A decentralized data ledger that is securely shared is what the term “blockchain” refers to. Blockchain technology makes data sharing between the collective group of selected members possible. Cryptographic hashes are used as unique identifiers to chain together shared blocks of data that have been divided into distinct pieces.
Blockchain also eliminates data duplication and boosts security by providing data integrity with a unique source of truth. In this article, let’s have a look at the different types of Blockchain networks that serve other purposes.
Before we move ahead with types of Blockchain networks, don’t you think we should know how this game-changing technology disrupts multiple industries?
Blockchain helps an organization in the following ways:
- Builds confidence between parties engaged in business by providing reliable, shareable data.
- Eliminates siloed data by combining it into a single system using a distributed ledger that is shared throughout a network and is only accessible to parties with permission.
- Provides a high level of data security.
- Lessen the dependency on third-party intermediaries.
- Makes tamper-evident, real-time records that can be shared across all parties.
Two types of blockchain are considered main; however, there are further classifications that are present today. Let’s have an overview of them in the following section.
Types of Blockchain
A blockchain network can be built in a variety of ways. They can be public, private, consortium, or hybrid. Each type is discussed in detail below.
#1 Private Blockchain
A private blockchain is the first type of blockchain network that operates in a limited environment, such as a closed network, or a single entity governs that. Although the functionalities are similar to a public blockchain network when it comes to peer-to-peer connectivity and decentralization, a private blockchain has a substantially narrower scope.
Private blockchains work on a small network inside a firm or organization rather than allowing anybody to join and contribute processing power. They are also known as enterprise blockchains or permissioned blockchains.
- Speed: Because oF the transaction’s small size, the rate is high. Therefore, each node’s verification takes less time.
- Scalability: The scalability can be modified. The network’s size can be chosen manually.
- Privacy: Due to business requirements for confidentiality, the level of privacy has been increased.
#2 Public Blockchain
Public blockchains are entirely decentralized, permissionless, and open to everybody. Public blockchains allow all nodes to have equal access to the blockchain, the ability to add new blocks of data, and the ability to validate existing blocks of data.
The main uses of public blockchains are for bitcoin trading and mining. Popular public blockchains like Bitcoin, Ethereum, and Litecoin may be familiar to you.
- Trustable: Algorithms exist to identify any scam. Participants don’t need to be concerned about the network’s other nodes.
- Anonymous Nature: You do not need to give your name or identity to participate, making it a secure platform for your transaction.
- Decentralized: Each user has a copy of the ledger; there is no single platform that manages the network.
#3 Hybrid Blockchain
A hybrid blockchain combines the features of public and private blockchains. It makes use of both the private permission-based system and the public permission-less system aspects of blockchains.
Users can manage who has access to what data is stored in the blockchain with the help of such a hybrid network. Only a specific subset of the blockchain’s data or records can be made public, keeping the rest secret and confidential. Users can simply combine a private blockchain with several public blockchains thanks to the flexibility of the hybrid blockchain technology.
- Cost: Transactions are inexpensive because just a few nodes verify them. As not all nodes carry out the verification, there is a reduction in computational cost.
- Architecture: It offers a great degree of adaptability while upholding integrity, security, and transparency.
- Operations: It can decide which blockchain users to include and which transactions should be made public.
#4 Consortium Blockchain
Combining the elements of private and public blockchain, a consortium blockchain, sometimes called a federated blockchain, is the fourth type of blockchain. However, it is distinct since numerous organizational members operate together on a decentralized network.
Predetermined nodes manage the consensus procedures in a consortium blockchain. It has a validator node whose primary function is to perform transaction initiation, receipt, and validation. Member nodes are capable of sending or receiving transactions.
- Speed: Verification is quick because there aren’t many users. Organizations can use this more readily because of the fast speed.
- Authority: It can be dispersed at every level and involve multiple entities. Decentralized power increases security.
- Flexible: The flexibility of the blockchain varies widely. The decision can be made more quickly because it is not a big one.
In the above sections, we have discussed the significant types of Blockchain networks that can play a crucial role in your organization. Now that you know the various classifications, you can decide which Blockchain network is appropriate for your company or organization.Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.