When you say blockchain, cryptocurrencies probably come to mind. But did you know there are different types of blockchains? Basically, there are 3 types of blockchain, namely public, private and permissioned or consortium blockchain. What are the differences between them? Let’s take a look at it.
Most of today’s blockchains are public. This means that anyone can connect to them, and all participants in the network can see the shared distributed ledger and participate in transaction verification. This type of blockchain is usually built on a consensus proof-of-work (PoW) mechanism, so the participants in the network can be called miners. By a public blockchain we can imagine, for example, Bitcoin or Ethereum.
Like everything, blockchains have advantages and disadvantages. For a public blockchain, the advantages are decentralization, so no one controls it; transparency, all transactions are visible; it is very resistant to censorship and it is accessible, anyone can connect to it. Disadvantages include energy inefficiency due to PoW and traceability of transactions, even if participants are anonymous, transactions are traceable.
This type of network is by invitation only. Thus, there is a central entity that controls who can join the network. At the same time, participants can be assigned roles and the controlling entity can edit, delete or cancel transactions. Some of the most well-known networks are Morpheus (a blockchain for logistics and supply chains) or Patientory (a medical supply chain application on Ethereum).
The benefits clearly include greater security, with fewer participants with nefarious intentions due to controls. Also, greater scalability, changes are more easily implemented; higher throughput, where transactions are faster; and greater trustworthiness due to limited access and better identification. On the other hand, such blockchains are not sufficiently centralized and the disadvantages include the fact that the operator can modify the transactions.
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Or also consortial blockchain. This type of network requires permission from the operator to connect and perform various functions. It is not a private blockchain, but an additional layer of access control. This serves as a security measure where only identified participants can perform actions. Thus, with permission, anyone can work in such a blockchain. For example, Ripple, a global payment platform, falls into this type.
The advantages include better performance, these blockchains are much lighter than public ones; different levels of decentralization, high customizability and also governance. Disadvantages then include external data storage and inconsistent levels of security, where security depends solely on the chosen consensus algorithm.