What are the four types of blockchain?

Blockchain technology has been the core of all crypto out there. Without it, the crypto world would not have been possible at all. There are four types of blockchain that have thrived over the years, and it is vital for each expert to know how it works.

The rise of crypto relied solely on the blockchain’s secure and fast network. The blockchain served as the main security system that other fiat banks do not have.

A blockchain is a distributed ledger or database where all records of transactions are kept by a group of computers. All of the data blocks are secure and tied with one another through a chain, just like how free CSGO skins work for one weapon but are connected to other skin classes.

The blockchain has changed and grown a lot over the years. There are variants of the blockchain network and each of them serves a different purpose. That is why it is vital to a lot of crypto experts and new users to know how each type of blockchain works.

The network itself, of course, has no central authority. It is also a shared ledger that cannot be changed even if the data can be viewed by everyone. With a strong security system, the blockchain soon had other types which focused on different levels.

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Public Blockchain

The first type is the public blockchain. It is where Bitcoin is built on and helped launch a stronger distributed ledger technology (DLT). It also solved the problem of centralized networks such as less security and transparency. 

DLT does not need to store data in one place. It sends a copy to all blocks in the network. Thanks to its decentralized nature, it needs a consensus algorithm to verify the data, ensuring security of the blocks. Examples of this process are the Proof of Work and Proof of Stake in use.

Ethereum is one of the most popular blockchain users in the industry. ETH has taken the concept to a whole new level and it has many apps based on this blockchain as well.

Private blockchain

The private blockchain works well in an environment that is secure for a single company. This could be a closed network or under the control of a single entity. It works like the public network as it uses the same connection and its security measures.

This is known as a private blockchain. No one can join or access the file right away since they only function inside a company most of the time. The one who owns this blockchain can set security levels and access as well. 

The nodes can be changed to see who can view, add, or change data and it prevents a lot of third parties from tampering with the blockchain itself. This makes it better than the public blockchain since it is less prone to hacks.

The best users for this blockchain are Ripple (XRP) and Hyperledger, and both are known for their tight security measures as well.

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Hybrid blockchain

There are some companies that want the perks of both the public and private blockchain which is why they use hybrid blockchain, which is another type that uses both elements from the first two types. 

This lets companies set up a private system that needs a key to access a private system and another that is set for the public.

Companies control who can access data stored in the network and what can be seen by the public. Most of the transactions of this type are not made public but can always be verified if the need arises. There is also company data (hidden from the public) stored in the network that can be verified as well.

Even if private entities own a hybrid, they still do not have the power to alter transactions. When a person joins the network, they have full access and are even logged in as anonymous users. 

One of the best examples that use this type is the IBM food trust which aims to improve efficiency for the whole food supply chain. Walmart is one of the players in this project by IBM.

Consortium blockchain

Consortium blockchains, like Quorum and Corda, thrive by having the traits of the first three types. It has a lot of members that can work on a single network and takes out the risk of having only one entity that can control the whole blockchain.

The preset nodes work to make the security measures run tightly and it has a node that will check all of the deals that will come in. Member nodes may also get or initiate transactions of their own as well.

Blockchain has set the bar in terms of security

Blockchain never came out of the blue. It was the result of the hard work that the minds of fintech and virtual money have worked on over the past few decades. At the end of the 20th century, the internet's reach became global, it paved the way for the breakthrough of pioneer cryptocurrency and blockchain technology (which was bit gold by Nick Szabo in 1998).

Some of those coins and tokens fell short when the new century began. Most coins, such as Digicash and E-Gold, went bankrupt and were shut down by the government. It took some time before crypto rose to prominence again in the same way that free CSGO skins paved the way for Valve’s rise to the top.

When Bitcoin rose in 2009, it had a blockchain that was secure and protected from hacks and other threats. That led to the creation of many altcoins when they saw how secure Bitcoin was. By 2017, the global tech value for blockchain was set at $339.5 million and rose to $2.3 billion by 2021. 

The expansion of the types of blockchain has changed the system in so many ways. This allowed a lot of crypto firms to thrive in the industry and make a strong impact as well. This is how the different types of blockchain have been important over the years.

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Words: Paul Daniel Flores