Four Classifications of Blockchain Technology in the Crypto Industry

When Bitcoin was launched as the first cryptocurrency using blockchain technology, there came the emergence of four blockchain types created for the global spectators. These blockchain types include the public, private, consortium or federated and hybrid.

Public Blockchain

As the name suggests, this is the general public’s blockchain. This is the type of blockchain that is designed for the people, by the people, and of the people.

A public blockchain is a non-restrictive and no permission required to be used by a distributed ledger system. Nobody is in charge to manage it. Everyone can take part in reading, writing, and auditing the blockchain. Those with online access can log in on the blockchain platform to use an authorized node and be a member of the blockchain network. For public blockchains, the most basic goals are mining and exchanging cryptocurrencies.

Examples of public blockchains: Bitcoin (BTC), Litecoin (LTC), and Ethereum (ETC)

For these three public blockchain networks, crypto enthusiasts can do the following:

• Use the full nodes of BTC/LTC/ETH and start mining
• Conduct transactions with the BTC/LTC/ETH chain
• Review/audit the technology through the blockchain explorer

Private Blockchain

This type of blockchain works as a private property of an individual or organization. It uses a restrictive network or blockchain requiring permission that only operates in a closed network.

Unlike a public blockchain, the private blockchain looks after vital activities such as read/write or selectively provide access to read or vice versa. The level of accessibility, authorizations, security, and permissions is managed by the controlling party.

As a result, it becomes centralized where several rights are exercised and vested in the main trusted party and cryptographically secured from the company’s point of view. This is considered more cost-effective.

However, it remains debatable whether something private can be identified as a ‘blockchain’ as it defeats the primary objective of blockchain when Bitcoin was released.

Private blockchain networks are widely used for voting, managing supply chains, securing digital identities, asset ownership, etc.

Examples of private blockchains: Bankchain, Multichain and Hyperledger

In this blockchain, people CANNOT perform the following:

• Run a full node and start mining.
• Conduct transactions on the chain.
• Review or audit the blockchain in a blockchain explorer.

Consortium or Federated Blockchain

This blockchain seeks to eliminate the sole autonomy that lies specifically in one entity through private blockchains. It is a semi-decentralized blockchain where more than one organization is responsible for administering the blockchain network.

Federated blockchain consists of different companies or representative individuals who collaborate and decide for the benefit of the entire network. These groups, also called consortiums or federation, create a consortium or federated blockchain.

This blockchain seeks to make things much faster with over one single point of failure and protects the entire ecosystem against using one point of failure.

Consortium blockchains are widely used by banks, financial institutions, and government offices.

Examples of consortium or federated blockchains: R3 and Energy Web Foundation

In this type of blockchain, members of the consortium can conduct the following:

• Run a full node and start mining
• Make transactions/decisions on the chain
• Review/audit the blockchain in a blockchain explorer

Hybrid Blockchain

This type of blockchain is an integration of the private and public blockchains. It features both blockchain types. One can have a private permission-based system and the other is a public permission-less system.

The hybrid blockchain is flexible to enable the users to easily take part in a private blockchain with several public blockchains. The transaction that uses a private network in this blockchain is generally verified within the system. However, users may also release it in the public blockchain to get verified. The public blockchains increase the hashing and involve more nodes that need to be verified. Also, the security and transparency of the blockchain network are enhanced.

Example of a hybrid blockchain: Dragonchain

Crowdfunding Platform that Employs Blockchain

When raising funds in a conventional approach, business owners face different barriers that make it things quite difficult for MSMEs to achieve the capital necessary to operate their startups. To solve the common challenges, AladiEx builds a platform that can unlock the MSMEs’ capital funding needs using blockchain technology. Through this innovative model, this assists enterprises to get access to financing their operations at very low fees.

Currently, AladiEx promotes its Aladin Token Offering (ATO). It is on sale during the angel round. It is AladiEx’s distinct means of selling tokens to ensure optimum safety for the people willing to invest and the success of their startup projects.

Most created projects are designed with their own blockchains. AladiEx seeks to implement its own blockchains and tokens. Today, AladiEx uses the Ethereum network for its current tokens and set to be migrated in the future.

With more blockchain types available, these are expected to resolve the current challenges:

• Less reliance on huge servers
• Blockchains are cost-effective and work faster
• Minimize the need for more trusted parties by implementing smart contracts
• Provide options for rights and access management while leveraging the same blockchain technology and reaping its benefits
• Reduce unnecessary tasks
• The distributed consensus in several parties is faster despite being geographically segregated

The different blockchain types are necessary for various industries. In markets where we require privacy and control, private and consortium blockchains are good options. In industries that need openness and censorship resistance, public blockchains are the best choices.

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