Blockchain is a decentralized digital transaction ledger, an ever-growing list of electronic records, which will be retained for a long time. Its security is ensured through encryption (an algorithm code). Blockchain ledger data is distributed in a computer network.
There are four types of Blockchain platforms:
- Public blockchain
- Private blockchain
- Licensed blockchain
- Consortium Blockchain.
1.What is a Public Blockchain?
Most blockchains are built on public infrastructure, a network that anyone can freely join without permission. Additionally, all network participants can view the shared ledger and participate in the consensus process by helping to validate transactions. Some of the most popular public networks include Bitcoin, the world’s first cryptocurrency; Ethereum, the world’s first decentralized applications (dApps) platform; and Cardano, a peer-reviewed third-generation blockchain network.
Benefits of Public Blockchain:
① Decentralization: Public blockchains are completely decentralized, meaning there is no central party in charge of the network and no authority to override the distributed ledger.
②Transparency: All transactions are visible on the public network, which means anyone (even outside the network) can see the entire transaction record. Each participant in the network receives a copy of the distributed ledger containing all previous transactions, which is updated as transactions are executed on the network.
③ Censorship-resistant: Public blockchains are censorship-resistant, which means no party or central authority can shut down the network or alter transactions on the ledger.
④ High accessibility: Since no permission is required to participate, public blockchains are among the most accessible networks, even more so than traditional banking services. All you need is a smartphone or laptop with internet access.
Disadvantages of Public Blockchains:
① Energy Inefficiency: One of the main drawbacks of PoW-powered public blockchains is their high energy consumption, which critics say is not environmentally sustainable. Newer blockchain networks are built on a Proof of Stake (PoS) consensus mechanism, which is more energy-efficient than proof-of-work.
② Transaction traceability: Although the identities of public blockchain participants are anonymous, transactions are technically traceable. For example, if a network participant’s wallet address is associated with a user, others will be able to track the participant’s cryptocurrency amounts and past transactions because the distributed ledger is publicly available.
2. What is a Private Blockchain?
Similar to public blockchain networks, private blockchain networks are also decentralized peer-to-peer networks. However, in a private blockchain network, an organization manages the network, controls who is allowed to participate in the network, enforces consensus protocols, and maintains a shared ledger. Depending on usage, this can significantly increase trust between participants. Private blockchains can operate behind corporate firewalls or even be hosted internally.
The main difference between public and private blockchains is that private networks are invite-only, meaning there is a central entity that controls who is allowed to participate in the network. This central entity can also assign roles to participants, such as granting them mining rights and allowing them to transact on the network. The same entity can modify, delete and overwrite existing transactions on the chain, which has been called the Achilles heel of private infrastructure – the lack of censorship resistance. Some of the most popular private networks include Morpheus Network (a supply chain and logistics blockchain), Patientory (a healthcare supply chain app with a private Ethereum implementation), and R3’s Corda (a blockchain for highly regulated institutions) Internet).
Benefits of Private Blockchains:
① Security enhancement: All private network participants require an invitation from a central entity, reducing the number of people on the network with potentially malicious intent. Combined with the fact that the main ledger is in a protected state, private networks are generally more secure.
②Excellent scalability: A network that does not carry millions of users and transactions is easier to scale than a larger blockchain network. Private blockchains are managed by a central authority and can easily implement changes and features without a community vote, just like public chains.
③ Higher throughput: Private networks have limited access rights, so they are usually much smaller than public blockchains. This results in higher throughput and faster transactions due to higher network availability.
④ More reliable: Unlike public blockchains, users on private networks are not anonymous, which increases the level of trust in these restricted blockchains. Each network participant can be identified.
Disadvantages of Private Blockchains:
① Lack of decentralization: One of the main disadvantages of private networks is that they are not decentralized. A shared ledger that tracks transactions functions as a closed central database managed by a single entity or organization.
② Lack of immutability: Due to the inherent centralization of private networks, network operators can change data and on-chain transactions.
3. What is Permissioned Blockchain?
Permissioned blockchains are not private blockchains, but rather have an additional layer of access control as a security measure, allowing only identifiable participants to perform certain on-chain operations. While private blockchains only allow known nodes to operate, any node can operate on an permissioned blockchain once the operator authorizes it. Examples of permissioned networks include Energy Web Chain (a blockchain platform for the energy industry), Ripple (a global payment platform), IBM Food Trust (a verification system for blockchains). food supply) and Nokia Data Market (a secure data exchange by blockchain technology market). The most important element of a permissioned blockchain is the aforementioned access control layer, which allows network operators to restrict access to participants and assign different roles to each participant.
Benefits of Permissioned Blockchains:
① Better performance: Since permissioned blockchains are not open to the public, they are generally much “lighter” than public blockchains, which means there is much less on-chain data blocking the network. The less data on-chain, the less strain on the network, resulting in faster transactions and better overall performance.
②Different degrees of decentralization: Authorized blockchain network operators can choose the desired level of decentralization. They can also be partially decentralized or fully centralized.
③ Maximum customization: Of the three blockchain categories, permissioned blockchains provide the most customizable infrastructure. Rights management features allow network operators to invite participants and assign different roles to participants.
④ Governance: Since they are managed by a central entity, permissioned blockchains generally do not require community approval for hard forks. This means that updates can be implemented quickly and easily based on the needs of individual entities.
Disadvantages of Permissioned Blockchains:
① External data storage: Permissioned blockchains generally require external storage space, but some authorized blockchains cannot use the decentralized storage methods used by public networks, depending on their degree of decentralization. This could endanger the integrity of the on-chain data.
② Level of inconsistency of SECURITY: The security of an authorized blockchain entirely depends on the consensus algorithm and chosen participants, and malicious actors could compromise the entire network. Combined with the fact that these networks also require some type of central monitoring, the potential for manipulation increases compared to public infrastructure.
4. Consortium Blockchain
Multiple organizations can share the responsibility for maintaining the blockchain. These preselected organizations determine who can submit transactions or access data. Consortium blockchains are ideal for companies when all participants need to be authorized and share responsibility for the blockchain.
A consortium chain refers to a blockchain whose consensus process is controlled by pre-selected nodes. For example, imagine a community consisting of 15 financial institutions, each of which runs a node, and to make each block valid, it must obtain one. 10 agency confirmations. The blockchain can be readable by everyone, or only restricted to participants and take a hybrid route, like the root hash of the block and an API (application programming interface) which is exposed to the outside world, and the API can be used by the outside world for a limited number of times Query and get information about the state of the blockchain. These blockchains can be considered “partially decentralized”. For example, R3 CEV is a typical consortium chain system