You’ve probably heard a lot about blockchain, and you’re curious to know more. Knowing the types of blockchain is the first step to learning more about its applications. If you’re one of the many interested in blockchain types, you’ve landed on the right page.
As you read further, you’ll get insight into the blockchain, its types, advantages and disadvantages of each.
Types of blockchain
It’s no news that this technology has evolved to affect several aspects of financial transactions. With its growth came the need to have different blockchain types. The following are types of blockchain and their pros and cons.
As the name implies, a public blockchain is a digital ledger with no restrictions and requires no access permissions. In other words, anyone with a strong internet connection can create an account on the platform, becoming a node.
Members of the public digital network are allowed to view current and historical records. They can also mine, confirm incoming transactions or perform proof-of-work on an incoming block.
The most fundamental use of the public platform network is for cryptocurrency mining and exchange. As a result, Bitcoin is one of the most commonly utilized blockchain platforms currently in existence.
- Anyone can become a member of the public platform
- Everyone is motivated to contribute to the public network’s improvement
- It fosters trust among the entire user community
- No intermediaries are required for it to function
- Due to the number of participating nodes, these ledgers are also secure
- Impossible to scale because of the large number of users
- It consumes a lot of energy
- Getting paid in Bitcoin is a slow process
A private blockchain operates within a closed network. The technology demands permission before a random individual can access the platform.
Private networks are ideal private organizations that wish to use the blockchain for business. Additionally, it allows the organization to configure many network characteristics like authorization and accessibility.
The distinction between public and private platforms is the means of access. Aside from this, both operate in the same manner, providing members with security and honest transactions. Records preserved on this platform also remain safe and untouchable by third parties.
Another significant distinction is that private networks are somewhat centralized. This is because only one authority controls how other members access the platform. There are different applications of this private technology but each has unique characteristics.
- Fast and transparent transaction
- A limited number of users on the platform
- Less clustered and rowdy network
- Easily scalable due to the fewer and controlled number of participants
- Fosters trust in an employer-employee situation
- Easier to track information
- Safe and secure for user data
- Less energy consumption
- Private networks are not entirely decentralized like other types
- Achieving a level of trust is difficult because one person makes the rules
- It has fewer nodes and less security
A hybrid digital platform combines private and public blockchains. In other words, this technology allows a closed permission-based and an open permissionless system.
Users can manage who has access to which data is stored on the blockchain using a hybrid network. Only some of the data or records can be public, while the remainder remains private on the network.
The hybrid technology is adaptable, allowing users to connect a private to numerous public blockchains quickly. As a result, a blockchain job within a private network of a hybrid blockchain is validated by private users. These users can also publish it to the public to have it confirmed.
- Maintains a high level of privacy while giving the public information
- Rules can be altered to meet certain needs
- It is 51% secure and can protect its user data
- It has a high scalability level compared to a public network
- It can be challenging to upgrade to a hybrid blockchain
- There is no financial incentive for people to join and contribute to the network
- It’s not entirely honest
A consortium blockchain is a semi-decentralized blockchain in which multiple organizations control the network. This contrasts with a private blockchain administered by a single entity. Multiple organizations can operate as nodes in this type of blockchain, exchanging data and performing mining.
Consortium blockchains are frequently utilized by banks, government agencies and large organizations.
- Users can easily customize and control resources on the platform
- It is more secure and scalable than standalone blockchains
- The technology is more efficient, unlike its public counterpart
- The platform consistently adheres to well-defined governance structures
- It has different access controls
- Even if it is secure, members can compromise the entire network
- It has lower transparency
- Regulations and censorship can have a significant impact on its operations
- It is less anonymous
Why are there different kinds of blockchain?
The blockchain’s actual application is to conduct and exchange information securely over a network. It was first introduced via Bitcoin.
The digital currency ran on a platform where anyone could become a node. As a result, they could easily verify other nodes and trade the currency. This made the platform a public one where everyone had access.
This function cannot work for every organization. For instance, a financial institution cannot expose all transactions and allow third parties to interfere with their business. The institution needs more privacyhence, they need a private platform to protect confidential information.
In the same vein, some organizations would want to hide some information and reveal others. A public technology would be too open, and a private one, too restricted. Thus, a hybrid blockchain is the best.
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With these examples, it’s easy to understand why there should be different types of blockchain. In summary, varied technology is necessary to satisfy different needs.
Now that you’ve learned the different blockchain networks, it’s easy to determine which is best in different situations. If you’re interested in using this network for private purposes, use the private blockchain. For something more open, the public blockchain is best. However, if you want something between both worlds, the hybrid network is perfect.