Why do we need different types of Blockchain Technologies? Types of Blockchain Technology
Why do we need different types of Blockchain Technologies?
Before talking about the different types of Blockchain, I want to discuss a few applications of Blockchain where the requirements and the way the application uses Blockchain is different.
Bitcoin is application that introduced Blockchain technology to the world.
Bitcoin is one of the most popular Cryptocurrencies. Bitcoin is a way of making an online monetary transaction without any intermediates. When it comes to cryptocurrencies like Bitcoin, anybody should be able to access it, make transactions and be a validator.
Multichain is an application of Blockchain that is used by organizations to enhance security. By setting up a Multichain, you can prevent unauthorized access to sensitive data. Here, the Blockchain is not available to the public, it is only available to the authorized entity in the same organization.
Depending on the need of the application, Blockchain can be divided into 3 types:
As the name suggests, Public Blockchain is publicly accessible and has no restriction on who can participate or be a Validator. In Public Blockchains, no one has complete control over the network. This ensures data security and helps immutability because a single person can not manipulate the Blockchain.
The authority on the Blockchain is equally divided among each node in the network, and due to this, Public Blockchains are known to be fully distributed.
Public Blockchains are mainly used for cryptocurrencies like Bitcoin, Ethereum, and Litecoin.
A Private Blockchain (also know as Permissioned Blockchain) has restrictions on who can access it and participate in transaction and validation. Only pre-chosen entities have permissions to access the Blockchain. These entities are chosen by the respective authority and are given permission by the Blockchain developers while building the Blockchain application.
Private Blockchains are mainly used in private organizations to store sensitive information that should be available only to certain people in the organization. Because Private Blockchain is a Closed Blockchain, the data is within the organization and out of reach from any external entities.
In Consortium Blockchain, some nodes control the consensus process, and some other nodes may be allowed to participate in the transactions. Consortium Blockchain is like a hybrid of Public and Private Blockchain. It is public because the Blockchain is being shared by different nodes, and it is private because the nodes that can access the Blockchain is restricted. Hence, it is partly public and partly private.
This type of Blockchain can be used when organizations are ready to share the Blockchain, but restrict data access to themselves, and keep it secure from public access.
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Next Topic on Blockchain Technology :- Different Platforms used in Blockchain Technologies.