Blockchain And Its Types

Blockchain is a digital record of transactions. It is a specific type of database. It stores data in blocks which are then chained together. When new data comes in, it is entered into a fresh block.

Each record is a block, and these blocks are linked together in a single list called a chain. Each block is used to record transactions made with cryptocurrencies(digital currency, which generally exists electronically, Eg: Bitcoin, Litecoin, Ripple, Dogecoin). It is used for a secure transfer of items like money, property, contracts. And the data which is stored inside a block depends on the type of blockchain.

Photo by Hitesh Choudhary on Unsplash

Types of blockchain:

1. Public Blockchain: Bitcoin originated from this blockchain. Bitcoin is a computer file stored in a digital wallet app, on a smartphone. These bitcoins can be sent to others digital wallet and vice-versa. A public blockchain is non-restrictive and permissionless. If you have internet access then, you can sign in to the blockchain platform to become an authorized node. Then you can access current and past records and conduct any mining activities. Here, anyone can verify the transactions and find bugs or propose changes because source code is usually open-source.
   The advantage of a public blockchain is the “Network’s transparency”. As long as the users follow security protocols and methods, public blockchains are mostly secure.
2. Private Blockchain: It works in a restrictive environment. It operates like a public blockchain network but, uses peer-to-peer connections and decentralization(decentralized networks are organized in a much more distributed fashion where each node within the network functions as a separate authority with independent decision-making power regarding how it interacts with other systems). It is used for smaller-scale networks.
3. Hybrid Blockchain: It combines elements of both private and public blockchain.
   It is helpful for organizations to set up a private, permission-based system and also allows a permissionless system, to allow only authorized users to access specific data stored in blockchain.
   The advantage of hybrid blockchain is that it works within a closed ecosystem. It protects privacy but also allows communication with third parties.
4. Consortium Blockchain: Also known as a federated blockchain. It is similar to hybrid blockchain, it has private and public blockchain features. A consortium is a private blockchain but with limited access to a particular group, eliminating the risks that come with just one entity controlling the network on a private blockchain.
   It is more secure, scalable, and efficient than a public blockchain. Just like private and hybrid blockchain it also offers access controls.