Different Types of Blockchain Technology

If you are new to the blockchain world, you might have heard about only one type of blockchain. Even the white paper published by Satoshi Nakamoto didn’t speak about the different types of the blockchain. It only specified the idea of blockchain and introduced bitcoin to the world. The peer-to-peer protocol is flexible, and this is where the different types of blockchain and distributed ledger technologies come in.

In this article, we will be focusing on the different types of blockchain technology. However, before we go further, we encourage you to learn about blockchain before proceeding further.

Different Types of Blockchain Technology

The three main types of blockchain include the following.

1. Public blockchain
2. Private blockchain
3. Federated blockchain

There are other types of blockchain technology, but we will stick with these three as they represent the majority of blockchains out there. You can find other variations, but they fall should fall under any one of the blockchain technology types discussed here.

Public blockchain

As you might have guessed it, public blockchain is “public” in nature, and can be used by anyone. It is made for the general audience without any emphasis on end-user type.

Bitcoin is using a public blockchain where anyone can participate. Public blockchains are truly decentralized and are not controlled by anyone. Another key aspect of public blockchain is that they are transparent and open to the audience. At any point in time, the information shared through the blockchain can be reviewed. The best use case of public blockchain is peer-to-peer transfer. Other popular cryptocurrencies such as Litecoin, Ethereum, etc. also make use of public blockchain.

Private blockchain

The private blockchain is the complete opposite of what public blockchain offers. It is privately owned either by an organization or an individual. Private blockchains work like a closed ecosystem. There are specific rules on who will be able to participate and take advantage of what the blockchain has to offer. The consensus is also centralized in nature unlike a completely decentralized feature of the public blockchain. A perfect example of private blockchain would be BankChain.

A central trust party is appointed to manage a private blockchain. This is done to ensure that an organization can take proper use of blockchain features without compromising information about their organization, including their internal process and the data associated with it.

Source: Draglet

Federated/Consortium Blockchain

Federated blockchain is an evolution of private blockchain. The main difference between a private and federated blockchain is how they are controlled. The private blockchain is controlled by only one entity. However, federated blockchain is controlled by a group of entities. This is done to bring better decision making to the blockchain. The most common use-cases are the projects where many companies collaborate. Few examples include EWF, r3, etc.

Let’s take an example to understand it. For example, all the major world banks came together to work on a financial solution that will use blockchain. For them to work efficiently, they need to have a body of entities to make decisions.

Conclusion

This leads us to the end of the article. We discussed the different types of blockchain which in return helped us to understand blockchain use-cases an and its ability to change the world. So, what do you think about blockchain technology as a whole? Comment below and let us know. We are listening.

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