Types of Blockchains
When we speak about blockchain, the majority of us refer to the Bitcoin or the Ethereum blockchain. However, there are many other blockchains. The most interesting of them have unique features and are worth our attention, too
What Are Different Types Of Blockchain Technology?
Blockchains can be divided into different groups depending on their functionalities, consensus protocol, use cases, industries, etc.
The most popular division is into:
- Proof-of-work
- Proof-of stake blockchains.
Here, it is worth noting that other types of consensus such as proof-of-authority, proof-of-space, etc. are variations of a proof-of-stake consensus.
Blockchains can be used in the world of finance, medicine, pharmaceutics, social science, etc., and classified accordingly.
Finally, we can classify different blockchain types based on their privacy and centralization level. They can be public or private, centralized or decentralized.
Why Do We Need Different Blockchains?
Blockchain can be used for many applications. For example, the Bitcoin blockchain serves to send funds in a secure permissionless environment. The Ethereum blockchain is used for the development and hosting of smart contracts, dApps, DeFi.
If we speak about a blockchain used by a single enterprise, say, a logistics company, then, such a blockchain is used to build the logistic network and store information, and so on. The possible applications of this technology are still to be explored. But for now, we can already see that its potential is immense.
Types of Blockchains
Depending on classification criteria, we can divide blockchains into several groups. Let’s delve deeper into each blockchain type and check their pros and cons.
Private Blockchain
Private blockchains are created by companies for their specific needs. Such blockchains are managed by the company and thus, they are not centralized. In this application, blockchain technology can be efficiently used to store important data, to facilitate information exchange between branches, etc.
Advantages
- Such blockchains are not big, that’s why they are very fast.
- Scalability is not an issue because the network size is adjusted manually.
- The privacy level is high that enables users to store there crucial information.
Disadvantages
- Such blockchains are centralized.
- Due to centralization, the possibility of manipulation is very high.
Consortium Blockchain
Such a type of blockchain is partially public and partially private. Such blockchains are also known as Federated blockchains because they are managed by more than one organization.
Advantages
- Such blockchains are fast because the number of users that have access to the network is limited.
- Consortium blockchains are safe because they are managed by some organizations.
- They are secure because the information is available to permitted users only.
Disadvantages
- Approval of decisions can take time because such blockchains are managed by several companies. Therefore, if interests are different, it may delay the decision-making process.
- Blockchain transparency is another issue. If one organization becomes corrupt, the network can be hacked.
- A high vulnerability level is another issue. If some nodes are compromised, the blockchain may have serious issues.
Hybrid Blockchain
Hybrid blockchains combine the features of private and public blockchains. One part of a hybrid blockchain is controlled by a specific organization while the other part is visible to the public.
Advantages
- It is very safe. Users cannot access the entire network that’s why the possibility of a 51% attack is almost absent.
- The cost of a transaction is very low because just a few nodes validate transactions. Therefore, the computational costs are low.
- Its architecture is highly customizable. However, it is characterized by integrity, transparency, and security - features so much valued in public blockchains.
Disadvantages
- They are difficult to maintain.
- Transparency issues because if the organization behind the blockchain decides to hide information, it can be done.
- No incentives for network participation.
Public Blockchain
These blockchains incorporate the idea of decentralization and are completely open to the public. Anyone can participate in the network without restrictions.
Advantages
- Transparency and high trustability level are the main benefits. Everybody can see what is happening on the blockchain, all the information is available to all the network participants.
- Anonymity is another benefit of public blockchains. Nobody is required to reveal their names or other personal data.
- Decentralization - public blockchains are not managed by a single authority.
Disadvantages
- Speed - because there are many network participants, public blockchains may be very slow.
- Computation power requirements - blockchains that utilize the proof-of-work consensus mechanism require a lot of power to participate in the network.
- Decentralization - there is no central authority to manage the blockchain. Everything is done by the network participants.
FAQ
How many blockchain types are there?
There are several blockchain types. The main classes are public, private, consortium, and hybrid blockchains.
Which is the fastest blockchain?
Private blockchains are the fastest because they are the smallest and are managed by a single organization.
What is the best blockchain type?
It all depends on the blockchain’s aim. Private blockchains are the best for companies to store confidential information and facilitate data transfer. Public blockchains are the best for sending funds around the globe. Consortium blockchains are the most optimal solutions for a group of companies. Hybrid blockchains combine all the mentioned features. You shall learn all the pros and cons of each blockchain type to choose the best option for you.
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