Blockchain Technology and its Types

ANURAG SINGH CHOUDHARY 11 Sep, 2022 • 7 min read

This article was published as a part of the Data Science Blogathon.


Blockchain technology is a decentralized, distributed ledger that keeps a record of ownership of digital assets. Any data stored on the blockchain cannot be modified, making the technology a legitimate disruptor for payments, cybersecurity, and healthcare industries. Blockchain is a system of registering information that makes it hard or impossible to change, hack or cheat the system.

Blockchain Technology

What is Blockchain Technology?

Blockchain, also referred to as distributed ledger technology (DLT), makes the history of any digital property immutable and clear through a decentralized network and cryptographic hashing.
A simple likeness of how blockchain technology works can be likened to how a Google Docs document works. When you develop a Google Doc and share it with a group of people, the document is simply distributed instead of being copied or transmitted. This creates a decentralized distribution chain that allows everyone to access the underlying document simultaneously. No one is blocked waiting for changes from another party, while all changes to the document are recorded in real time, so changes are completely transparent. However, a significant loophole is that, unlike Google Docs, the original content and data on the blockchain cannot be modified once written, increasing its level of security.

Why is blockchain important?

Blockchain is an up-and-coming and revolutionary technology as it helps reduce security risks, curb fraud and bring transparency in a scalable way.
Popularized by its association with cryptocurrencies and NFTs, blockchain technology has since evolved to become a governance solution for all types of global industries. Today, you can find blockchain technology providing transparency to the food supply chain, securing healthcare data, innovating gaming, and overall changing the way we deal with data and ownership at scale.
Blockchain Technology

Exploring the types of Blockchain Technology

Private Blockchain

What is a Private Blockchain?

A private blockchain is a permissioned and partially decentralized system where only one organization has access and authority to the network.
In other words, anyone who wants to join it has to ask for permission from the blockchain’s governing body, and the public can’t access it.
A private blockchain involves invitation, and only the individuals participating in the transaction can know about it. Anyone managing a private blockchain network can change or modify transactions according to their needs.
However, a private blockchain consumes much power and energy and is more vulnerable to risks, hacks, data breaches, or manipulation.
In private blockchain platforms, records can be changed by the owner and organizations use distributed ledger technology but do not publicize their data. A private blockchain means that each user must have a backed-up identity, as this characterizes their access type. They enable faster transactions and are more energy efficient to maintain.
Additionally, since businesses require privacy, private blockchain use cases seem ideal in this case. Without real privacy, their competition can enter the platforms and release invaluable information to the press.
Advantages of Private Blockchain:
  1. Private blockchains are fast. This is because there are few participants compared to a public blockchain. In short, the network takes less time to reach consensus, resulting in faster transactions.
  2. Private blockchains are more scalable. Scalability is possible because only a few nodes are authorized to verify transactions in a private blockchain. It doesn’t matter if the network grows; the private blockchain will operate at its previous speed and efficiency.
Disadvantages of Private Blockchain:
  1. Private blockchains are not truly decentralized. This is one of the biggest disadvantages of a private blockchain and goes against the basic philosophy of the distributed ledger or blockchain.
  2. Achieving trust within a private blockchain is difficult because centralized nodes make the final call.
  3. Finally, the security is not so good since only a few nodes exist. It is important to understand that it is possible to lose security if a certain number of nodes go bad and compromise the consensus method used by the private network.

Public Blockchain

What is Public Blockchain?

A public blockchain is a network without restrictions, meaning anyone can join it whenever possible. Anyone can see the ledger and participate in the consensus process.
You only need an internet connection to connect to the network and start validating blocks and sending transactions. In general, this network offers incentives to users who validate blocks. For example, Bitcoin and Ethereum are examples of public blockchain networks.
The public blockchain network uses proof of work or proof of stake consensus algorithms to verify transactions. In a public blockchain architecture, you can download the protocol at any time, and the blockchain is permission-less, meaning you don’t need any permission from anyone to connect and interact with the network; anyone can read, write or participate in the blockchain.
Public blockchains characterize the perfect model that makes the technology industry so profitable. In addition, data on a public blockchain is secure because once verified on the blockchain; the data cannot be modified or changed.
Functions of public blockchain:
  • In a public blockchain, anyone can participate by reviewing and adding data to the blockchain.
  • The public blockchain is decentralized.
  • By orders of magnitude, a public blockchain is lighter than a private blockchain and generates transaction throughput.
  • Transactions per second are less in public blockchains compared to private blockchains.
  • A public network is more secure because it is decentralized and involves active participation.
  • In a public blockchain, it is required to grant access to a centralized authority to oversee the entire network.
Advantages of Public Blockchain:
  1. Anyone can join a public blockchain.
  2. It instills trust among the entire user community.
  3. Everyone feels motivated to work to improve the public network
  4. A public blockchain requires no intermediaries to work.
  5. It brings transparency to the entire network as data is available for verification purposes.
Disadvantages of Public Blockchain:
  1. It suffers from low transaction speed. The transaction may take several minutes to hours to complete. For example, Bitcoin can only handle seven transactions per second compared to VISA’s 24,000 transactions per second. After all, solving mathematical problems and completing the transaction takes time.
  2. Another problem with public blockchain is scalability. They simply cannot scale because of how they operate. The more nodes that connect, the clumsier and slower the network becomes. Bitcoin, for example, is working on lighting the network, making transactions off-chain to make the main Bitcoin network faster and more scalable.
  3. The last disadvantage of a public blockchain is the consensus choice of method. For example, Bitcoin uses Proof-of-Work (PoW), which consumes a lot of energy. However, this has been partially resolved using more efficient algorithms such as Proof-of-Stake (PoS).
Blockchain Technology


Hybrid Blockchain

What is Hybrid Blockchain?

Hybrid blockchain is a unique type of blockchain technology that combines the components of public and private blockchain or tries to use the ideal part of public and private blockchain solutions.

Transactions and records in a hybrid blockchain are private but can be verified if connected, for example, by allowing access through a smart contract. Private information is retained inside the network but is still verifiable.
Although a private entity can own a hybrid blockchain, it cannot alter transactions. A hybrid blockchain allows organizations to establish a permission-based private system alongside a permission-less public system, allowing them to manage who has access to specific data stored on the blockchain and which data we can make public.
When users are connected to a hybrid blockchain, they have full permission to access the network. The user’s identity is secured and protected from other users when not participating in a transaction. After that, their identity is revealed to the other party.
Advantages of hybrid blockchain:
  1. It works in a closed ecosystem without the need to publish everything.
  2. Rules can be changed as needed.
  3. Hybrid networks are also immune to 51% of attacks.
  4. It offers privacy while still being connected to the public network.
  5. It gives good scalability if we compare it to another public network.
Disadvantages of Hybrid Blockchain:
  1. Not completely transparent.
  2. Upgrading to a hybrid blockchain can be a challenge.
  3. There is no incentive to participate and contribute to the network.

hybrid blockchain


Consortium Blockchain

What is a blockchain consortium?

A blockchain consortium is a permissioned blockchain technology through which multiple organizations operate the platform.

It is quite similar to a private blockchain. In a private blockchain, there is only one organization on the platform, while in a consortium blockchain, multiple organizations manage the platform.

A blockchain consortium allows new users to join an established structure and share information instead of starting over.

Blockchain Consortium helps organizations jointly search for solutions and save development time and costs.

Advantages of Consortium Blockchain:
  • Verification: The number of participants in the consortium blockchain is known and verified.
  • Control: Instead of a single entity, a specific group of authentic participants governs the blockchain platform.
  • Security: Information on authentic blocks is private.
  • Economical: the blockchain consortium does not charge any service or transaction fees in the consortium setup.
  • Flexibility: Connecting multiple validators to other blockchains leads to mutual consensus and synchronization issues.
Disadvantages of Consortium Blockchain:
  1. Although secure, the entire network can be compromised due to the integrity of a member.
  2. It is less transparent.
  3. Regulations and censorship can have a very large effect on network functionality.
  4. It is also less anonymous if we compare it to another type of blockchain.
Blockchain Technology



This brings us to the end of our guide to the different types of blockchain. In general, it is a good idea to use a private blockchain if you are a business and want to use it without making everything public. If you want more transparency in your network, then a public platform is a good choice. But they are not very suitable for business use cases.

Key takeaways:

  • Before giving the final verdict, we thoroughly studied the two main types of blockchains, i.e. private and public blockchains. Both have some differences between them. However, the main differences lie in security, scalability and transparency. On the one hand, where the private network may not seem very trustworthy, you can completely rely on the public network for its unbroken consensus system (proof-of-work).
  • A public blockchain guarantees security because hacking the entire network is almost impossible. In addition, it offers data transparency as every node has equal access to the record stored in the blockchain. One very successful example of a public blockchain is the Bitcoin system.
If you are just a beginner and want to understand how each type of blockchain works, then we recommend our free blockchain article.

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