The primary use case of blockchain is to carry out transactions in a safe and secure network. This is the reason why people use blockchain technology in different scenarios. Moreover, multichain can be set up to prevent unauthorized access to sensitive information and data. Also, the data is available only to authorized entities in an organization. The use case can be seen in the blockchain game development services, which is a broad industry using blockchain technology.
In this article, we will discuss with you what the different types of blockchains are and thus help you decide which is the most suitable for your Business.
Furthermore, we all know how the rise of Bitcoin made enterprises move their blockchain projects into action. Before we look at the different types, we will first delve into what blockchain is.
What is Blockchain?
It is an advanced database mechanism allowing the sharing of information transparently within a business network. Moreover, a blockchain database is capable of storing data in blocks; these blocks are linked in a chain together. The data in here is chronologically set, as you cannot modify or delta the chain without consensus.
You can use this blockchain technology to create unalterable ledgers for tracking payments, accounts, orders and other transactions. Additionally, the mechanism is such that it prevents unauthorized entries and gives a shared view of all transactions. Even the NFT game development services use blockchain technology.
The Different Types of Blockchains
Blockchain networks can be built in various ways, including the ones mentioned below
● Public Blockchains
These blockchains are entirely open to the idea of decentralization. They do not come with any restrictions. Anyone with an internet connection and a system can participate in this network. As the name suggests, the public blockchain is open to the public, meaning that no one owns it. Additionally, the computer in the network holds a copy of the blocks present in the network or the other nodes. Under the public blockchain, the verification of records or transactions can also be performed.
Pros: Trustable, secure, decentralized and anonymous nature.
Cons: Energy consumption, processing and no acceptance by central authorities.
Use case: Displace traditional systems of finance and support decentralization—for example, Ethereum and Bitcoin.
● Private Blockchain
A blockchain network that works in a restricted environment, similar to a close network. This network is under the control of a single/sole entity and is known as the private blockchain. Although it operates in line with the public blockchain network, meaning that it uses decentralization and peer-to-peer connection. The private blockchain does this on a smaller scale. They are typically operated on smaller networks inside an organization or company. Private blockchains are also known as enterprises of permissioned blockchains.
Pros: The speed, privacy, scalability and balance.
Cons: Centralized, limited security and count such as few nodes.
Use cases: Securing information without exposure to the public eye for internal auditing, asset management and voting in various companies. For example, Corda and Hyperledger are private blockchains.
● Hybrid Blockchain
A hybrid blockchain is ideal and suitable for organizations that want the best of both worlds. Hybrid blockchain combines the features of both private and public blockchains. It helps enterprises construct a private, permission-based and without-permission system. This allows the companies to choose what blockchain data is made public and accessible. In the hybrid blockchain, records and transactions are usually not made public. However, they can be validated whenever necessary. This is done by granting access through a smart contract. Even though confidentiality is maintained, it is still verifiable. Users who join hybrid blockchains have full access to the networks, but their identity is not revealed unless they engage in a transaction.
Pros: The cost, architecture, hybrid ecosystem and operations.
Cons: Transparency and efficiency.
Use case: Great help in healthcare, government, financial institutions and real estate. It comes to the rescue when data is to be accessed publicly but has to be shielded privately. Examples of hybrid blockchains are XRP tokens and the Ripple network.
● Consortium Blockchain
This is a creative approach that helps solve the needs of an organization. It is similar to the hybrid blockchain that comes with the features of both public and private blockchains. The significant difference is that various members collaborate on a decentralized network in a consortium blockchain.
The consortium blockchain validates, initiates and receives transactions. It is also known as Federated Blockchain. In this blockchain, some parts are private, and some are public. Also, more than one organization manages the blockchain. This means various organizations work together on a decentralized network.
Pros: Authority, speed, flexibility, privacy and speed.
Cons: Transparency becomes problematic, vulnerability and approval.
Use case: The consortium blockchain has high potential in banks, businesses and other processes. Food tracking can be done quickly, and it is an ideal solution. Examples of this are Multichain and Tendermint.
Having said all that, it must be clear by now what the four different types of blockchains are. Moreover, businesses can decide the most suitable for their Business depending on the pros, cons and use cases of each blockchain type. Ultimately, blockchain technology is gaining popularity on a greater level these days. Also, it is rapidly gaining the required enterprise support. Each blockchain type mentioned above has potential applications which can help in improving transparency and trust, thereby creating better data for transactions.
Knowing your needs and requirements will help you make a better and more informed decision.