These four categories form the foundation of the Blockchain Technology:
- Private Blockchain
- Public Blockchain
- Consortium Blockchain
- Hybrid Blockchain
When compared to public block chains, these private blockchain technologies are more secure since only a private guide may contribute to the process. They are not as accessible as a public blockchain network, as these are only accessible to certain authorised users. Private block chains run on a closed network and only a few people are allowed to participate in a system within a company or organisation in this case.
Anyone with a computer and the internet may join the network. Because this public block chain technology is accessible to everyone, no one controls it. Because it is open to everyone, this type of blockchain technology is not controlled by anyone. A public blockchain records transactions and provides verification services to all of its connected nodes. Every node has a copy of every other node or block, so every connected node can participate in transactions or record verification.
A consortium blockchain is sometimes known as a federated blockchain. It includes both private and public block chain technologies in one package, making it similar to hybrid blockchain. Unlike hybrid blockchain, where members can cooperate in an effective manner, in a federated blockchain, it is more difficult for members to collaborate in an effective manner due to its decentralized nature. Particularly, a consortium blockchain is more of a private block chain as it gives a very restricted amount of access to the entire network. In public block chain contexts, controlling the accessibility and availability of data is a key concern, which makes consortium blockchains appealing. In consortium blockchains, the consensus procedure is determined by predefined nodes rather than being handled by the community. A validator node receives, verifies, and approves transactions. Member nodes can also send or generate transactions.
When an organisation seeks the greatest of all feasible solutions, it will use hybrid blockchain, a kind of blockchain approach that allows for both public and private blockchain features. When managing data, an organisation can set up a private authority system alongside a public, permissionless mechanism and still manage data, keeping in mind who has access to various data recorded on the blockchain and what data is publicly available. Hybrid blockchains, in addition to being difficult to publicly disclose, can be validated by using a smart contract. All the things and documents on this hybrid blockchain can be validated.
Though a private company may own the hybrid block chain technology, the exchanges can still be validated. The private entity does not have authority over the hybrid block chain technology and cannot modify the dealings. They have complete access to the system regardless if a user wants to become part of it. The user’s identity is secured from the rest of the users except when they partake in a transaction, which is when it is disclosed.
Benefits of Blockchain
The blockchain is a form of distributed ledger which is shared across a network of computer systems. It functions similarly to a database by storing data digitally in an electronic format. The blockchain is most commonly associated with cryptocurrencies like Bitcoin, as it is used to securely and immutably record transactions. There are various advantages associated with this technology, including the following:
No added costs– There is no extra cost to use blockchain technology since it does away with the need for third-party validation. Businesses are typically charged fees when they accept credit card payments due to the presence of financial institutions and payment processing companies. However, with cryptocurrency, there is no central authority and the cost of making a transaction is much lower.
Accurate– A decentralised system of multiple computers verifies and authorises transactions on the public blockchain, thereby eliminating the need for manual labour in the confirmation process. This could lead to fewer human errors and a more precise database.
Decentralisation– Rather than having all of its data in one centralised location, decentralisation is implemented in Blockchain technology. This implies that the blockchain is duplicated and sent out to a collection of computers. Each time a new block is included, every computer in the system must update its blockchain record. By distributing the data across the network instead of a single central database, it is more challenging to tamper with the blockchain. If a hacker were to gain access to a version of the blockchain, they would only compromise one copy of the data and not the complete infrastructure.
Private and Secure Transactions– Blockchains are frequently viewed as public databases, allowing anyone with an Internet connection to observe the history of transactions. Nonetheless, personal data linked with the transactions cannot be seen. A frequent mistake is assuming that blockchain networks, for instance bitcoin, are completely anonymous when they are only confidential. The vast majority of blockchains are made available for public access so that anyone with knowledge of the coding can view and analyze it. This permits external reviewers to evaluate the safety of digital currencies like Bitcoin. It also signifies that there is no official authority responsible for who controls Bitcoin’s software or how it is modified. Ergo, anyone can suggest changes or software upgrades to the system. If the majority of users on the network decide that the new version of the software with the update is secure and useful, then Bitcoin can be updated.
Efficiency in transactions– Transactions done through centralised authorities can take a few days to finalise. For example, if you deposit money on a Friday afternoon, the funds may not be visible in your account until the following Monday morning. In contrast to organisations that only run from Monday to Friday, blockchain technology is available round the clock, 24/7, and all year round. Transactions can be processed and completed in about 10-15 minutes, and safe within a few hours.