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A Comprehensive Guide to Different Types of Blockchain

case study author

Jakub Przyciasa


A Comprehensive Guide to Different Types of Blockchain

Blockchain technology has revolutionized various industries, and its potential seems limitless. However, not all blockchains are the same. In this comprehensive guide, we will explore the different types of blockchain and their functionalities, helping you gain a deeper understanding of this groundbreaking technology.

Understanding Different Blockchain Varieties

One of the key differentiators among blockchain types is their range of functionality. Public blockchains, for example, allow anyone to participate in the network. They are decentralized, meaning that no single entity controls the network. These blockchains are often used for cryptocurrencies like Bitcoin and provide transparency and security through consensus mechanisms.

On the other hand, private blockchains are more restrictive. Only authorized participants can join the network, making them ideal for industries that require privacy, such as healthcare or finance. While private blockchains sacrifice decentralization, they offer enhanced scalability and transaction speed.

For those looking for a blend of characteristics from both public and private blockchains, hybrid blockchains are the answer. Hybrid blockchains leverage both public and private features, allowing organizations to strike the right balance between transparency and privacy. This type of blockchain can be useful for supply chain management or voting systems, where some data needs to be public while other information must remain confidential.

Lastly, consortium blockchains combine the advantages of private and hybrid blockchains. They are governed by a consortium or a group of organizations that work together to maintain the network. Consortium blockchains provide more control and higher transaction speeds compared to public blockchains, making them suitable for applications like interbank transactions or supply chain collaboration.

Exploring the Functionality of Public Blockchains

Public blockchains are an open playground for innovation. They allow anyone to access the network, participate in consensus, and contribute their computing power for validating transactions. One of the key benefits of public blockchains is their transparency. Every transaction made on the network is visible to all participants, making it ideal for projects that require accountability and trust.

Furthermore, public blockchains are highly secured through cryptographic hashing algorithms and consensus mechanisms like proof-of-work or proof-of-stake. By relying on a large network of nodes to validate transactions, public blockchains ensure immutability and resistance to malicious attacks.

However, the inherent openness of public blockchains can also be a drawback. It can be challenging to scale public blockchains due to the massive computational power required to validate each transaction. Moreover, the level of privacy in public blockchains is relatively low, which may not be suitable for applications that handle sensitive data.

Unveiling the Potential of Private Blockchains

Private blockchains, also known as permissioned blockchains, provide an alternative approach to blockchain technology. With a limited number of participants, private blockchains offer higher levels of scalability, transaction speed, and confidentiality compared to their public counterparts.

Private blockchains are especially relevant to industries that handle sensitive data or require fine-grained access control. For example, in the healthcare sector, private blockchains provide a secure environment for storing and sharing patient records among authorized healthcare providers. By enabling only trusted participants to join the network, private blockchains minimize the risk of data breaches and ensure confidentiality.

However, the trade-off for enhanced privacy and security is a reduced level of decentralization. Private blockchains rely on a centralized entity to manage and control the network. This centralization undermines some of the key principles of blockchain, such as immutability and censorship resistance.

secure blockchain

The Best of Both Worlds: Hybrid Blockchains Explained

Hybrid blockchains bridge the gap between public and private blockchains, offering a versatile solution for various use cases. These blockchains allow organizations to control access rights while preserving certain elements of transparency and decentralization.

In a hybrid blockchain, selected participants have the authority to validate transactions and maintain the ledger, while the rest of the network can still read and access the data. This approach is particularly useful for supply chain management, as it allows companies to collaborate while maintaining confidentiality regarding sensitive information, like pricing or trade secrets.

Another advantage of hybrid blockchains is their ability to scale. By offloading some computations to a private network, hybrid blockchains can process transactions more quickly and efficiently, without sacrificing security.

Navigating the World of Consortium Blockchains

Consortium blockchains are a unique type of blockchain governed by a group of organizations working together. In this model, the participants agree on the rules and regulations that govern the network, ensuring distributed control and decision-making.

By leveraging a consortium model, industries such as finance or supply chain management can benefit from increased efficiency and reduced costs. For example, banks can collaborate on interbank transactions using a consortium blockchain, eliminating intermediaries and streamlining processes.

Consortium blockchains strike a balance between scalability and decentralization. With a limited number of validators, consortium blockchains can process transactions faster than public blockchains while ensuring a distributed network with increased security.

As the world of blockchain continues to evolve, understanding the different varieties and their functionalities is crucial. Whether it's the transparency of public blockchains, the privacy of private blockchains, the versatility of hybrid blockchains, or the collaborative nature of consortium blockchains, each type offers unique advantages and trade-offs. By exploring and embracing these diverse blockchain varieties, organizations can unlock the full potential of this transformative technology.

blockchain in the world

Final Considerations on Blockchain Technology

Blockchain technology has come a long way, offering diverse possibilities for various applications. As you navigate through the realm of blockchain, understanding the different types of blockchains will empower you to choose the most appropriate solution for your needs.

Whether you require a transparent public network, a private blockchain for sensitive data, a hybrid model for specific use cases, or a consortium blockchain to collaborate with other organizations, blockchain technology provides a flexible and secure foundation for innovation.

Remember, blockchain is still an evolving technology, and each type of blockchain has its own advantages. By staying informed and exploring the possibilities, you can leverage the power of blockchain to transform your business and drive meaningful change in the digital world.

One key aspect to consider when delving into blockchain technology is the concept of smart contracts. Smart contracts are self-executing contracts with the terms of the agreement directly written into code. These contracts automatically enforce and facilitate the negotiation or performance of an agreement, providing increased security and efficiency in various industries.

Furthermore, the decentralized nature of blockchain technology ensures that there is no single point of failure, making it highly resilient to cyber attacks and data manipulation. This distributed ledger system not only enhances transparency and trust but also reduces the risk of fraud and unauthorized alterations to data.