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Are you aware of the four different types of Blockchains?

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Introduction 

The invention of bitcoin has made the concept of blockchain famous, and only then the entire world got to know the fantastic capabilities of this technology. Though for many days, blockchain and bitcoin had been used as synonyms, it is not the same case anymore as the world understood the potential of this technology. Blockchain has much more applications than just cryptocurrencies. We have seen the applications of blockchain in different industries like healthcare, government, SCM, banking and financial institutions.

Blockchain is classified into four different types depending on its applications and the purpose for which they are used. Below are the four types of blockchain.

  1. Public or permissionless blockchain
  2. Private or permissioned blockchain
  3. Private and open blockchain
  4. Public and closed blockchain

Let’s understand these different types in detail:

Public blockchain

As the name suggests, this blockchain is open to everyone. Anyone can join the blockchain and look at the transactions, transaction history and even join the consensus, i.e. to approve or reject the current transactions based on the validity and history of the ledger present with the user. Identity of the users in the network is not known. Essentially anyone can add a record and read the records from a public blockchain. Anyone can go etherscan.io and look at the real-time transactions on the Ethereum platform.

In public blockchains, no one has full control over the network. Immutability and data security are assured because of this reason as no one can alter or change the data in the network. Hence public blockchains are fully distributed, thus fulfilling all the properties of the blockchain.

Public blockchains are predominantly used for cryptocurrencies like Bitcoin, Litecoin, Ethereum. Gambling and videogames are good examples as well. Videogame companies may reward the players with digital tokens for crossing certain milestones. These tokens can be used on other games by the same company in order to retain their customers (players). This can be achieved by a public blockchain platform.

Private blockchain

Private blockchains are not open for all. Only people who require access are allowed in the blockchain by the validator available in the network. Identity of the person joining the network should be known. Only then we can give essential access to the person. Access to a user can be removed at any point in time. New users can be joined after the approval of the network administrator.

Hyperledger is the best example of a private closed blockchain. Hyperledger aims for blockchain enterprise solutions. Hence, they came up with native identity management tools. Supply Chain use cases for provenance tracking, Inventory management within organisations can be improved with private blockchains.

Private and Open blockchain

This blockchain is essentially the one where a very limited number of people can add data to the blockchain, but anyone can view and consume the data.

An example could be the Walmart Supply chain use case. Unless they are Walmart’s vendor, they don’t get to add data to the blockchain network. But as a consumer to track the provenance, everyone has the rights to look at the data. Publicly trading companies, they can publish their results in blockchain, and everyone can access the data as required.

Public and Closed blockchain

This blockchain is the one where a large set of people can contribute data, but only some people can consume the data.

Voting and voting records come under this type of blockchain. Voting is open to everyone, but only election officials get to access this data. Whistleblowers can contribute the data anonymously to the blockchain, and only some set of people will be able to consume the data. These are some good examples of public and closed blockchain.

 

Depending on the use case and the requirement of the use case, any one type of blockchain can be selected.

Bottom line

The examples given above are not absolute. One example can be taken and be implemented in any other type than the one given above. But it is best to choose the inherent properties of a blockchain type and go with it instead of making many changes to the native type to suit our current needs.

Since blockchain is still at the nascent stage of its inception as a technology, rapid developments are taking place in a very short period. Consortiums or federations are being formed to develop the technology. Only when more and more companies of the same industry come up together, development is possible. One such consortium is R3 LLC where around 200 financial institutions have come up together to develop decentralised apps. Hence various types of blockchains help to maintain the privacy and anonymity of each company involved in the consortium to contribute and grow together as the technology improves. What are the blockchains you know? In which of the four types do they fall under? Let us know in the comments below.

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