Dubai, UAE, 24th July 2024, Although closely linked with cryptocurrency, blockchain technology has revolutionized our approach to storing, verifying, and securing data beyond this thriving industry. After the advent of Bitcoin, blockchains have experienced rapid expansion, broadening their application from digital currencies to various other sectors of the traditional economy. As the use cases and environments continue to expand, blockchains have been adapting and developing. Let’s delve into the different blockchain types and their benefits and downsides.
Public Blockchains
This type of blockchain is likely one of the most familiar, especially in crypto. These blockchains are decentralized networks available to anybody who wishes to use them or participate in their functioning. They encourage trust and openness, which makes them well-suited for decentralization-promoting cryptocurrency ecosystems. Besides, public chains are excellent for traditional companies that emphasize transparency and trust, such as non-profits or public records, since they can help create a permanent register of any data with a verified past.
The primary advantage of public blockchains is their total independence from outside influence and transparency. One of the significant drawbacks is scalability. These blockchains cannot scale effectively, and as more users join the network, the network’s performance drops, sometimes rendering the whole network completely unusable. Another significant drawback in some circumstances is the openness of public networks, which cannot be restricted in terms of access or usage by companies. This is why they may prefer the subsequent blockchain type instead.
Private Blockchains
Conversely, private blockchains are limited access-wise and closely managed by their governing entities. These networks enable organizations to modify them following their needs and goals, rendering them a potent tool. Private blockchains are appropriate for scenarios where a company will benefit from cryptographic security but simultaneously prefers to keep the data confidential rather than open to the public. Businesses can use private blockchains to handle proprietary information, evaluate assets, and supervise inside processes without revealing data to competitors or third parties.
Besides offering greater flexibility and improved operational control, public blockchains also have another crucial benefit — speediness. Due to their restricted size and fewer participants, private chains can handle transactions and other data more swiftly and effectively than their counterparts. Naturally, one of the biggest drawbacks of public blockchains is the lack of decentralization, so those individuals prioritizing it should choose others. The fewer nodes needed for a blockchain’s operation may also present a security concern, as it simplifies hacker attacks. Therefore, companies choosing these blockchains should foreground audits and check the team supervising a network’s function.
Hybrid Blockchains
The hybrid blockchain incorporates features from both previous types, enabling organizations to govern access to specific data. Thus, such blockchains can be effectively utilized in areas where confidential information is mixed with data that must be easily accessible. For instance, the highly regulated medical field may benefit considerably from employing such blockchains. This way, they can securely store patients’ data while being able to access it when necessary, again in a secure and highly restricted manner.
Hybrid blockchain provides significant benefits, such as preventing outside hackers from launching a 51% attack due to its operation within a closed ecosystem. It also safeguards privacy while enabling interaction with outsiders. On the other hand, this kind of blockchain lacks complete transparency since information can still be obscured by malicious actors working within the system.
Consortium blockchains
Consortium is another blockchain type that contains aspects of both public and private blockchains. The key distinction is that these networks are administered by a consortium of organizations, offering more elevated authority and protection than public blockchains while retaining some decentralization.
Blockchains of this type are typically more secure, scalable, and efficient than public chains. Moreover, like private and hybrid types, consortium networks provide enhanced control over various features, including access to data, and allow for collaborations between projects, companies, institutions, etc. So, they are a perfect solution for sectors that require a high level of interaction between companies, such as banking.
Conclusion
Blockchain technology is constantly advancing, and there is much more to offer than public chains that we get so accustomed to while exploring the cryptocurrency landscape. As it matures, it is expected to become a key component of different industries, facilitating enhanced data security, fostering collaboration between companies, and changing how we engage with both digital assets and data.
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Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Insure Information journalist was involved in the writing and production of this article.
