Understanding the different types of Blockchain networks

Blockchain is a technology that has incredible potential to transform the way we do business and create computer networks. Blockchain networks are made up of computers that are linked together. In a blockchain, the central computer or the controlling authority is not there - instead, every computer shares and validates information. The network is decentralized, meaning there is no central point of control. Unlike traditional centralized systems, blockchains operate without a central authority or controlling server.

The blockchain, alternatively called the distributed ledger technology (DLT) is a shared digital record of transactions that are maintained independently on several computers within a network. A blockchain network on the other hand is a data structure that makes it possible to create a digital ledger of transactions and share it among a distributed network of computers. It uses cryptography to allow each participant on the network to manipulate the ledger in a secure way without the need for a central authority.

Types of Blockchain Networks:

There are several ways of building a blockchain network. These networks can be public, private, permissioned or can be a consortium network

Public Blockchain Network (permissionless):

Just like a party with no restriction on attendance, a public blockchain is that blockchain that anyone can join and participate in. An example of a public blockchain network is Bitcoin, Ethereum, Litecoin, etc. They ensure wider participation and Inclusion but can limit privacy of transactions, weak safety and might need huge computational power to run. They're also completely decentralized.

uses

1. used for exchanging cryptocurrency

2. used for mining cryptocurrency

Private Blockchain Network (permissioned):

A private Blockchain Network is also a decentralised peer 2 peer network. However, there are restrictions to participating in Private blockchain. One organization governs the network and determines who is allowed to participate, execute a consensus protocol or maintain the shared ledger. In other words you can say a private blockchain is partially decentralized. One benefit with a private Blockchain is that it boosts trust and confidence between participants in the network. It is however vulnerable to fraudulent activity.

Permissioned Blockchain Network:

Essentially, most private Blockchain Networks are permissioned Blockchains. However a public Blockchain can also be permissioned. Permissioned Blockchain Networks place restrictions on entry; who to participate and in what transactions. Participants have to obtain an invitation or permission to join.

Consortium Blockchain Network:

This is an aggregation of multiple organisation saddled with the responsibility of collectively maintaining a blockchain network. The organizations are preselected and they determine who may submit transactions and access data in block. To establish a consortium blockchain, all participants need to be permissioned and have a shared responsibility for the maintenance of the blockchain.

Blockchain has long been known as the underlying technology for cryptocurrencies. However, the use cases for blockchain are more than just having a decentralized ledger for digital currencies and payments. Blockchain can be used in diverse areas such as medical records, banking, public services, supply chain, voting and many more.

Blockchain provides a mechanism for exchanging information in a trustable manner with the participants being completely anonymous. This can be used to solve problems in any industry where there is need for transparent transactions. Blockchain allows business processes to be redesigned by eliminating middleman and enhancing collaboration among partners. The depth of the use case of Blockchain technology is yet to be discovered and this is to tell you how early you are in the system.

I hope you found this article very educative. Stay tuned for more