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Different types of Blockchain Technology

Blockchain technology is steadily changing the landscape of digital transactions in the world. The potential of this technology is no longer restricted to only cryptocurrencies. It is also worth noting that blockchain is not monolithic and there is no uniform standard size that suits all requirements. The concept of ‘one size fits all’ is not applicable in the context of blockchain technology. Therefore, experts classify the technology into four main types, public, private, consortium, and hybrid. Each of these categories has different pros and cons. Moreover, their usability and applications are also distinct. Hence, it is important to highlight the different types of blockchain technology.

Classification of Blockchain Technology

Blockchain technology is classified based on accessibility into the public blockchain, private blockchain, consortium, and hybrid. 

Private Blockchain

The private blockchain is a major classification of blockchain. The operational activities of this blockchain usually take place in restricted private spaces. These private spaces may have closed networks and single-entity control. These blockchains are comparatively smaller and function in more closed environments. 

The main advantage of private blockchains is their faster speed. The transactional speed is higher because the network size is usually smaller. Verification of transactions is also quicker. Scalability levels are higher and it allows the network to function based on specific needs. Privacy and data control are crucial for the financial sector. 

The only major limitation of private blockchain is trust. Fewer participants make it somewhat less trustworthy. There can be legitimate concerns about data validity owing to trust deficit. 

Public Blockchain

Public blockchain does not require any formal permissions and anyone can join it openly. Decentralization is the main feature of this public blockchain and this is why every user can have equal access to the network. In this form of blockchain, people having internet access can have the authority to engage in verification and mining operations. 

The major advantage of a public blockchain is that it has high levels of security and is currently the most trustworthy form of blockchain. This is because proof-of-work transactions do not need any form of mutual trust and can intercept fraudulent transactions. The fortification of a vast expansive network by public blockchain makes it very hard for potential cyber criminals and hackers. 

The only notable disadvantage of a public blockchain is low Transaction Processing Speed (TPS) because of its vast network and verification systems. 

Hybrid Blockchain

A hybrid blockchain has all the features of private and public blockchain. It is a significant innovation in blockchain and permits enterprises to have a unique identifiable framework of operation. In this framework, both private and public permission-based systems coexist. Therefore, this form of blockchain is more flexible and has better potential for customization.

The foremost advantage of hybrid blockchain is its advanced security levels. Hybrid blockchain combines the best of both public and private blockchains and shields external attacks. Privacy guarantees are more reliable while interacting with third parties. On the issue of scalability and cost-effectiveness, a hybrid blockchain is preferable. 

The only significant disadvantage of hybrid blockchain is it can be cumbersome to upgrade systems dependent on this technology. Transparency may get compromised if the private aspect of the blockchain is more dominant. 

Consortium Blockchain

Consortium blockchain combines elements of both private and public blockchains. The distinguishing feature is that several organizational members collaborate on a decentralized network. Shared responsibilities and collective governance are unique features of blockchain. 

The main advantage of consortium blockchain is that it enhances efficiency and security. Scalability in consortiums is more widespread than in public blockchains. It ensures better mitigation of risks and has a balanced power structure. Customization levels are high and it also allows various degrees of control.

The main notable disadvantage of consortium blockchain is that it may face potential breaches of member nodes. The network’s functionality may be compromised if the wrong combination of blockchains is chosen.

Also Read- Top Cryptocurrencies in 2024

Bottom Line

Blockchain has the enormous potential to provide transparent and traceable records of its activities. It is also true that it can reduce instances of fraud, and manipulation and enhance security. However, the needs of individual users and different enterprises vary significantly. Therefore, blockchain categorization matters, and users should assess the pros, cons, and suitability of the four different blockchains.

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