What Are the 4 Different Types of Blockchain Technology? | TechTarget

Public blockchain is non-restrictive and permissionless, and anyone with internet access can sign on to a blockchain platform to become an authorized node. This user can access current and past records and conduct mining activities, the complex computations used to verify transactions and add them to the ledger. No valid record or transaction can be changed on the network, and anyone can verify the transactions, find bugs or propose changes because the source code is usually open source.

Advantages. One of the advantages of public blockchains is that they are completely independent of organizations, so if the organization that started it ceases to exist the public blockchain will still be able to run, as long as there are computers still connected to it. “Some blockchains incentivize users to commit computer power to securing the network by providing a reward,” noted James Godefroy, a senior manager at Rouse, an intellectual property services provider.

This type of blockchain is ideal for organizations that are built on transparency and trust, such as social support groups or non-governmental organizations. Because of the public nature of the network, private businesses will likely want to steer clear.

2. Private blockchain

How it works. A blockchain network that works in a restrictive environment like a closed network, or that is under the control of a single entity, is a private blockchain. While it operates like a public blockchain network in the sense that it uses peer-to-peer connections and decentralization, this type of blockchain is on a much smaller scale. Instead of just anyone being able to join and provide computing power, private blockchains typically are operated on a small network inside a company or organization. They’re also known as permissioned blockchains or enterprise blockchains.

Advantages. The controlling organization sets permission levels, security, authorizations and accessibility. For example, an organization setting up a private blockchain network can determine which nodes can view, add or change data. It can also prevent third parties from accessing certain information.

“You can think of private blockchains as being the intranet, while the public blockchains are more like the internet,” Godefroy said.

Because they’re limited in size, private blockchains can be very fast and can process transactions much more quickly than public blockchains.

Disadvantages. The disadvantages of private blockchains include the controversial claim that they aren’t true blockchains, since the core philosophy of blockchain is decentralization. It’s also more difficult to fully achieve trust in the information, since centralized nodes determine what is valid. The small number of nodes can also mean less security. If a few nodes go rogue, the consensus method can be compromised.

Additionally, the source code from private blockchains is often proprietary and closed. Users can’t independently audit or confirm it, which can lead to less security. There is no anonymity on a private blockchain, either.

Use cases. The speed of private blockchains makes them ideal for cases where the blockchain needs to be cryptographically secure but the controlling entity doesn’t want the information to be accessed by the public.

James Godefroy

“For example, companies may choose to take advantage of blockchain technology while not giving up their competitive advantage to third parties. They can use private blockchains for trade secret management, for auditing,” Godefroy said.

Other use cases for private blockchain include supply chain management, asset ownership and internal voting.

3. Hybrid blockchain

How it works. Sometimes, organizations will want the best of both worlds, and they’ll use hybrid blockchain, a type of blockchain technology that combines elements of both private and public blockchain. It lets organizations set up a private, permission-based system alongside a public permissionless system, allowing them to control who can access specific data stored in the blockchain, and what data will be opened up publicly.

Typically, transactions and records in a hybrid blockchain are not made public but can be verified when needed, such as by allowing access through a smart contract. Confidential information is kept inside the network but is still verifiable. Even though a private entity may own the hybrid blockchain, it cannot alter transactions.

When a user joins a hybrid blockchain, they have full access to the network. The user’s identity is protected from other users, unless they engage in a transaction. Then, their identity is revealed to the other party.

Advantages. One of the big advantages of hybrid blockchain is that, because it works within a closed ecosystem, outside hackers can’t mount a 51% attack on the network. It also protects privacy but allows for communication with third parties. Transactions are cheap and fast, and it offers better scalability than a public blockchain network.

Disadvantages. This type of blockchain isn’t completely transparent because information can be shielded. Upgrading can also be a challenge, and there is no incentive for users to participate or contribute to the network.

Medical records can be stored in a hybrid blockchain, according to Godefroy. The record can’t be viewed by random third parties, but users can access their information through a smart contract. Governments could also use it to store citizen data privately but share the information securely between institutions.