Are you hearing a lot about different types of blockchains and wondering how you’ll ever figure them out? Do you want to know more but you’re sure it’s too complicated to learn?
The global messaging security industry expects to reach over 13 billion US dollars in the next six years. Blockchains are a big part of this industry.
Did you know that not all blockchains are the same? Here’s a guide to the different types of blockchains that exist today.
What Is a Blockchain?
Nodes are multiple users or computers that are part of a blockchain network.
The main idea behind blockchain technology is a network of users or nodes that can make transactions directly on a database without involving a third party. The decentralized nature of the database and network means they are not controlled by a central authority.
The blockchain is a secure series of encrypted records stored in a database in linked blocks. The linked records are unchangeable.
Authorized nodes can access records or legitimate blocks of data in the blockchain. They can make a transaction, verify or receive a transaction, and create a block. Verification of the data uses a consensus algorithm where nodes each agree on the current state of the ledger.
What Are the Different Types of BlockChains?
There are four main types of blockchains. Each type is either a permissioned blockchain, permissionless or a combination of both.
Permissionless blockchains let anyone become a node or user, and they don’t restrict their rights on the network.
Permissioned blockchains restrict access to specific nodes, and they might limit their rights.
A public blockchain is permissionless, and there are no restrictions on the network. Anyone with access to the internet can access it. A cryptocurrency credit line can be on a public blockchain.
A private blockchain allows nodes to access them with permission only. That’s a permissioned blockchain. These are small closed networks, usually controlled by a company or other group. Nodes with permission can do specific tasks. Some uses are voting, managing supply chains, or recording asset ownership.
MultiChain is a commonly known spinoff of Bitcoin. It’s a platform used to create custom blockchains.
The hybrid blockchain is a combination of a private and public blockchain. Some data can go public while others remain on the private blockchain. Flexibility is an advantage of hybrid chains and that enhances the security and transparency of the network.
When more than one organization manages the network, it’s a consortium blockchain. These are often used by government organizations or in the financial industry. Fintech industry examples are Venmo or Stripe.
Knowledge Is Power
When you know about the types of blockchains, you’ll better understand the crypto space and how it works. It promises to be a revolutionary technology that will affect many business transactions.
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