I think there is no more introduction needed for the term Blockchain, as the distributed ledger technology has already made its footprint in all major industries be it the government, trade, medical, education or real estate. The Blockchain has significantly showcased its extensiveness in laying solutions to the critical market problems like security, transparency, accountability, time consumption, cost and more. Every industry has witnessed the big play of blockchain in improving the efficiency and effectiveness of the industry function.
This blog brush off different types of blockchain and its implications in varied businesses. There exist different types of blockchain but let us focus on the three major types.
There are mainly three types of Blockchain:
a) Public Blockchain
b) Private Blockchain
c) Consortium or Federated Blockchain
To start with, let me introduce you to the first type of blockchain The Public Blockchain.
As the name defines, public blockchain is open to the public. It has no access restrictions and anybody powered with internet can conduct their transactions and perform their validations (execution of consensus protocol). Under public blockchain, no single authority is authorized to perform the action. Anybody can indulge in reading, writing or auditing within public blockchain. The public blockchain remains open to mass giving full vicinity of actions undertaken within.
So it’s obvious to question the credibility of a public blockchain. A question can come into your mind, how liable this kind of public blockchain is if no one is authorized or made in charge. How decisions are made? Questions pondering into someone’s mind is endless and the answer lies within the public blockchain.
Any decision making under public blockchain is executed through decentralized consensus mechanisms like proof of work (POW) and proof of stake (POS). There exist several living examples for public blockchain. The list includes Bitcoin, Ethereum, Monero, Dash, Litecoin, etc. Bitcoin technology introduced the concept blockchain among the tech community.
Here are the three things that account public blockchain.
(1)Anyone can download the code and start running a public node on their local device. They can thereby validate every transaction happening on the network and participate in the consensus process to validate the action. The public can freely determine which block to get added and what size should be.
(2) Anyone can transact in the network as long as they are valid.
(3) Using a block explorer anyone can access or read transactions.
The major implications of public blockchain in any business are that anybody can disrupt the business models. Also, it reduces the expenditure of running decentralized applications, as no server or system admins are demanded. Isn’t interesting??
Second and most talked about kind of blockchain The Private Blockchain
As the word defines, the private blockchain is kept private within the community and requires permission to access. The private blockchain moreover functions like a private property of an individual or an organization to perform specific job function defined by them. Unlike public blockchain, in private, there is an authorized or in charge who looks after the communication within the network and one cannot join the private blockchain network unless he is a permissioned user. The participant should be invited from the side of network administrators to conduct validations and perform transactions. And he will be responsible for giving access to read or write within the network. The consensus is drawn on the whims of central in-charge of the network. For this reason, a private blockchain is always advocated for business organizations. It works well for the companies who are interested in carrying their particular functions under blockchain technology. But often seen that the comfort zone with respect to the level of control is low when compared with public blockchain.
Secondly, under private blockchain, though read permissions are kept public, write permission is kept centralized to one particular organization.
If you ask for the examples in private blockchain, one can give you Bank chain, MONAX or Multichain as the examples. Service functions integral to a single company like database management, auditing, can be successfully managed under private blockchain. One of the premier advantages of private blockchain is that it helps in forming the groups and participants to verify transactions internally, complying better with governmental data security and privacy regulations.
Just like recounted for public blockchains, reduced transaction cost, less data redundancy, simplified data-handling, and automated compliances are the implications when we talk about private blockchains.
The third type of blockchain is Consortium or Federated Blockchain
A federated blockchain in other terms called as consortium blockchain comes with mixed properties from public and private blockchain networks. One can classify the consortium blockchain or the federated blockchain as partially public and partially private. Under the consortium network, the power of authority comes semi- decentralized not residing to a single authority. Often, a federated blockchain is operative under a group and they are responsible to shed restrictions on users’ reading, writing and auditing rights. Under consortium blockchain only trusted nodes are acquainted with the responsibility of executing consensus protocol.
Unlike public blockchain network, consortium network doesn’t invite anybody with the internet connection to participate in the network. It again demands the permission from network admins. Federated blockchain is mainly applied in the banking sector for its fast speed, supreme scalability, and better transaction privacies. R3, EWF are examples of federated blockchains.
In short, if take into study all three types of the blockchain, each defines a different set of characteristics benefiting business industries in large. Depending on the different uses cases, one can wisely choose the type of blockchain networks for their business industry. If your business look for an open or permissionless network, you have the option of going for a public blockchain network. On the other hand if the business look for a permissioned and censorship network, well they have the options to choose among consortium or private blockchain.