After Bitcoin’s success, many enterprises are starting their own blockchain projects. About 60% of CIOs expect to deploy them by next year.
That said, not all cryptocurrencies are part of the same blockchain network. There are four main types of blockchain: public, private, consortium, and hybrid. The technology behind these networks is the same, but they target different end-users.
Not sure which blockchain network is relevant to your needs? Here’s a short guide to the four main types of networks and their ideal uses.
The public blockchain is where Bitcoin and other cryptocurrencies originated. It popularized distributed ledger technology (DLT) by removing all issues related to centralization. Rather than store information in one place, DLT distributes it across a network.
A public blockchain is completely non-restrictive. Anyone can become an authorized node simply by signing on the platform. Users can also conduct mining activities and access past and current records.
Public blockchains are perfect for the cryptocurrency business. For instance, if you know how to sell bitcoin, you’re best off using a public blockchain. Beyond that, any organization built on transparency can profit from a public blockchain.
A private blockchain is either controlled by a single company or works in a restrictive environment. Much like a public blockchain, it uses P2P connections, but on a much smaller scale.
As they’re limited in size, private blockchains tend to be faster and more secure. Their source code is often closed, though, and you need an invite to get in. These blockchains are ideal for auditing, trade secret management, and asset ownership.
A hybrid blockchain combines the elements of public and private blockchains. It lets organizations set up a private system alongside a permissionless one. This allows them to choose what data will be public and who can access specific resources.
When you join a hybrid blockchain, you’ll gain full access to the network. Your identity won’t be visible to other users unless you engage in a transaction with them. The closed ecosystem also prevents hackers from mounting an attack on the network.
The real estate, retail, and medical industries get a lot of value out of hybrid blockchains. They can run a private system while showing some information—such as listings—to the public.
A consortium blockchain provides limited access to a specific group. This eliminates the risks that come with one entity controlling the network. These blockchains are more scalable and safer than public blockchains.
Consortium blockchains are best used for banking and payments. Different banks can form a consortium, allowing them to choose who validates the transactions. Research organizations can follow a similar model.
Types of Blockchain: Have Your Pick!
As blockchain technology becomes more popular, you can no longer afford to ignore it. All types of blockchain have their applications, so it’s just a matter of finding the right fit for your needs. The above guide should help you reach the right decision.