Blockchain Types and What They Are Used For?
Beyond bitcoin and other cryptocurrencies, blockchain technology has many more uses. Technology is changing many industries in ways that span from how contracts are executed, to how effectively governments operates, owing to its capacity to increase transparency and accountability while saving enterprises time and money.
A public blockchain type with a cryptocurrency use-case was the first version of blockchain technology to be introduced to the general public. This helped to raise the idea of decentralized ledger technology. The DLT idea altered how we approach problems in our environment. It enabled organizations to operate independently of a centralized body.
In this article, we will talk about the different types of blockchains and their use cases.
Blockchain technology is the principle or system that underpins how a blockchain operates. Cryptocurrencies like Bitcoin accelerated blockchain technology just as the internet enables email. The blockchain is a distributed digital ledger that is immutable (meaning that once recorded, a transaction or file cannot be modified) and has various applications outside the world of cryptocurrencies. Blockchain cloud services allow transactional data from multiple sources to be easily collected, integrated and shared.
The fundamental use of the enterprise blockchain is to carry out transactions on a safe network. For this reason, people employ blockchain and ledger technologies in various contexts. To guard against unwanted access to private information, multichain can be set up. It can only be accessed by authorized entities within the organization and is not accessible to the general public. Aside from cryptocurrency, blockchain technology is also applicable to solving real-world problems. It can be used in the following ways:
- For a full-proof voting management system.
- In supply chain management.
- In healthcare management.
- Real estate project.
- NFT marketplace.
- Avoid copyright and original content creation.
- In the personal identity system
- To make an immutable data backup.
- Internet of Things
A permissionless blockchain is a type of blockchain commonly referred to as a trustless or public blockchain that allows anyone to take part in the procedure used to validate and authenticate data and transactions. These are employed in networks when maximum transparency is necessary.
- There is no centralized authority in a permissionless blockchain.
- Every aspect of the platform is open-source.
- Complete transparency in the transaction.
- Significant token usage.
- Anyone can join if they have access to suitable hardware and the internet.
- Encourage user or entity trust.
- It has a high level of transparency because it is a more extensive network.
- Increased participation through a wider decentralization of access.
- Inefficient use of energy because of a vast network.
- Lower scalability of performance.
- Greater public visibility means less privacy.
A permissioned blockchain is a closed network where only a selected group of individuals or entities can validate or authenticate transactions or data in a specified blockchain network. These are utilized in a private network where blockchain hosting is centralized and when there is a need for extreme privacy and security.
- A key characteristic is the organization’s transparency about its goals.
- The absence of anatomy and the restriction on the number of users are other features.
- It lacks a centralized administration.
- Created by a private entity.
- Since it has specific nodes for validation, this blockchain typically operates more quickly.
- They may provide customization.
- Permission is required to access transaction details, ensuring strong privacy.
- Performance and scalability are improved because there are fewer nodes involved.
- It is not entirely decentralized, as it needs permission.
- There is a chance of corruption because there are so few participants.
- Owner and operator can alter the rules whenever they see fit.
Types of Blockchain Technology
There are four types of blockchain, and we will consider each type and its uses.
A public blockchain network is an unrestrictive, permissionless distributed ledger system. Anyone with internet connectivity can sign in to a blockchain platform to join the blockchain network as an authorized node and become a part of it because they are entirely decentralized. A node or user participating in the public blockchain can read recent and old records, confirm transactions or complete proof-of-work for an incoming block, and engage in mining.
Cryptocurrency mining and trading are the most fundamental uses of public blockchains. Public blockchain networks are generally secure if users closely adhere to security standards and procedures. It’s only dangerous if the participants do not comply with the security measures.
Public blockchains are secured by proof of work or proof of stake and can replace the use of existing financial systems. This blockchain’s smart contract, which made it possible for decentralization, represents its more advanced aspect. Litecoin, Ethereum, and Bitcoin are a few examples of public blockchains.
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- Trustable: There are algorithms for detecting fraud. Participants don’t need to be concerned about the network’s other nodes.
- Secure: This blockchain is large because it is accessible to everyone. A large size has a more evenly distributed record volume.
- Anonymous Nature: It is a secure platform that allows your transaction to go through smoothly, and you can participate without disclosing your identity or name.
- Decentralized: Every user owns a copy of the ledger; hence there is no central platform for network maintenance.
- Processing: Because of its vastness, the transaction procedure moves relatively slowly. It takes a long time to verify each node.
- Energy Consumption: Proof of labor requires a lot of energy. To participate in the network, high-quality computer hardware is needed.
- Acceptance: Governments struggle to integrate technology more quickly since no centralized authority exists.
A private blockchain network is a restrictive or permission blockchain that can only be used in a closed network. Private blockchain networks are typically utilized within businesses or organizations where only a small group of people are allowed to participate in a blockchain network. The governing organization controls security, authorizations, permissions, and accessibility.
Therefore, private blockchains are used similarly to public blockchains but have a restricted and small network. Also, the central authority may only sometimes accord every node an equal right to execute certain functions. Private blockchains are partially decentralized due to the limited public access to private blockchains.
This blockchain system offers a major benefit to securing information without making it accessible to the public, provided it is properly secured and maintained. As a result, businesses employ them for asset ownership and management, digital identity, supply chain management, voting, and internal audits. Multichain, Ripple, Hyperledger projects (Fabric, Sawtooth), and Corda are a few examples of private blockchains.
- Speed: The transaction rate is high because of its small size. It takes less time to verify transactions of every node.
- Scalability: Scalability can be modified. One can manually choose the network’s size.
- Privacy: It has a higher level of privacy due to businesses’ need for confidentiality
- Balanced: Only a select few users get access to the transaction, making it more equitable and enhances network performance.
- Security: There is a potential for manipulation because there are few nodes of this type.
- Centralized: The critical nature of trust-building makes it one of the main drawbacks. This is a tool that businesses can employ for misconduct.
- Count: Due to the low number of nodes, the security of the blockchain may be at risk if any nodes go down.
A consortium blockchain is a permissioned, semi-decentralized blockchain controlled by several organizations. Consortium blockchains are more decentralized than private blockchains, which increases security. However, developing consortiums can be difficult because it calls for collaboration between several organizations, which poses a logistical problem and a possible antitrust risk.
Also, some supply chain participants might need the facilities or technology required to use blockchain technologies. Those who have may believe the startup expenses are too high of a cost to bear to digitize their data and access other participants in the supply chain.
The enterprise software company R3 has designed a well-liked set of consortia blockchain solutions for the larger financial services market. CargoSmart established the Global Shipping Business Network Consortium in the supply chain business. It is a non-profit blockchain consortium that digitizes the shipping sector and enables maritime industry operators to collaborate more effectively.
The main users of consortium blockchains include banks, governments, businesses, and other payment processing institutions. Examples of consortium Blockchain are Tendermint, Multichain, Energy Web Foundation, R3, etc.
- Speed: Verification is quick due to the small user base. Organizations can use this more readily because of the fast pace.
- Authority: Participation from multiple organizations can decentralize it at every level. Decentralized power increases security.
- Privacy: The public does not have access to blockchain records. However, it is accessible to all blockchain participants.
- Flexible: Blockchain flexibility differs significantly from one another. The decision can be made more quickly because it is not big.
- Approval: The protocol is less pliable because it has the unanimous consent of all members. There may be discrepancies in the interest vision since one or more entities are participating.
- Transparency: If the company turns corrupt, it might be hacked. Organizations may keep users from seeing certain information.
- Vulnerability: This blockchain is more vulnerable if a small number of nodes are infiltrated.
A hybrid blockchain is an enterprise blockchain that combines the features of public and private blockchains. This means that you can have a private permission-based system as well as a public permission-less system. Users can regulate which data in the blockchain is accessible by using a hybrid network.
Only a specific subset of the blockchain data or records can be made public, keeping the rest hidden and confidential. Users can combine a private network blockchain with several public blockchains owing to the flexibility of the hybrid blockchain technology.
It offers a more comprehensive approach to healthcare, government, real estate, and financial sectors. It offers a solution for situations in which data must be protected privately but must be accessible to the public. Examples of Hybrid Blockchain are IBM Food Trust, Ripple network, and XRP token.
- Ecosystem: The hybrid nature of this blockchain is its greatest asset. Since 51% of users cannot access the network, it cannot be infiltrated.
- Cost: Only a few nodes validate each transaction, making transactions inexpensive. Lower computational expense since not all nodes carry out the verification.
- Architecture: Although very customizable, it nonetheless upholds openness, security, and integrity.
- Operations: It can select the blockchain users and determine which transactions should be made public.
- Efficiency: A hybrid Blockchain cannot be implemented by everyone. Also, the organization has specific issues with maintenance efficiency.
- Transparency: Someone can keep some information from the user. The organization decides whether to grant access if someone requests it through a hybrid blockchain.
- Ecosystem: The lack of network involvement incentives in this blockchain results from its closed environment.
Blockchain is finally gaining recognition, largely owing to bitcoin and cryptocurrencies, and there is already a wide range of valuable applications for the technology being researched and deployed. Blockchain is a lucrative investment since it can reduce mediators while increasing accuracy, efficiency, security, and cost in commercial and government activities.
NFTs are becoming more popular, and assets are being tokenized. Blockchain will continue to grow significantly over the coming decades. Are you looking for Bitcoin dedicated server hosting or blockchain hosting? We’ve got you covered. ServerMania Dedicated Server hosting can be customized to meet the needs of your business. Contact us now to choose from various base configurations before customizing the hardware and software for your applications.