Blockchain technology has revolutionized the modern payments system by powering the cryptocurrency ecosystem. Currently, developers around the world are recognizing the potential of this technology and its multifarious uses that can solve many modern-day problems. For this reason, corporate bodies and government agencies are focusing on innovative blockchain projects.

But, to unlock the full capacity of blockchain technology, one needs to know its different types to leverage its power to the fullest. These will be your concise to know more.

Why are the types important?

Before diving into the distinction of various types, we need to understand why it is important to understand the difference. In general terms, different types of blockchains have different functionalities. For example, in its inception, the public blockchain introduced the decentralized Ledger Technology (DLT), which revolutionized digital asset management. But later, for better performance, automation, scalability, time-saving, and energy efficiency, various other types were also introduced. Moreover, the fundamental structure lacked the power to suit some specific goals. This is why various types of blockchain become necessary.

What are the types of blockchain?

Fundamentally, there are four primary forms of the blockchain. All of them are interconnected in terms of basic functioning but get used in different use cases. They are-

Public
Private
Hybrid
Federated

#1. Public Blockchain:

A public blockchain is the initial form of blockchain that uses DLT technology to achieve any digital transaction. It is permissionless and non-restrictive, where every person in the network can hold a copy of the public ledger. Various other concepts like Proof of Work and Proof of Stake get used as consensus methods for the transactions. Bitcoin’s network is the best example of this type.

This type of blockchain follows open standards, so anyone with an internet connection can join it.
The entire network makes the data (ledger) available to all, which increases transparency.
Depending on the number of nodes, this type ensures a higher level of security.
For optimal functioning, it doesn’t require an intermediary.
This type of technology can get used to creating a transparent (corruption-free) voting system. Using the DLT tech, public fundraising through the network will be straightforward to achieve.

#2. Private Blockchain:

Private blockchains are one of the fastest and are a closed network that remains under the control of designated authorities. Unlike the public variant, it is permission-based and preserves the confidentiality of an organization. It provides transparency and trust to selected participants within the network. In this model, every aspect is regulated and centralized to ensure scalability over customizability. Reaching consensus is a rapid process in the private network that results in faster transactions and less energy usage. Examples of this technology include the Hyperledter Fabric, Multichain, and Sawtooth. If you want to develop a supply chain management, CMR software, or Asset ownership tracker, this type is the best for your necessities.

#3. Hybrid Blockchain:

The Hybrid blockchain network has all the advantages of its public and private counterparts. The best part about this type is that it has minimal disadvantages in terms of functionality. According to experts, this is the most promising technology for scalable business models such as Real estate, Retail, and highly regulated markets. Example of this type includes Dragonchain and XinFin.

#4. Federated Blockchain:

Federated blockchain, also known as the consortium, is a unique type of blockchain designed for solving problems within an organization. It holds features of both public and private blockchains but selectively makes information public or private depending on its content. The consortium structure doesn’t allow you complete confidentiality and requires a validator node for proper functionality. It is ideal for customizable applications, like food tracking, shared research, and baking apps. The best part of using this model is that it allows various access controls and well-defined governance options, unlike the hybrid model. An example is the IBM Food Trust.

Final Words

Now that you have got an idea about all sorts of blockchain, you can further your research to fully understand extensive use cases along with their benefits and drawbacks. This way, you will be able to make an informed decision regarding your development project. Remember, unleashing the potential of blockchain not only makes a profit for your business but also can open new horizons to expand your operations globally.