Blockchain Technology: The types and use cases
Tags: blockchain, web3, learn, beginners
Published: 2022-09-04 21:26:45

## Introduction
A blockchain is a decentralized, distributed, and public digital ledger that is used to record transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the consensus of the network.

In simple terms, a blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain.

## Blockchain Technology's Key Features

Instead of a single authority, the blockchain relies on a decentralized network of users to validate and record transactions. Because of this feature, blockchain transactions are consistent, fast, safe, affordable, and tamper-proof because of this feature. These characteristics are explained below:

**FAST**: No intermediaries are required because transactions are transferred directly from the sender to the recipient (middlemen).

**CONSISTENT**: Blockchain networks are active around the world, seven days a week, 24 hours a day..

**INEXPENSIVE**: Blockchain networks run more cheaply because there are no centralized, profit-driven middlemen.

**SECURE**: The distributed network of nodes in a blockchain provides collective defense against assaults and outages..

**TAMPER-PROOF**: Since data is transparent and immutable after it has been time-stamped to the ledger, fraud and other illegal activity cannot be committed via the blockchain. Similarly, everyone who has access to a public blockchain network can view the transactions that have been generated.

## Types of Blockchain

- Public Blockchain.

- Private or Permitted Blockchain.

- Hybrid Blockchain.

- Consortium or Federated Blockchain.

### Public Blockchain

The public blockchain is the first type of blockchain technology. This is where Distributed Ledger Technology(DLT) first emerged, giving rise to cryptocurrencies like Bitcoin. It eliminates the drawbacks of centralization, such as decreased security and transparency. DLT distributes information throughout a peer-to-peer network rather than storing it centrally. Due to its decentralized nature, some form of authenticating data must be used. By using a consensus mechanism, users on the blockchain can agree on the ledger's present state. Two popular consensus techniques are proof of work (for Bitcoin) and proof of stake (for Ethereum 2.0, Polygon).

Anyone with internet connectivity can join on to a blockchain platform and become an authorized node, making public blockchain non-restrictive and permissionless. This person has access to both recent and old data, and they can perform mining operations—complex calculations necessary to confirm transactions and add them to the ledger. On the network, no legitimate record or transaction can be altered, and because the source code is typically open source, anybody may check the transactions, look for errors, and suggest fixes.

**ADVANTAGES:** Public blockchains have the benefit of being fully independent of organizations; as long as there are computers still connecting to them, the public blockchain will continue to function even if the company that launched it goes out of business.

Public blockchains also offer the benefit of a transparent network. Public blockchains are generally secure as long as their users adhere strictly to security regulations and procedures.

Another factor contributing to the public blockchain's widespread user base is its anonymity. Yes, it is a secure and open platform where you may operate your business effectively and legally. You are not required to provide your real name or identity in order to take part. If your identity is protected, no one can monitor your network activity.

**DISADVANTAGES:** However, there is insufficient security, little to no transaction privacy, and significant processing power is needed. These are significant factors for blockchain use cases across different businesses.

Public blockchains also struggle with scalability. As more nodes join the network, it becomes slower.

**USE CASES:** The mining and exchange of cryptocurrencies like Bitcoin is the most typical use case for public blockchains. It can also be used to electronically notarize affidavits and public documents of property ownership in order to create a fixed record with an auditable chain of custody.

For organizations that are based on openness and trust, like social support networks or non-governmental organizations, this kind of blockchain is appropriate. Private enterprises will probably wish to stay away due to the network's open nature.

### Private Blockchain

A private blockchain is a blockchain network that operates in a constrained setting, such as a closed network or one that is governed by a single institution. Although it functions similarly to a public blockchain network in terms of peer-to-peer connectivity and decentralization, this particular blockchain is substantially narrower in scope. Private blockchains are often run on a small network inside a firm or organization, rather than allowing anybody to join and contribute processing power. They are also referred to as managed or permissioned blockchains. In a private blockchain, a node's eligibility is decided by the central authority.

Additionally, the central authority does not necessarily give every node the same permissions to carry out tasks. Private blockchains are only partially decentralized, though, because they are not accessible to the general public.

Private blockchains include, for instance, the business-to-business virtual currency exchange network Ripple (XRP) and the open-source blockchain application framework Hyperledger.

**ADVANTAGES:** Permission levels, security, authorizations, and accessibility are controlled by the controlling organization. For instance, the establishment of a private blockchain network allows an organization to control which nodes can see, add, or modify data. Additionally, it can restrict access to some information by outside parties.

"You can think of private blockchains as being the intranet, while the public blockchains are more like the internet," Godefroy, James (TechTarget,2007)

Private blockchains can process transactions significantly more quickly than public blockchains because of their size restriction.

**DISADVANTAGES:** Private blockchains have drawbacks, including the contentious assertion that they aren't actual blockchains because decentralization is the foundation of the technology. Since centralized nodes decide what is valid, it is also more challenging to fully create trust in the information. Less security may also result from the small node count. The consensus process may be jeopardized if a few nodes act erratically.

Furthermore, the source code from private blockchains is frequently closed-source and proprietary. It cannot be independently audited or verified by users, which may result in inferior security. On a private blockchain, there is no anonymity either.

**USE CASES:** Private blockchains are the best option when a blockchain needs to be cryptographically secure but the governing entity doesn't want the data to be accessible to the general public due to their speed.

The administration of the supply chain, asset ownership, and internal voting are further use cases for private blockchain.

### Hybrid Blockchain

Organizations occasionally employ hybrid blockchain, a form of blockchain technology that includes components of both private and public blockchain, to get the best of both worlds. It enables businesses to set up both a private, permission-based system and a public permissionless system, giving them control over which data is made available to the public and who has access to it.

In a hybrid blockchain, transactions and records are typically private but can be validated as necessary, for example by granting access via a smart contract. Although protected inside the network, confidential information can still be verified. The hybrid blockchain may be owned by a private organization, but it cannot change transactions.

An individual who joins a hybrid blockchain has complete access to the network. Unless they conduct a transaction, other users cannot learn the identity of the user. The opposite person is then made aware of their identity.

**ADVANTAGES:** Because hybrid blockchain operates in a closed ecosystem, one of its major benefits is that hackers cannot conduct a 51% attack on the network. Additionally, it safeguards privacy while allowing for third-party communication. Compared to a public blockchain network, it has higher scalability and delivers quick and inexpensive transactions.

**DISADVANTAGES:** This kind of blockchain can have information hidden, so it's not entirely transparent. There is no incentive for users to take part in or contribute to the network, and upgrading can be difficult.

**USE CASES:**  Real estate is one of the many compelling use cases for hybrid blockchain technology. A hybrid blockchain can be used by businesses to run systems securely while displaying some information, like listings, to the general public. Hybrid blockchain can be used to streamline procedures in the retail sector as well as in highly regulated industries like the banking sector.

A hybrid blockchain can be used to store medical records. Users can access their information using a smart contract, but arbitrary third parties cannot see the data. Governments might also utilize it to securely communicate and keep citizen data among various entities.

### Consortium Blockchain

Contrary to private blockchains, which are permissioned blockchains managed by a single institution, consortium blockchains, often referred to as federated blockchains, are permissioned blockchains that are managed by a group of organizations. Due to having greater decentralization than private blockchains, consortium blockchains have higher levels of security. Given that it has both private and public blockchain elements, it is comparable to a hybrid blockchain. However, it differs in that a decentralized network is used in collaboration by numerous organizational members. A consortium blockchain essentially functions as a private blockchain with restricted access to a certain group, removing the hazards associated with having just one entity control the network on a private blockchain.

The consensus processes in a consortium blockchain are managed by predetermined nodes. It has a validator node that performs transaction initiation, receipt, and validation. Member nodes have the ability to send or receive transactions.

**ADVANTAGES:** Compared to a public blockchain network, a consortium blockchain is typically more reliable, scalable, and effective. It enables access controls just as private and hybrid blockchain. The consortium blockchain offers a high level of privacy due to the fact that the data from the verified blocks is shielded from the general public view. But anyone with access to this blockchain can use it. The consortium blockchain does not charge transaction fees, in contrast to a public blockchain.

**DISADVANTAGES:** Compared to public blockchain, consortium blockchain is less transparent. The network's functionality may still be hampered by the blockchain's own rules if a member node is attacked.

Creating consortiums can be challenging since it calls for cooperation between several businesses, which raises logistical concerns and increases the possibility of antitrust violations.

Additionally, certain supply chain participants might not have the infrastructure or technology required to use blockchain technologies. Those who do might feel it's not worth it given the hefty upfront expenses of digitizing their data and connecting to other supply chain participants.

**USE CASES:** There are two applications for this kind of blockchain: banking and payments. A consortium made up of various banks can decide which nodes will validate the transactions. Organizations who want to track food as well as research organizations can develop a similar methodology. It's perfect for supply chains, especially those involving food and medicine.

### Conclusion
These are my breakdown of all the types of blockchain known at the moment, which I know and shared with you so that you can use that knowledge wherever it may apply.

So, which question do you have for me?
Let me know in comment section. Moreover, If anything else that I may have missed out on, please share it in comment as well 👍.

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### References

📌 [A beginner's guide to the different types of Blockchain networks.](https://cointelegraph.com/blockchain-for-beginners/a-beginners-guide-to-the-different-types-of-blockchain-networks)

📌 [Culled from Blockchain for business: The ultimate enterprise guide](https://www.techtarget.com/searchcio/Blockchain-for-businesses-The-ultimate-enterprise-guide)