Blockchain technology explained
As an innovative technology, Blockchain is a distributed database that facilitates secure information sharing in orders called “blocks.” Blockchain technology’s major features that increase its adoption are its immutable, transparent, and decentralized nature.
Blockchain technology was first developed for cryptocurrencies, but it has found its use case in different forms. That is why several types of blockchain exist today.
Types of technology
The different types of blockchain technology relevant across various industries in the world include 1) Public, 2) Private, 3) Hybrid, and 4) Consortium.
The public blockchain technology is a permissionless, non-restrictive distributed ledger. It was the first type of blockchain to emerge, and Bitcoin originated from the public blockchain. A public blockchain is mainly used for mining and exchanging cryptocurrencies. Everyone with internet access can be a part of the public blockchain and send transactions through it. Thanks to its decentralized nature, it is the most preferred type of blockchain used when a high level of transparency is required. Litecoin and Ethereum use the public blockchain to run operations. Its consensus methods include the proof-of-stake (POS) and proof-of-work (POW).
Unlike the public blockchain, private blockchains are permissioned networks, usually utilized by a single entity. In this type of blockchain, the central authority decides who can be a node and grants only a few users access to particular transactions. The private blockchain is also partially decentralized and operates on a smaller scale. It is helpful for networks where high privacy and speed are required. Examples of private blockchain networks are Multichain and the Oracle blockchain platform.
The hybrid blockchain is a blend of both private and public blockchain technology. It combines the features of permission-less and permission-based, allowing users to determine who can access particular data and data that is made public. Hybrid blockchain is adopted by organizations that want the best of both worlds and still maintain the decentralized feature of blockchain technology. Transactions on a hybrid blockchain are typically private, but they can be affirmed by granting access via a smart contract. One of its significant advantages is maintaining privacy while still allowing third-party contact.
A consortium blockchain, a federated blockchain, is similar to a hybrid blockchain. However, it differs from the hybrid blockchain because while one institution administers it, a consortium blockchain is managed by several organizations. The consortium blockchain is also more decentralized than the private one, aiding its security. Organizations like banks and payment institutions can utilize this type of blockchain to secure data and fast-track transactions.
Blockchain is helpful for different industries and can aid in the increase in effective processes. With several types of blockchain available, the potential applications for this technology remain ever-increasing.