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Blockchain, Blockchain Security, Featured, Technology

Federated Or Hybrid Blockchain? Which One to Choose?

Blockchain happens to be revolutionary undoubtedly. But, the question arises when it comes to picking the kind of blockchain that really suits your use case. All the two kinds of blockchain are namely public and private, they have an additional variety known as the federated and hybrid blockchain. Do you know about them? If not, this article will concentrate on each kind and assist you in realizing which one is ideal for your blockchain project

It will provide you with detailed insight into the federated and hybrid blockchain world. You’ll know how these blockchains make an impact in the world of blockchain. Before we dive deeper into the federated and hybrid blockchain, it is necessary for you to understand what public and private blockchain are. 

Public and Private Blockchain

As per the term, public blockchain is a network that happens to be public in nature. It also indicates that public blockchains are open to all and anyone can easily participate in the same. But, the question arises on why would anyone like to join a public blockchain? This is where the incentives of public blockchain come in. It happens to improve blockchain growth. Let us understand this with an example. 

For instance, miners can provide computational power for solving complex algorithms and can also participate in the public blockchain. By performing so, a block happens to be mined. Contrarily, the minors happen to be incentivized while they receive Bitcoin for their work and effort. There will always be workers and users within the environment of public blockchain for making it operate smoothly. As fluidity is essential, that is why the incentivizing part keeps going. 

Now that you know what public blockchain is, let us head onto the private blockchain. As per its name, contrary to a public blockchain, a private blockchain happen to be private. Here, the parties restrict the access of blockchain to their users. Users are required to get permission before using the network. Other than that, the permission can only be taken from the authority managing private blockchain. For instance, the administrator can restrict transactions according to their intent, speed, and nature. For more information about public and private blockchain, check out the link to the article below. 

Also Read: What are the differences between public, private, and permissioned blockchain networks?

Define Federated Blockchain 

A federated blockchain, also known as a consortium blockchain, is pretty similar to a private blockchain. But, a thin line of demarcation exists between both. In the case of a federated blockchain, there is no particular organizational influence. On the other hand, private blockchain operates on a permissioned DLT system. 

In a network of federated blockchain, numerous entities make utilization of the network and they are likely to develop a decentralized system. Thus, rather than having a particular organization take charge of the entire network, federated blockchain facilitates numerous organizations to leverage the network for their advantage. 

Types of Federated Blockchain

  • Technology-focused: This blockchain provides reusable platforms with solutions based on technological standards. Some examples are enterprise ethereum alliance, hyperledger, and more. Their primary purpose is to assist blockchain in attaining Global recognition. 
  • Dual focused: They come with both business and technology solutions. Thus, they offer an open-source platform feasible for any type of technological solution for business. 
  • Business focused: It helps develop solutions for a specific business issue. They concentrate on particular use cases like supply chain, energy banking, and more. 

Benefits of Federated Blockchain

Apart from numerous applications, federated blockchain networks also come with an assortment of benefits as well. 

  • Saves cost: The primary idea of being a part of a federated blockchain network is to reduce costs. Thus, you need to choose the one offering the most price-saving feature concerning your business. 
  • Mass adoption: As more organizations come together under the federated blockchain network, it assists in driving mass adoption. Mass adoption assists your organization to reach new heights seamlessly. 
  • Risk shared by participants: It is one of the major advantages of federated blockchain. You need to look for a platform where all the participating members will equally share the risk in case of new solutions. It is one of the new natures of blockchain and there are lots of risks associated with the same within the market. 

Define Hybrid Blockchain

Hybrid blockchain is ideally defined as a network that uses the best part of both public and private blockchain solutions. It means controlled freedom and access equally. The architecture of hybrid blockchain is distinguishable as they do not happen to be open to everyone, however still come with blockchain features like security, transparency, and integrity. 

The architecture of hybrid blockchain is wholly customizable. Members can choose who can participate within the network or which transactions can be made public. This ensures that an organization can work with stakeholders in the best manner possible. 

Also Read: Use Cases of Blockchain Technology in the Public Sector Across the World

Use Cases of Hybrid Blockchain 

Here are some real-life applications of hybrid blockchain: 

  • Government procedures: Hybrid blockchain can assist in making government procedures more productive. The government can use it for creating public identification databases, provide both humanitarian and social assistance as well as conducting elections. 
  • Banking industry: Hybrid Blockchain serves to be the perfect solution to most of the banking sector challenges we experience. As the industry requires solving internal issues and also safeguard user data, the requirement for hybrid blockchain turns out to be more imperative. 
  • Supply chain: Hybrid blockchain is a fabulous help in the case of supply chain networks due to the broad reach of the overall network supply chain. A supply chain needs to be neither public nor private but a combination of both, and that is why hybrid blockchain serves to be suitable here. 

Wrapping Up

Both federated and hybrid blockchains happen to be disruptive. Thus, to answer the question about which one is the best, it is entirely dependent on the use cases, benefits and applications. But, hybrid and federated blockchain networks have their peculiarities within the industry. Federated blockchain cannot perform the work of a hybrid blockchain network and vice versa.

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