the event that a few nodes are hacked.
Applications: Frequently employed in sectors like supply chain management and financial services when several businesses must work together to achieve a shared objective. Excellent prospects for banks, companies, and other payment processors. Perfect for research groups and supply chain management for food and medications. Quorum, Hyperledger, Tendermint, and Multichain are a few examples.
You can also read What Are The Challenges Of Decentralization & It’s Methods?
Other types in the blockchain include
Sidechains: Referred to as a blockchain ledger that operates in parallel to a major blockchain, enabling connections between entries (such as digital assets) from the primary chain and the sidechain. This enables the sidechain to function autonomously, maybe utilizing an alternative consensus process or record-keeping technique. While the principal “Types” section in other sources concentrates on the four main categories, sidechains are included as a type in the Wikipedia Table of Contents.
Centralized Blockchain: Described as a centralized blockchain offering an immutable feature, Oracle included a “Blockchain Table” feature in its Oracle 21c database. Centralized blockchains may usually provide shorter transaction latency and better throughput than decentralized ones.
Lightweight Blockchain: Compared to traditional blockchains, they are said to be more suited for Internet of Things (IoT) applications. According to one experiment, a lightweight network could manage a lot of authentication requests per second.
The “best” kind of blockchain ultimately relies on the particular requirements and goals, including the intended use case, speed, scalability, security, privacy, control, and transparency levels. To select the optimal choice, organisations must evaluate their needs.
In conclusion, the numerous kinds of blockchains provide unique methods for decentralization, security, and access control, which makes them appropriate for a range of uses and objectives. Consortium chains allow cooperation between a small number of companies, private chains concentrate on control and privacy inside a restricted group, public chains emphasize open access and decentralization, and hybrid chains try to combine elements of both public and private models.