The main purpose of blockchain is to carry out transactions in a safe manner. This is why people use blockchain and ledger technology in various scenarios. Additionally, a multichain can be configured to prevent unauthorized access to sensitive data. It is not open to everyone and, but only to those authorized by the organization that uses said blockchain. Depending on the organization and the specific way it operates, there are multiple types of blockchain technology to choose from. There are four main types of blockchain networks: public blockchains, private blockchains, consortium blockchains, and hybrid blockchains. Each of these platforms has its pros, cons, and ideal uses. Although the blockchain technology in these projects is the same, the target end-users of different blockchains may differ. For example, public blockchains are intended for the general public as end users, while private blockchains are intended only for invited users and their networks. But let’s dive deeper into this, shall we?

Why are different blockchains useful?

The most basic need or use of blockchain is to transact or exchange information over a secure network. However, how people use blockchain and distributed ledger technology or the network is different in each case. For example, we can talk about Bitcoin, thanks to which the blockchain has become so popular. Bitcoin is a digital cryptocurrency processed using blockchain and DLT technologies. This type of blockchain network is a public network because people all over the world can become nodes, verify other nodes, and trade bitcoins. However, suppose a bank uses a private blockchain network. A restricted network is created where only authorized members of the bank can access confidential information. Therefore, no one outside this closed network can access the bank information. A private network has restricted and authorized nodes controlled by the network administrator. Information transmitted through such a private blockchain network remains on the web. Each new host added to the private network must be authorized by the network administrator. The bank decides at what scale the private blockchain for all its branches can be created. As in these examples, there are different ways to set up a blockchain network, depending on the use and requirements.

What are the 4 types of blockchain technology?

Blockchain technology offers decentralization, greater security, faster settlements, and immutability. Orders, invoices, payments, production, and more can be tracked using the blockchain network. You can see all transactional events at all times which gives you greater confidence, enhanced security, and more opportunities. How many blockchains are there?

Public blockchain

A public blockchain can be accessed by anyone in the world; they can post transactions and hopefully be included if they are valid and involved in a consensus process that determines which blocks are added to the chain and what the current state is. Public blockchains offer a mechanism to protect application users from their developers, showing that certain activities are beyond the rights of even the application's developers. Since public blockchains are open, they are likely to be adopted by many organizations as they do not require third-party validation. Another reason it has attracted so many followers is the anonymity of the public blockchain. It is indeed a safe and open platform where you can run your business properly and effectively. In addition, you do not need to provide your real ID or your name and surname to participate. No one can track your online activities if your identity is protected. However, it requires a lot of computing power, has little or no privacy for transactions, and has security issues.

Private blockchain

Private blockchains, which can also be called managed blockchains, are blockchains with permissions controlled by one organization. In a private blockchain, a central authority decides who can be a node. The central authority, however, doesn’t have to grant each node equal rights to perform operations. Private blockchains are only partially decentralized because public access to these blockchains is limited. Some examples of private blockchains include Ripple, a virtual exchange network for companies, and Hyperledger, an umbrella project for open source blockchain applications. Private and public blockchains have their downsides - public blockchains tend to have longer confirmation times for new data than private blockchains, and private blockchains are more prone to fraud and scammers. Consortium and hybrid blockchains have been developed to overcome these shortcomings.

Consortium blockchain

Consortium blockchains, unlike private blockchains, are permissioned blockchains that are managed by a consortium of organizations, and not a single entity. This makes consortium blockchains more decentralized than private blockchains, which increases security. On the other hand, setting up a consortium blockchain can be difficult as it requires the collaboration of multiple companies, increasing the risk of logistics problems and antitrust violations. Additionally, some members of the supply chain may not have the necessary technology or infrastructure to adopt blockchain technology. Those who do this may find the initial cost of digitizing their data and linking it to other members of the supply chain too high.

Hybrid blockchain

Hybrid blockchains are a unique type of blockchain technology that combines elements from public and private blockchains or tries to use an ideal part of public and private blockchain solutions. The transactions and records on the hybrid blockchain are private but can be verified if necessary - for example by providing access through a smart contract. Personal information is stored online but can still be verified. While a private party may have a hybrid blockchain, it cannot change a transaction on a whim. The hybrid blockchain enables organizations to build a private permission-based system and a public permissionless system, allowing them to manage who can access specific blockchain data and what public data will be public. All in all, blockchain technology is becoming even more popular and gaining businesses support rapidly. Each of these types of blockchains has potential uses that can improve trust and transparency, and create better transaction records.