Blockchain Debunked! Part 2. Understanding the Different Blockchain Types.

In the previous article, we only walked through what blockchain is and why it has grown so popular and special over time. Here in this article, we are going to outline types of blockchains and just a little bit about blockchain architecture.

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Types of Blockchain

Actually, there are diverse types of blockchains existing but we will focus on the four major and important ones in no particular order, their benefits, drawbacks, and ideal uses:

i. Public Blockchain: Just as the name goes it's a blockchain system where anyone anywhere can participate. Example: Solana, Ethereum and Bitcoin are all public blockchains.

Key Features:

• Open to anyone
• No central authority
• High transparency
• Secured by consensus mechanisms like proof of work(PoW) or proof of stake(PoS)

Drawbacks:

• Scalability: The wide access to public blockchain prevents its ability to handle large volumes of transactions and growing user base. The more the user base grows, the slower it becomes.

• Privacy: Its open nature of increases the exposure of users sensitive information to the public.

Use case: Popular cryptocurrencies such as Bitcoin and Ethereum use a public blockchain for decentralized payments and other crypto-related activities such as trading tokenized assets.

ii. Private Blockchain: This blockchain is the opposite of a public blockchain in sense that it restricts participation to a select few members. It's permissioned and often controlled by a single entity.

Think of it like a party strictly on invite.

Key Features:

• Restricted access (only invited members)
• Highly centralized
• Increased privacy

Benefits:

• Compared to public blockchain, there's increase in privacy since it's not open to the public.
• It's privacy nature in turn accounts for security.
• More scalable(faster) since there are less users on the blockchain.

Drawbacks:

• Lacks Transparency. Sometimes this is for the greater good with intention to tighten security.
• Centralization.
• Expensive to maintain.

Use case:
Some healthcare systems use this blockchain to manage patient records securely, certain finance institutions use it for cross-border transactions and companies like Walmart use a private blockchain to track goods from production to delivery.

iii. Hybrid Blockchain: It's a combination of both public and private blockchain at customized level. Example Aergo Enterprise and Swisscoin.

Key Features:

• Allows customizable level of access control.
• Designed to reduce the setbacks of both private and public blockchains and leveraging on their benefits.

Benefits:

• Unlike public blockchain, Hybrid Blockchain is more scalable and yet manages to possess the extra cool features of a public blockchain alongside private's as well.
• Only selected information can be made public or private depending on the data that need to be shared.

Drawback:

• Isn't completely transparent since it has a little bit of the centralized nature of private blockchains.

Use case: Enterprises adopt a hybrid blockchain system to enable them customize their transparency to both internal stake holders and external users. Example XinFin use a hybrid blockchain that has Ethereum's public blockchain system and Quorum for the private use.

That's all about the core blockchain types and I hope you enjoyed your read.

In the next article, we're going to cover Blockchain Architecture. If you want to explore the internal make-up of blockchains, kindly look out for the next article.

Thanks for stopping by. See you soon.