Blockchain is the latest decentralized technology used by famous cryptocurrencies like Bitcoin, Ethereum Litecoin, Ripple, Dash, and others. Apart from that, Blockchain has different use cases (Smart Contracts, Education, Medical Field, Voting Systems, Food Chain Supply, Logistics, Money Transfer, Digital Media, and many others).
It has 4 different variants:
- Public
- Private
- Consortium
- Hybrid
Today’s article is all about the blockchain and its types so let’s get started to know more about blockchain technology!
What is Blockchain?
Blockchain is a technology that is used to perform financial transactions without sticking to centralized authorities like banks and governments. Technically, blockchain is a decentralized technology that performs cryptographically secure and immutable transactions. Furthermore, it maintains the record of each transaction on the distributed ledger.
A distributed ledger is a form of database that would be created on each node that is a part of the blockchain network. Whenever the transaction is initiated, it would be broadcast to every single node in the network and would also verify by each node in the network. In case of a legitimate transaction, it would be added to the entire distributed ledger otherwise it would be discarded and the initializer would be blocked.
How Exactly Does the Blockchain Work?
As it is represented by the name Blockchain means the chain of different blocks. It works in the form of blocks, each block in the chain having (data, hash, and previous block hash).
Here are the following steps representing the working of blockchain:
Step 1: A transaction is initiated
Step 2: A block that represents the transaction is created
Step 3: A block is sent to every node in the network
Step 4: Each node will verify the node
Step 5: After verification, it would be added to the entire blockchain
Step 6: Node receives a reward to perform the proof of work
Step 7: The transaction is completed
How Many Different Blockchains Are There?
There are four different types of blockchain: Public blockchain, Private blockchain, Consortium blockchain, and Hybrid blockchain, let’s discuss them one by one:
1: Public Blockchain
A public blockchain is a permissionless and non-restrictive distributed ledger, every internet user can be a part of this type of blockchain. Whenever you join the public blockchain you have access to presents and records. Furthermore, you can perform proof of work or mining after successfully joining the blockchain network. Used by the Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC).
Benefits Of Public Blockchain
- Transparent
- Secure
- Trustable
Drawback Of Public Blockchain
- Lower TPS (Transaction Per Sec)
- Scalability Issue
- More Power Consumptions
2: Private Blockchain
A private blockchain is a permissioned and restrictive blockchain, only the authorized user can join and access it with predefined rules by a central authority. It is mostly used in big organizations or enterprise networks. Each user in the private blockchain network will have very limited access defined by the central authority but the central authority has full access to the entire network. It is deployed for the Supply Chain, Voting System, Digital Identity, Asset Ownership, Hospital Records, and many others.
Benefits Of Public Blockchain
- Speed
- Scalability
Drawback Of Public Blockchain
- Need Trust Building
- Lower Security than Public Blockchain
- Centralized
3: Consortium Blockchain
Consortium Blockchain is a type of semi-decentralized blockchain where more than one organization manages the blockchain, like blockchains of different universities, hospitals, banks, and others. Here each organization will act as a single node as well as verify the transactions.
Benefits Of Public Blockchain
- It has multiple owners means no concept of centralization
- Validation would be done by the trusted nodes
- No 51% attack
- No transaction fees
Drawback Of Public Blockchain
- It would be corrupted if more than one node is corrupt
- Chance of disputes among the different members of each organization
- Upgrade the entire system requires the permission of each party
4: Hybrid Blockchain
Hybrid Blockchain is the combination of Public Blockchain and Private Blockchain, Ripple network, and XRP tokens are good examples of hybrid blockchains.
Benefits Of Hybrid Blockchain
- Access Control
- Performance
- Scalability
Drawback Of Hybrid Blockchain
- Transparency
- Upgrading
Conclusion
Blockchain is the advanced decentralized technology to perform a financial transaction. Each transaction would be transparent, secure, and immutable and each node in the entire network has equal rights to perform the tasks. It works in the form of a chain of blocks and each block carries data, its hash, and the previous block's hash, Furthermore, it has four major types: public blockchain, private blockchain, hybrid blockchain, and consortium blockchain.
