Blockchain technology is transforming businesses everywhere by boosting transparency, security, and efficiency, leading many to adopt it to stay ahead. In fact, forecasts suggest that global spending on blockchain solutions will reach nearly $19 billion by 2024.
However, figuring out this distributed ledger can be tricky, even for seasoned business leaders, investors, or tech enthusiasts. Our post breaks down the different types of blockchain technologies so you can understand their unique features and identify which type best suits your specific needs.
Table of Contents
Public Blockchain Structure
The public blockchain structure is an open network that anyone can join without needing special permission. It uses methods like proof of work (PoW) or proof of stake (PoS) to verify all the transactions that happen on the network.
PoW involves solving complex puzzles to validate transactions and secure the network. In contrast, PoS lets participants validate transactions based on how much currency they hold and are willing to stake or commit. Everyone involved can see the entire history of these transactions, which helps keep everything transparent and secure without the need for a central authority.
In this public blockchain technology, each participant, or node, helps to create, verify, and store transactions. These instances are bundled into blocks. Once the nodes reach an agreement, these blocks are added to the blockchain. Each block is connected and secured with cryptography, so it’s tough for anyone to alter past transactions.
Take Bitcoin as an example: it operates on a public blockchain where anyone can become part of the network and help verify transactions.
Pros and Cons of Public Blockchains
The following are the pros and cons of the public blockchain structure:
Pros
- Strong protection against tampering
- Clear visibility of transactions
- Widespread access and control
- A permanent record of data
Cons
- Struggles with large transactions
- Processes transactions slowly
- Has limited privacy
Use Cases of Public Blockchains
Public blockchains offer a wide range of applications across different sectors. The following are three of the most popular uses:
- Cryptocurrencies: Digital currencies like Bitcoin are built on public blockchains. Anyone can see the transactions, which prevents fraud and builds trust without needing a central bank.
- Supply chain tracking: Public blockchains can track the progress of goods from the factory to the consumer. For instance, Amazon Managed Blockchain allows supply chains to monitor their products via blockchain automatically — from farm to consumption.
- Secure voting: Using public blockchains in electronic voting systems can increase transparency and security. Votes cast on a blockchain are tamper-proof and fully traceable, helping to ensure fair and fraud-free elections.
Private Blockchain Structure
The private blockchain is designed for limited access, allowing only authorized users to join. This controlled environment is perfect for specialized blockchain app development, where privacy and access management are critical.
Private blockchains allow quick, controlled information sharing within an organization under the supervision of a central authority. Such an approach contributes to faster transactions since fewer nodes verify each transaction.
For instance, a bank might use a private blockchain to handle transfers between its own branches. This blockchain ensures that all transfer records are permanent and only visible to those who have permission. These characteristics make it a reliable platform for blockchain development companies to develop financial applications that require high confidentiality and security.
Public Blockchain vs. Private Blockchain
The biggest differentiator between public vs. private blockchain is who can access them and how they’re managed. Public blockchains are open to everyone, making them very transparent but sometimes slow because they handle many users. On the other hand, private blockchains limit access to specific, approved people, which makes them faster but highly inaccessible.
Pros and Cons of Private Blockchains
The following are the pros and cons of private blockchains:
Pros
- More control over who can join
- Faster transactions
- Better privacy
- Easier to scale
Cons
- More expensive to set up
- Limited user access
- Less control
Use Cases of Private Blockchains
Private blockchains serve distinct purposes across various industries. The following are three key applications of the private blockchain structure:
- Financial services: Banks use private blockchains for processes like clearing and settlements. One example is IBM Blockchain, which allows real-time fund transfers between financial institutions that significantly speed up transactions.
- Legal document management: Law firms and corporate legal departments turn to private blockchains to securely manage sensitive documents like contracts and legal agreements. This setup guarantees that only authorized personnel can access or modify such documents.
- Healthcare record management: Private blockchains help hospitals manage patient records with confidentiality. Only authorized medical staff can access the information to uphold privacy standards.
Consortium Blockchain Structure
The consortium blockchain structure is a hybrid system managed by a group of organizations that combines features from different types of blockchains. In this setup, several pre-selected members unified in a consortium play a role in maintaining the ledger. This approach ensures that no one can dominate the process and helps balance control and transparency.
This type of blockchain is great for scenarios that require trust and cooperation between multiple entities. For example, a consortium of banks could use this system to process transactions quickly and securely, benefiting from both shared control and reduced centralization risks.
The collaborative approach of consortium blockchains makes them ideal for companies that need to work closely yet securely with each other.
Pros and Cons of Consortium Blockchains
The following are the pros and cons of consortium blockchains:
Pros
- Cost-effective through shared resources
- Better security with joint oversight
- Faster than public blockchains
- Increased confidence among members
Cons
- Less control for individual participants
- Reliance on consortium
- Can be complex to manage
Use Cases of Consortium Blockchains
Consortium blockchains are making a big difference in several fields where teamwork is crucial. Here are three popular areas where they’re being used:
- Energy trading: Energy companies are teaming up on consortium blockchains to trade energy like electricity and gas smoother and more efficiently. For example, the Energy Web Foundation brings together energy firms worldwide to improve energy distribution.
- Identity verification: Governments and businesses are using consortium blockchains to streamline the process of verifying identities. This helps them with personal data confirmation, crucial in areas like border control and national security.
- Real estate: In real estate, consortium blockchains simplify buying and selling properties by making ownership records easy to check and trust. Companies like Propy are collaborating to ensure property deals are transparent and fraud-free.
Hybrid Blockchain Structure
The hybrid blockchain structure is a flexible configuration that combines elements of both private and public blockchains. It allows organizations to set up a private, permission-based system while also utilizing a public blockchain that benefits them.
In this setup, businesses can manage sensitive data under the secure environment of a private blockchain, while still engaging with the wider community or other businesses on the public blockchain. For instance, a company could handle internal validations and sensitive data processing privately, while recording product verification or supply chain data on a public ledger to ensure transparency for consumers.
This method provides a balanced solution for organizations seeking security and transparency without committing fully to a public or private blockchain model.
Pros and Cons of Hybrid Blockchains
Below are the pros and cons of hybrid blockchains:
Pros
- Selective privacy for confidential information
- Transparency for public transactions
- Strong security measures
- Flexible access settings
Cons
- A constant balance between privacy and transparency
- Complicated setup process
- Expensive maintenance
Use Cases of Hybrid Blockchains
Hybrid blockchains are proving effective in a variety of fields beyond the most common sectors. Here are three different types of use cases:
- Agriculture supply management: In agriculture, hybrid blockchains facilitate both internal data management for sensitive business operations and transparent tracking for consumer assurance. Companies like AgriDigital integrate blockchain to securely manage transactions within their network while providing stakeholders and customers with traceable information about the origin and safety of food products.
- Event ticketing: Ticketing platforms use hybrid blockchains to combat fraud and ensure ticket authenticity. For instance, MEGO Tickets use non-fungible tokens (NFTs) for that purpose.
- Automotive lifecycle management: In the automotive sector, hybrid blockchains are used to secure sensitive design and production data, while allowing for parts traceability and authenticity verification accessible to partners and customers.
Key Features Across the Types of Blockchain
Now that we’ve already explored the four types of blockchain models in detail, we’ll make it easier for you to review and compare these models quickly. The following is a table that highlights the essential features of each type.
| Type of Blockchain | Key Features |
| Public | Open access, high transparency, secure cryptography, cryptocurrency support |
| Private | Restricted access, privacy and control, fast transactions, corporate suitability |
| Consortium | Group control, transparency and privacy balance, cross-organization efficiency |
| Hybrid | Features of public and private, selective transparency, flexible participation, varied business suitability |
Blockchain technology is reshaping the way companies operate by making processes more transparent, secure, and efficient. With global spending on blockchain expected to skyrocket, understanding these technologies is more crucial than ever. Our guide provides you with the necessary knowledge so you can make informed choices in the realm of blockchain.
Types of Blockchain FAQs
What is blockchain?
Blockchain is similar to a notebook that records all transactions in a list. Each transaction gets its own page, or “block,” which is connected together in order. This connection, or chain, creates a permanent history that can’t be changed, making everything transparent and trustworthy.
Why do we need different types of blockchains?
We need different types of blockchains because each serves a unique purpose based on how open or private they need to be. Such variety allows each industry to pick a blockchain that matches its specific security, access, and compliance needs.
