1. Here’s all you need to know about Blockchain and its different types

Here’s all you need to know about Blockchain and its different types

There is great interest in Blockchain nowadays. As Blockchain – the underlying technology behind Bitcoin – has slowly started gaining popularity, organisations across the world have started expressing their desire to have a Blockchain-based database system for their daily operations.

Updated: April 3, 2017 2:06 PM
Also, data once stored on a Blockchain will always be stored there and all the details of transfer and storage are visible to everyone connected to the network and to anyone not connected to the network who wishes to verify such details. (Reuters)

There is great interest in Blockchain nowadays. As Blockchain – the underlying technology behind Bitcoin – has slowly started gaining popularity, organisations across the world have started expressing their desire to have a Blockchain-based database system for their daily operations. A Blockchain is nothing more than a database. Blockchain offers many advantages as compared to other databases. It has a decentralised structure with no single point of failure and the data stored on the Blockchain is completely tamper proof. Also, data once stored on a Blockchain will always be stored there and all the details of transfer and storage are visible to everyone connected to the network and to anyone not connected to the network who wishes to verify such details.

Public Blockchain
In a Public Blockchain, anyone can read and write the data stored on the Blockchain as it is accessible to everyone in the world. A person can become a member of the Blockchain network and can store, send and receive data after downloading the required software on his device.

A Public Blockchain is completely decentralised as the permissions to read and write data onto the Blockchain are shared equally by all the connected users, who come to a consensus before any data is stored on the database. A Public Blockchain is based on a completely trust-less system where no user is given special privileges on any decision.
The most common implementations of a Public Blockchain are Bitcoin and Ethereum where the public nature of Blockchain allows users from various backgrounds to come on a common platform for making transactions and eliminates the need for third party vendors by making transactions direct between users.

As it is decentralised, a Public Blockchain is also mathematically very hard to hack as the cost of hacking becomes too high for a system where every node connected is synced with the entire Blockchain database and more importantly, once a hack is discovered, the value of the hacked coins would diminish exponentially – thus incurring huge losses on the hacker (he had to invest a lot of hardware to overtake the network hashrate).

Watch this also:


Since all transactions in a public Blockchain need to be verified by thousands of users, the transaction verification process can become very time consuming. The users pay a larger amount of transaction fee here as compared to the Private and Permissioned Blockchain.

Private Blockchain
In a Private Blockchain, the permissions to write data onto the Blockchain are controlled by one organisation which is highly trusted by the other users. This organisation may/may not allow users to have access to read the data, as public readability might not be necessary in most cases. In some situations, the organisation might want the public to audit the data. Limited/restricted read permissions also provide a greater level of privacy to the users, a feature not available in Public Blockchains.

The organisation in control has the power to change the rules of a Private Blockchain and may also decline transactions based on their established rules and regulations.

In a Private Blockchain, the transactions are quicker as they can be verified be a small number of devices. Thus, the users pay lesser amounts of transaction fees since the number of people verifying the transaction is fewer than in a Public Blockchain.

Also, the devices are very well connected and any faults can be fixed by human intervention, which can be easily approved by the users since the users trust the single organisation in control of the Blockchain.

Permissioned Blockchain
A Permissioned Blockchain is a type of Private Blockchain and shares many features of the latter. A Permissioned Blockchain provides a hybrid between the ‘low-trust’ provided by Public Blockchains and the ‘single highly-trusted entity’ model of Private Blockchains. Popularly called a Consortium Blockchain, it is one where instead of allowing any person with an internet connection to participate in the verification of the transaction process or allowing a single company to have full control, a few selected nodes are predetermined.

For example, imagine a consortium of 10 companies, each of which operates a device connected to the Blockchain network. If company ‘2’ only trades and shares its invoices with ‘3’, ‘4’ and ‘5’, there is no need for the other companies to be given the permissions to read the shared data.

Although some degree of decentralisation is maintained in their structure, the participants have the power to grant read/write permissions to other participants, leading to the ‘Partially Decentralised’ design of Permissioned Blockchains. The transactions are quick to verify in a Permissioned Blockchain as there are a handful of verifiers, with the transaction fee miniscule, thus increasing the overall efficiency of transactions. Like Private Blockchains, the Permissioned Blockchains maintain the privacy of a user’s data, without consolidating power with a single organisation.
Which Blockchain is the best for you?
There is no Blockchain that can be recommended to everyone. Each type has its pros and cons. The main concerns surrounding Public Blockchains are privacy and scalability. Both can be mitigated to some extent, but are not completely solved at present.

Similarly, Private Blockchains have a single point of failure and bringing various organisations to use a common model remains a concern.

Both the models are needed in various industries and constant developments are being done on both the Public and Private models. So, which model would suit you the best? Well, that clearly depends on the type of data being stored, who all will need the access to read and write data on the Blockchain, and whether all these participants need to be given the same or different privileges of reading and writing on the database in concern.

By Ayush Varshney

(The author is CTO and co-founder, Darwin Labs)

  1. No Comments.

Go to Top