Bitcoin and other cryptocurrencies make up a very small fraction of the blockchain. Blockchains often fall into one of four categories, each with unique benefits, drawbacks, and applications.

 

Blockchain technology is one of the key ideas that newcomers to cryptocurrency need to understand. Since blockchain is essentially simply a database spread across a network of computers, this is the simple stage. Since the security of the network is a completely distinct issue, we all have different perspectives on blockchain security.

What is Blockchain?

A blockchain is described as "a distributed database that maintains a continuously expanding list of ordered things, called blocks," and these blocks are linked together via encryption. A date, transaction information, and a cryptographic hash of the block before it are all included in each block. A blockchain is a distributed, open, and decentralized digital ledger that is used to record transactions on a number of computers in a way that prevents changes to the past without also changing all blocks that came before them and getting network consensus.

 

A blockchain, also known as a decentralized ledger or a peer-to-peer network, is used to store the whole history of transactions. This technology enables participants to confirm transactions without the requirement for a central clearing authority. A few possible uses include voting, trade settlement, financial transfers, and numerous other processes.

Types of Blockchain

  • PUBLIC BLOCKCHAIN
  • PRIVATE BLOCKCHAIN
  • HYBRID BLOCKCHAIN
  • CONSORTIUM BLOCKCHAIN

PUBLIC BLOCKCHAIN

A blockchain needs to be open to all users and permission less in order to be regarded as public. To put it another way, anybody can use their computer to join a network as a node. A blockchain node can mine, validate transactions, or view the full network's record once the software has been downloaded and set up on the computer.

Advantages

  • There will always be a top-level vulnerability in centralised organizations, regardless of how good they are.
  • Since public blockchains are decentralized, they are not affected by this problem.
  • A public blockchain can continue to function if there are computers or nodes linked together to form a distributed ledger, regardless of the entity that first provided funding for it.
  • This is another benefit of a permission-less distributed ledger network, in addition to openness.

PRIVATE BLOCKCHAIN

A private blockchain, which is usually run by a single company, has limits on who can access the network or register as a node. Eminent entities that have the authority to limit or expand the network as they see fit evaluate these node listings. Similar to permissioned distributed ledgers, private blockchains, often known as firm blockchains, are blockchains.

Advantages

  • Due to the restriction on the amount of nodes that can join the network, they perform faster than public blockchains.
  • After all, a transaction would then only need to traverse via a small number of nodes.
  • Because the entity in charge has complete control over authorization and network accessibility, there is a lower likelihood of successful hacking.

HYBRID BLOCKCHAIN

The characteristics of both a private and public blockchain are combined in a hybrid blockchain. It is feasible to have both a private permission-based system and a public permissionless system by fusing the features of the two blockchains. With the aid of this hybrid network, users may control which data on the blockchain is accessible to whom. The majority of blockchain data points or records are kept concealed on the private network; only a small subset may be made public.

 

It is simple to combine blockchain technology with a variety of open blockchains because to its hybrid architecture. A transaction is frequently confirmed by the entire network in the hybrid blockchain's private network. However, users have the option to publish it to the public blockchain for verification. On public blockchains, the speed of hashing and the use of more nodes for confirmation increase the network's security and transparency.

Advantages

  • Since they contain more nodes while remaining a member of a closed network, hybrid blockchains have a high network throughput and are immune to 51% attacks.
  • As a result, they are more economical and scalable than open blockchains.

CONSORTIUM BLOCKCHAIN

The responsibility for maintaining a blockchain may be divided among numerous teams. Who is permitted to submit transactions or access data is determined by these predetermined entities. A consortium blockchain is the best option for business when each member needs to have permission and be given a shared responsibility for the blockchain.

Advantages

  • Consortia blockchain networks are more scalable and provide quicker transaction processing times than public blockchains, all while maintaining management over a significant number of businesses.

Conclusion

Cryptocurrency transactions involving Bitcoin use the most well-known public blockchain. The open blockchain is transparent in all aspects. Businesses who need to manage sensitive data, such as corporate contracts or individual client information, are useless with such technology.

 

Due to the fact that they don't expose data and only permit transactions from users who have been invited, private blockchains are more likely to attract private entities. The private blockchain makes it possible to grant users various degrees of authorization, set access restrictions, and encrypt data to safeguard data confidentiality.