The classifications Private, Public and Consortium Blockchain also have differences that lead to different user experiences from there, individuals and businesses also have many Blockchain options when participating in different activities.

Since Bitcoin was launched, it laid the foundation for an industry based on the technology behind the Blockchain protocol. Innovators have discovered the potential of this technology and are exploring every possible application of it across industries.

Bitcoin is known as a cryptocurrency – a form of digital cash that is not controlled by any institution. It uses a combination of distributed database technology, financial incentives, and cryptographic techniques to create a large ecosystem that can operate without leaders or administrators.

The data structure that the Bitcoin network uses has gained great traction in the more than 10 years since its creation. Now, Blockchain technology is being tested in areas ranging from finance and supply chains to regulatory and government systems.

In case you haven’t read the tutorial about Blockchain technology for newbies you need to understand: Blockchain is a simple data structure in which its entries cannot be edited but can only be extended. You can think of it as a spreadsheet, where each cell references the cell before it, so any attempt to change the previous cell can be immediately detected. In general, a Blockchain stores information about financial transactions, but it can also be used for any kind of digital data.

Let’s continue with the Blockchain comparison with a spreadsheet. This workbook is kept by multiple parties. Each party runs a specialized piece of software on their device, which connects to other devices running the software so that all participants keep an up-to-date database.

Participants do not get this information from a central source (this is a decentralized network). This means slower information propagation, but it makes the network stronger in terms of security and redundancy.

Next, we will look at three types of Blockchain – Private (private), Public (public) and Consortium (a combination of the two above). Before that, let’s reiterate some of the common features of all three:

A ledger that allows only additions – to qualify as a Blockchain, a system must have a blockchain structure, where each block is linked to the block before it. If the Blockchain is likened to a collection of cells in a spreadsheet, then each block is an individual cell.

A network of peers – every participant on the network keeps a copy of the Blockchain. These participants are called nodes, and they interact in a peer-to-peer fashion.

A consensus mechanism – nodes reach consensus on the correctness of transactions transmitted on the network based on a mechanism that ensures that no erroneous data is written to the chain.

The table below summarizes some of the key differences between these types of Blockchain.

Private Blockchain (Private Blockchain)

In stark contrast to the permissionless nature of public Blockchains, private Blockchains set the rules for who can join and write data to the chain (they are necessary environments). authorized). They are not decentralized systems, as there is a clear hierarchy in terms of control. However, they are distributed networks in which many nodes maintain a copy of the chain on their computers.

Private chains are suitable for an enterprise setup, where an organization wants to enjoy the properties of Blockchain while still being able to protect their network from being accessed by outsiders.

Asking for a Proof of Work is wasteful, but it has proven essential for an open environment, based on the security model. However, in a private Blockchain, PoW cannot prevent too dangerous threats – the identity of each participant is revealed and the management is direct.

In this case, a more efficient algorithm is one with specified validators, where nodes are chosen to take on certain functions to validate transactions. In general, to do this, nodes have to log out on every block. If nodes start acting maliciously, they can be quickly captured and removed from the network. With the top-down control of the Blockchain, it is easier to create a reversal.

Public Blockchain (Public Blockchain)

If you have used a certain cryptocurrency, chances are you have interacted with a Public Blockchain. The majority of distributed ledgers today are Public Blockchains. We call them public because anyone can see the transactions taking place, and you only need to download the necessary software to join this Blockchain.

We also often use the term permissionless to describe public Blockchains. No gatekeeper can stop you from participating, and anyone can participate in the consensus mechanism (for example, by mining or staking). Since anyone is free to participate and get rewarded for contributing to the consensus, we expect to see a highly decentralized topology on a network established around public chain.

Accordingly, we would expect a public Blockchain to be more resistant to censorship than a private (or semi-private) Blockchain. Since anyone can join the network, the protocol must incorporate certain mechanisms to prevent malicious actors from attacking anonymously.

However, a security-oriented approach on public chains often comes with a performance trade-off. Many blockchains suffer from scalability problems and relatively low performance. Furthermore, rolling out changes on a network without forking it can be challenging, as rarely all participants agree on the proposed changes.

Consortium Blockchain (combination of public and private Blockchain)

The Consortium Blockchain is a combination of public and private chains and combines elements from both. The most notable difference between these types of Blockchain can be observed at the consensus level. Instead of an open system in which anyone can confirm blocks or a closed system where only a single organization appoints the creators of blocks, the Consortium chain consists of a number of stakeholders. peer-to-peer act as validators.

From there, the rules of the system are flexible: the chain’s visibility can be limited to validators, can be viewed by authorized individuals, or by all. Provided the validators can reach consensus, changes can easily be introduced. As for the functionality of the Blockchain, if a certain number of parties act honestly, the system will not face any problems.

A Blockchain Consortium will be most beneficial in an environment where many organizations operate in the same industry and require a common platform to conduct transactions or to relay information. Joining a Consortium of this kind can be beneficial for an organization, as it will allow them to share their industry insights with other players.

Between Private, Public and Consortium blockchain, which is the best?

Basically, the Private, Public and Consortium Blockchains are not contradictory & ndash they are different technologies:

– Well-designed public chains have superior censorship resistance however that affects speed and throughput. This type of Blockchain is best suited to ensure the security of the execution of transactions (or smart contracts).

– The private chain can prioritize the speed of the system because it does not need to worry about the unique points of failure encountered in the public blockchains. They are ideal in situations where an individual or organization must control and information is kept private.

Consortium chains mitigate some of the counterparty risk that private chains face (by removing centralized control), and the smaller number of nodes typically allows them to do that more efficiently than public chains. Consortiums are likely to attract organizations that want to streamline forms of communication with each other.

See more: Long-term Crypto Investment for Newbies

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