The 4 Types of Blockchain Networks: Definitions, Examples and Comparison

What is blockchain?

Blockchain is a peer to peer network that could be simply defined as a shared, immutable ledger where transactions are permanently recorded by appending blocks. What this means is that a blockchain is a historical record of all transactions ever recorded, from the genesis block to the latest block, which leads to a creation of a ‘chain’ of ‘blocks’. While a blockchain records transactions, it also facilitates tracking and trading of tangible or intangible assets, be it a house, land, intellectual property or practically anything of value! What makes blockchain a reality is the technology and infrastructure it’s based on called – distributed ledger technology.

While blockchain technology has a wide scope of applications, not all types of blockchains are suitable for every use case. It’s rudimentary to have a clear understanding of the different types of blockchain structures to know what works best for different projects.

Permissioned and Permissionless blockchains

All types of blockchains can be characterised as permissionless, permissioned, or both.

As the name suggests, a permissioned blockchain requires ‘permission’ and is not publicly accessible. These blockchain networks have an additional layer of security where users are only granted to perform actions set by the ledger administrators, while also having to identify themselves digitally or through certificates.

Permissionless blockchains though built on the same fabric of blockchain technology, are easier to access allowing anyone to participate in their network.

To break things down further here’s a clear distinction between the two:

The 4 main types of blockchains with examples

Based on structure, characteristics and usage mainly 4 types of blockchains exist:

  1. Public Blockchain
  2. Private Blockchain
  3. Hybrid Blockchain
  4. Consortium Blockchain

Public Blockchain

A public blockchain network is the only type of blockchain that is completely permissionless. These blockchain networks are decentralised, meaning that no single organisation or individual lies at the center of it, controlling it and users can remain anonymous. With no permissions, anyone has the liberty to join and participate in the primary activities of a public blockchain. That’s why public blockchains are known to be self-governed because users have completer freedom to read, write and audit activities on its network. 

Main features of public blockchain:

  • Permissionless
  • Largely decentralised
  • Self-governed
  • Maintain’s anonimity of users 

Examples of public blockchain:

Private Blockchain

The key differentiator of a private blockchain from a public one would be that it requires users on its network to be verified. Users can only join such a network through invitation when their identity is authenticated. They are also given express permission on the level of access they have and the activities they can perform. This means that private blockchains have a single central authority or owner that controls granting access to it and also has the right to override, edit, or delete entries on the blockchain when it deems necessary. This results in the network being partially decentralized and smaller than public blockchains because of restricted access and central control. However, on the upside, this also means that the networks are fast, efficient and trusted.

Main features of private blockchain:

  • Permissioned
  • Partially decentralised
  • Highlly efficient
  • Trusted network

Example of private blockchain:

Hybrid Blockchain

A hybrid blockchain is the amalgamation of a private and public blockchain, combining the best of both networks into one. It has the capability of constructing a private, permissioned based system alongside a public, permissionless one. This creates a network that is not restricted by one blockchain’s limitations and allows a single owner  or central authority to control who has access to certain data and what is made public.

Main features of hybrid blockchain:

  • Controlled by a central authority
  • A combination of permissioned and permissionless blockchain
  • Information can be accessed via smart contracts

Example of hybrid blockchain:

Consortium Blockchain

A consortium blockchain, also known as federated blockchain, is another type of permissioned blockchain with its main point of differentiation being that it is a group of private blockchains owned by multiple individuals or entities. While each organisation manages their own blockchain in a consortium blockchain, it also allows data from several different sources to be integrated while ensuring a secure and efficient data flow. 

Main features of consortium blockchain:

  • Permissioned
  • Partially Decentralized
  • Controlled by a group of entities 
  • Privacy and security of data is ensured

Examples of consortium blockchain:

The difference between Public, Private, Hybrid and Consortium blockchains

Now that we’ve looked into each of the different types of blockchain, here’s a quick summary to see how they compare at a glance!

How to choose the best blockchain to use?

Blockchain is more than cryptocurrency. Its varied structures and types are encouraging a plethora of use cases across industries that range from tracking the provenance of everything from watches to real estate. With such a wide spectrum of possibilities, its necessary to break down the various types and understand what works best in a particular context or situation based on the network’s performance, cost, access control, centralisation vs decentralisation, among other criteria. In conclusion to make the right choice, put in the time to do your research! Keeping an eye on current blockchain applications and projects is also extremely advantageous in understanding what could work best for your particular project. 

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