Types of Blockchains

Types of Blockchains

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May 16, 2018 by matthewrobinson
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This post teaches you about different types of blockchains If you are reading this, you probably know what a blockchain is. You may have heard of the blockchain technology that supports Bitcoin and other cryptocurrencies and you may have also heard of other Blockchain solutions like IBM’s Hyperledger Fabric. Those technologies are similar but are
3 types of blockchains

This post teaches you about different types of blockchains

If you are reading this, you probably know what a blockchain is. You may have heard of the blockchain technology that supports Bitcoin and other cryptocurrencies and you may have also heard of other Blockchain solutions like IBM’s Hyperledger Fabric. Those technologies are similar but are not the same. Generally, there are three types of blockchains: public, consortiums, and private. All three provide databases that sync through participant consensus but they differ in their degree of centralization and accessibility.

Public Blockchain (permission-less blockchains)

Most cryptocurrencies including Bitcoin and Ethereum use a public blockchain. It is public in the way that anybody can access, read, use, and validate transactions on the blockchain. Public blockchains typically reward participants who validate transactions with small amounts of a cryptocurrency. Each node in the network must synchronize with the rest of the network after each new block is created, so consensus is not instant. Because almost anybody (a computer is required) can participate in a public blockchain’s validation process, they are considered decentralized. Public blockchains are considered trustless solutions because the network can arrive at a consensus without trusting a given entity like in a consortium or private blockchain.

Consortium Blockchain

In a consortium blockchain, transaction validation (consensus) is controlled by a limited number of nodes. Those nodes need permission to partake in the consensus process. For instance, there are pre-set nodes that verify transactions on the Ripple and Corda networks. Data on consortium networks may be private or public depending on the network. One institution does not control a consortium’s consensus mechanism, so they are still considered decentralized, but not to the extent of permission-less blockchains.

Blockchains that use Proof of Stake (PoS) and masternodes to validate transactions are a mix between public and consortium blockchains. In the case of PoS, anybody can view and participate in the validation process, but larger institutions/businesses with masternodes will likely dominate the consensus mechanism.

Private Blockchains (Permission-based blockchains)

In a private blockchain, only one organization can write in the blockchain and they can choose who has access to read their data. Because only one organization can append data to the network, it is considered centralized. Because transactions do not need to be validated by multiple sources, consensus is achieved almost instantly.