Blockchain has become a popular technology that is rapidly changing the way we store and use data. Blockchain is here to stay and it’s only natural that its technology will be used for other purposes as well. So, in this blog post, we’ll learn about different types of blockchain. So, before knowing its types, let’s discuss Blockchain.
What is Blockchain?
Blockchain is a method of recording and storing data transactions in a way that is irreversible and transparent. It eliminates the need for third parties to authenticate transactions.
Blockchain is a decentralized, distributed ledger that records transactions in chronological order.
Blockchain is the technology behind Bitcoin. It was invented by Satoshi Nakamoto in 2008 for Bitcoin to function without a central authority or financial institution.
Blockchain is based on the principle of trust, allowing people to make transactions without requiring any third-party institution to oversee everything. Blockchain has created an opportunity for people who don’t have access to banks, lending institutions, and other financial services because they are too expensive or too far away.
Also, Mining, the process of adding transaction records to a Blockchain, is how transactions are verified and added to the Blockchain.
A distributed ledger is a ledger that is not controlled by a single entity. It can be public or private and it can be distributed geographically or logically.
Now, lets discuss its types. There are 4 types of blockchain: Public, Private, Hybrid, and Consortium blockchains.
1. Public Blockchain
The first type of blockchain is a public blockchain. This type of blockchain can be accessed by anyone and does not require an invitation to join the network. Anyone can make transactions on a public blockchain without any fees. You can think of Bitcoin as an example of this type of blockchain. Individuals can use public blockchains as a way to share their data with other users, who will be able to see it and use it for their own purposes.
2. Private Blockchain
A second type is a private blockchain, where data that is stored cannot be accessed by just anyone and requires an invitation to join the network. Anyone who wants to join the network has to provide their personal information which is then authenticated by all parties in order to gain access. The advantage of this type of Blockchain platform is that it allows for secure data storage and confidentiality without any risk for data breaches or hacking attempts because only authorized people have access to it.
3. Hybrid Blockchain
A hybrid blockchain contrasts with public blockchains by allowing for some degree of centralized control over who can participate, or what transactions are added to the blockchain, while still providing many of the benefits of decentralization.
Hybrid blockchain enables cross-border transactions with transaction finality within minutes, without charging exorbitant fees or requiring foreign exchange exposure.
In a hybrid blockchain, two different blockchains are used. One is public and the other is private. In this type of blockchain, assets can be transferred from a public blockchain to a private one without the need to trust any third party.
This type of blockchain usually has two types of nodes – one node that monitors the system’s performance and another node that creates new blocks. This ensures that the entire system is always up-to-date with new transactions even if some nodes are offline or unavailable.
4. Consortium Blockchain
A consortium blockchain is a type of blockchain that is made up of a group of nodes. This means that the blockchain is managed by a pre-selected set of nodes. This also means that the nodes can be changed based on who is invited to be part of the network.
The consortium blockchain system has been designed to have all the advantages of a public blockchain but without its disadvantages. For example, a public blockchain will have open authentication and data storage which makes it vulnerable to cyber-attacks and data loss.
Thus, Blockchain is a decentralized technology that allows data to be stored in an immutable way. Blockchain can be used as a platform for preventing fraud, as it allows multiple parties to access the same information and validate the information without revealing it. In this way, blockchain provides transparency and accountability in peer-to-peer transactions.