Blockchain should be given the credit for transmuting the meaning of the word ‘ledger’. Once thought to be an archaic reference to record keeping, it has now made a comeback into the world of technology. The blockchain is a transparent, immutable, decentralized, and secure digital ledger that can be used for record keeping.
These attributes bring in a lot of applications across various industries, including, but not limited to, healthcare, real estate, politics, and above everything, finance! It has to be stated here that the thunder of the blockchain was initially stolen by the Bitcoin, a cryptocurrency which is an offshoot of blockchain technology. Owing to its lucrativeness, availability, and anonymity of transactions, the Bitcoin overshadowed the blockchain.
We will look at the different types of blockchain that are available. Before we go on to dive deeper, let us understand the need for different blockchain types because they serve different applications.
It is perhaps this application that heralded the awesomeness of blockchain to the world! Cryptocurrencies were conceptualized as a way to affect E-commerce transactions without the involvement of a banking intermediary so that costs can be reduced. With this in mind, the Bitcoin was born!
Bitcoin is, without question, the most popular cryptocurrency. The Bitcoin uses blockchain mining for validation which helps in the mitigation of fraud. The Bitcoin blockchain is an open network with no restrictions on who can access the transaction records. The costs, the exchange rates, and every piece of information regarding transactions are available in a transparent and public fashion.
What started as a simple digital ledger quickly diversified into multiple dimensions delivering a host of practical advantages. There are different ways in which the technology manifests itself. Some of them are given below.
Not all blockchain has to be public! Multichain is a blockchain application that organizations use to enhance security and prevent unauthorized access to sensitive data.
The access of the blockchain is restricted to a few relevant people, leave alone validation.
Blockchain for Banking
When centralized banks saw the advantages of the Bitcoin, they decided to jump on the bandwagon. The blockchain can help banks achieve process-efficiency with activities like settlements, fraud-reduction, KYC/AML (Know Your Customer/Anti-money Laundering), and syndicated loans.
The complete access to the blockchain is restricted to a few trusted nodes which are not likely to compromise on the security of the entire blockchain.
The Different Types of Blockchain
Given the variety of applications, it will make more sense that we now look at the different types of blockchains.
This is figuratively and literally the most common type of blockchain. It is accessible by anyone on the planet, and anyone can be a participator or a validator. It is the perfect epitome of decentralization as there is no one who has complete control over the network. This property ensures top-notch data security and focuses on immutability as there is no single person who can manipulate the entire blockchain.
As an offshoot of decentralization, the authority on the blockchain is equally divided among every node in the network making the blockchain fully distributed. Bitcoin and Ethereum can be stated as good examples of public blockchains.
The private blockchain can also be called as permissioned blockchain as it imposes restrictions on who can access, participate, transact, and validate. The entities that will have specific powers on the blockchain are chosen by the organization at the time of development. Just in case new participants need to be added and existing members need to have their permissions revoked, a network administrator can take care of it.
Private blockchains are increasingly adopted by many organizations to store their sensitive data. Since the blockchain is available only to certain people in the company, the security offered by the blockchain only gets multiplied!
The consortium blockchain is a hybrid model where some nodes can control the consensus evaluation and others are allowed to participate in transactions. It is a perfect cocktail of the public and private blockchain.
Given its hybrid nature, there are two types of users — 1) those who can control the access to the blockchain, and 2) those who can access the blockchain. HyperLedger Fabric and Quorum have demonstrated the utilities of this blockchain category.
This type of blockchain finds its application in businesses which are ready to internally share the blockchain but would like to keep it away from the axis of the public.
Choosing the Right One
Blockchain technology is still in its nascent stages but it would not be an exaggeration to say that a lot of industries have recognized and acknowledged the ingenuity of this new technology. Companies like Blockchain App Factory will not only help you choose the right kind of blockchain for your business. Transcending a level, the company also help in creating an exclusive one for you or if need be, capitalize on an existing blockchain and create your smart contract or tokens on it!