What are the four types of blockchains?

Over the last few years, especially with the advent of cryptocurrencies, the term “blockchain” has become fairly commonly used. It is a way of storing digital information in a completely secure and decentralized way, and this fact has made blockchains crucial in the cryptocurrency world because they alone guarantee everything is fair and just.

Simply put, there is no need for a third party to verify anything here.

But did you know that there are several types of blockchains? Four, to be exact.

If you didn’t, here’s a quick overview of what each of them has to offer and what makes it so special.  

Private (managed) blockchains

The main feature of private blockchains is the fact that they have someone (an individual or an organization) managing them in the sense that these people in charge decide who gets to perform the role of a node. Furthermore, different nodes may have different levels of authorization when it comes to performing certain functions.

The downside of this type of blockchain is that it is fairly exposed to fraud and people acting in bad faith. However, on the plus side, if everything is going smoothly, the time required for validation is significantly shorter than that of public blockchains.

Public blockchains

Public blockchains are primarily used in the world of cryptocurrencies and represent a stark opposite to their managed counterparts. In public blockchains, all nodes have equal “rights” and anyone can join. 

This is what makes them perfect for mining virtual currencies – anyone can create blocks needed to record transactions and be rewarded for their service with a certain amount of the cryptocurrency in question.

And should you ever need to move your liquidity from one chain to another, there are specialized websites that offer this kind of service. Click here to meet one of them.

Hybrid blockchains

A way to try and circumvent the flaws of the previous two types of blockchains is to set up a hybrid blockchain. In it, a single entity still maintains control over the blockchain, but in this case, the transactions are validated publicly. Permissions are still given to other parties in regards to who has access to the data in the blockchain, but the information in it is very much verifiable. This is a fairly quick and affordable way for a blockchain to function. 

Consortium blockchains

Consortium blockchains have also devised a way to get around the flaws of classic private blockchains. Sure, there are still permissions that need to be issued, but the whole blockchain is not governed by a single entity anymore but by a group. Hence the name consortium blockchains.

While this certainly does improve the blockchain’s security and makes it much more decentralized, establishing a consortium that will manage things in the first place can be very challenging, especially from a logistical standpoint. Infrastructure, technology and costs can all cause quite a lot of problems at the beginning of such a project.

Ellen Hollington

Ellen Hollington is a freelance writer who offers to ghostwrite, copywriting, and blogging services. She works closely with B2C and B2B businesses providing digital marketing content that gains social media attention and increases their search engine visibility.