Types of Blockchain: Complete Overview

Have you ever thought about cryptocurrencies, such as Bitcoin, work behind the scenes? That is where Blockchain comes in. It is an essential technology that has changed the way information is stored, exchanged, and verified. There are various Types of Blockchains, each built to fulfil a specific purpose and function.

Whether you’re just stepping into the world of digital innovation or already working with decentralised systems, understanding the different Types of Blockchain is essential. This blog will walk you through how each type works, where they’re used, and why they matter in today’s digital economy. Let’s dive in and explore the possibilities.

Table of Contents

1) What is Blockchain?

2) What are the Different Types of Blockchain?

3) Use Cases for Each Blockchain Type

4) Real Life Applications of Blockchain

5) How Many Blockchains are there in Cryptocurrency?

6) What is the Most Used Blockchain?

What is Blockchain?

Blockchain is a decentralised system used for storing and transferring data across a network of computers, known as nodes. Each node holds a complete copy of the ledger, which gets updated when new transactions or data are added. Information is stored in “blocks,” and is securely linked to the previous one using a cryptographic hash.

Here, new blocks are added through a process called mining. This is where nodes solve complex mathematical puzzles to validate transactions or data. In cryptocurrency, the first to solve the puzzle earns a reward and adds the next block to the chain.

Types of Blockchain

There are different Types of Blockchains, depending on who can access, participate in, and validate the ledger. The main Types of Blockchain are:

Public Blockchain

A Public Blockchain is open and permissionless. It means anyone is allowed to join, read, write, and verify transactions. It is decentralised with no single authority controlling the network. Some popular examples under this Type of Blockchain include Bitcoin, Ethereum, and Litecoin.

1) Advantages:

a) High level of security, transparency, and immutability, as the ledger is verified by a large number of nodes and cannot be altered by anyone.

b) High level of innovation and diversity, as anyone can create and use applications and services on the network.

c) High level of inclusiveness and accessibility, as anyone can freely join and engage in the network without any barriers or fees.

2) Disadvantages:

a) There is a low level of scalability and efficiency, as the network can process only a limited number of transactions per second and consumes a lot of energy and resources.

b) Low level of privacy and confidentiality, as the ledger is public and anyone can see the transactions and data of the users.

c) High levels of volatility and unpredictability, as the network is subject to market fluctuations and external influences.

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Private (or Managed) Blockchain

A Private Blockchain is closed and requires permission. It means only authorised members can access and validate data. It is managed centrally by one organisation, making it suitable for internal business use. Some well-known examples include Fabric, Corda, and Quorum.

1) Advantages:

a) High level of scalability and efficiency, as the network can process a large number of transactions per second and consumes less energy and resources.

b) High level of privacy and confidentiality, as the ledger is private and only the authorised entities can see the transactions and data of the users.

c) High level of stability and predictability, as the network is less subject to market fluctuations and external influences.

2) Disadvantages:

a) Low level of security, transparency, and immutability, as the ledger is verified by a small number of nodes and can be altered by the authority or the intermediary.

b) Low level of innovation and diversity, as the network is restricted and limited by the rules and regulations of the authority or the intermediary.

c) Low level of inclusiveness and accessibility, as the network is exclusive and requires permission and fees to join and participate.

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Consortium Blockchain

Another different blockchain types include, Consortium Blockchain is placed between public and private models. Here, access and validation are limited to a selected group of organisations that jointly govern the network. Some popular examples include Ripple, Stellar, and Binance Chain.

1) Advantages:

a) Moderate level of scalability and efficiency, as the network can process a moderate number of transactions per second and consumes a moderate amount of energy and resources.

b) Moderate level of privacy and confidentiality, as the ledger is semi-private and only the authorised entities can see the transactions and data of the users.

c) Moderate level of stability and predictability, as the network is partially subject to market fluctuations and external influences.

2) Disadvantages:

a) Moderate level of security, transparency, and immutability, as the ledger is verified by a moderate number of nodes and can be altered by the group of authorities or intermediaries.

b) Moderate level of innovation and diversity, as the network is partially restricted and limited by the rules and regulations of the group of authorities or intermediaries.

c) Moderate level of inclusiveness and accessibility, as the network is partially exclusive and requires permission and fees to join and participate.

Hybrid Blockchain

Hybrid Blockchain combines the strengths of both public and private Blockchains. It enables organisations to maintain a private, permission-based environment while interacting with the public when needed. In this Type of Blockchain, most transactions are validated within the private section. Some examples include Kadena, Dragonchain, and Polkadot.

1) Advantages:

a) Flexible level of scalability and efficiency, as the network can adjust the number of transactions per second and the amount of energy and resources according to the demand and the supply.

b) Flexible level of privacy and confidentiality, as the ledger can be public or private depending on the type and the purpose of the transactions and data of the users.

c) Flexible level of stability and predictability, as the network can balance the market fluctuations and external influences with the internal rules and regulations.

2) Disadvantages:

a) Complex level of security, transparency, and immutability, as the ledger is verified by a variable number of nodes and can be altered by different entities depending on the access and the authority.

b) Complex level of innovation and diversity, as the network is influenced by different factors and forces depending on the participation and the validation.

c) Complex level of inclusiveness and accessibility, as the network is determined by different criteria and conditions depending on the join and the involvement.

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Use Cases for Each Blockchain Type

The different Types of Blockchain serve different industry needs, with regard to their privacy, security, and scalability needs.

1) Public Blockchains:

This is widely used in the domain of cryptocurrency. In this Type of Blockchain, there are open financial transactions and decentralised innovation. Some popular networks, such as Bitcoin, Ethereum, and Cardo, support these payments as well as Non-fungible Tokens (NFTs) and Decentralised Finance (DeFi).

2) Private Blockchains:

Large organisations utilise this Type of Blockchain to improve internal security and efficiency. For example, Walmart has been using this Type of Blockchain since 2016 to track food products across its supply chain. Also, financial giants, such as J.P. Morgan, rely on this system for secure transaction processing.

3) Consortium Blockchains:

This Type of Blockchain is commonly used in sectors where multiple organisations need shared access to data. It includes government bodies, energy providers, and banks that benefit from this model. One notable example is the launch of the R3 Consortium in 2014 by Goldman Sachs and several banks to improve financial communication.

4) Hybrid Blockchains:

This offers versatile applications across many industries. It is commonly used in sports and entertainment; the Chiliz Chain blends controlled validation with open participation. Also, it powers fan tokens and other interactive experiences while maintaining strong data control.

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How Many Blockchains are there in Cryptocurrency?

Since Blockchains are continuously being created and some become inactive over time, there is no specific number for Blockchains in Cryptocurrency. However, there are well over a thousand Blockchains and fall under four Types of Blockchain: public, private, consortium, and hybrid.

What is the Most Used Blockchain?

When talking about the most used blockchain, Ethereum is one platform that stands out. It is one of the most popular Blockchains worldwide due to its smart contract and dApp dominance, large community, and flexibility. Other names, such as Hyperledger, Fabric or Stellar, are also amongst the most used Blockchains.

Conclusion

Blockchain has evolved beyond digital currency, offering multiple structures to enhance transparency, security, and innovation. By understanding the Types of Blockchain, organisations can select the right system for their data sharing needs, scalability objectives, and compliance requirements.

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