Types of Blockchain

Blockchain is a distributed database that allows for secure, open, and unchangeable transactions. It is the underpinning technology of cryptocurrencies like Bitcoin. Blockchain is not limited to cryptocurrencies, though. It has the potential to upend a variety of sectors, including supply chain management, healthcare, and finance. Blockchains are of four types. Namely public, private, hybrid, or consortium. No matter what kind of blockchain you select, it's critical to comprehend how it functions and what its advantages and disadvantages are. We shall learn about the many kinds of blockchain in this essay.

What is Blockchain?

A blockchain is a digital ledger that contains a record of all cryptocurrency transactions. It grows as additional blocks of recordings are submitted as "completed" chunks. Each block contains transaction information, a timestamp, and the cryptographic hash of the previous block. Bitcoin nodes use the block chain to distinguish between real Bitcoin transactions and efforts to resend previously spent money. Although a blockchain can be used to track any kind of digital transaction, the Bitcoin sector makes the most use of it. Bitcoin, the first and most well-known cryptocurrency, keeps a blockchain of all transactions.Other well-known cryptocurrencies like Ethereum, Litecoin, and Bitcoin Cash also utilize blockchains.

A decentralized database called a blockchain records each transaction that has ever occurred. This record's blocks are each time stamped and linked to the block preceding them. A chain of blocks is another name for this data. use blockchain technology to protect two-party transactions. Because they are distributed, blockchains are very challenging to manipulate. They are therefore the greatest option in situations where security is essential, such as while carrying out financial transactions. Furthermore, blockchain technology can be leveraged to develop unique applications such as smart contracts. A smart contract is a piece of computer code that may be used to automatically execute transactions in response to specific circumstances. For instance, ownership of a piece of property might be quickly transferred when a smart contract's requirements are met.

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Types of Blockchain

Now that we've covered the basics, let's take a closer look at the different types of blockchains

1. Public Blockchain

Features of a Public Blockchain:

  • Anyone can join this distributed ledger and utilize it to carry out transactions.
  • This is a non-restrictive ledger format, owned by each peer. Nowadays, anyone with an internet connection can view the public Blockchain.
  • This user has access to both old and new records and can perform mining activities.
  • These complex computations are required to validate transactions and add them to the ledger.
  • On the blockchain network, no legally binding record or transaction may be altered. Because the source code is frequently made accessible for public review, anyone can evaluate the transactions, pinpoint problems, and offer solutions.

Benefits of a Public Blockchain 

Trustworthy :
  • Since the proof-of-work procedure ensures that no fraudulent transactions take place, public blockchain nodes are not required to be acquainted with or to have any kind of mutual regard.
Safe :
  • A public network permits the addition of any number of users or nodes. In a bigger network, more data is distributed, making it harder for hackers to compromise the whole thing.
Transparency :
  • Every member node can view the data on a public blockchain, making it open and transparent. Each authorized node keeps a copy of the blockchain records or digital ledger.

Disadvantages of a Public Blockchain 

Lower TPS :
  • There are incredibly few transactions per second on a public blockchain. This is because of the vastness of the network and the fact that many nodes are needed to do proof-of-work and verify transactions.
Slow Processing :
  • The slow processing and completion of transactions is one scaling problem. Scaling is compromised. Since the network will slow down as we attempt to expand it.
High Electricity Consumption :
  • The proof-of-work device is expensive and consumes a great deal of energy. Undoubtedly, energy-efficient consensus techniques will need to be developed in technology.

Applications of a Public Blockchain :

Voting: Governments can cast their votes on a public blockchain to promote openness and confidence.

Fundraising: To boost transparency and trust, organizations and projects can use the open Blockchain.

2. Private Blockchain

Features of a Private Blockchain :

  • A blockchain network is controlled by a single identity and operates in a restricted or private setting.
  • The peer-to-peer connection and decentralisation of this Blockchain are similar to those of a public blockchain network, despite its significantly smaller size.
  • They are often run on a limited network inside a business or organisation, rather than being available to anybody who wants to volunteer computing power.
  • Enterprise blockchains and permissioned blockchains are other names for them.

Benefits of a Private Blockchain :

Speed :
  • Blockchain private transactions go more swiftly in terms of speed. This is because a private network takes less time to validate transactions because there are fewer nodes in it.
Scalability :
  • The size of your private Blockchain can be adjusted to meet your specific requirements. Private blockchains are therefore particularly scalable since they enable companies to swiftly grow or reduce the size of their network.

Disadvantages of a Private Blockchain 

Building Trust :
  • Less people utilize a private network than a private network.
Lower Security :
  • A private blockchain network is more vulnerable to a security breach since it has fewer nodes or members.
  • Private blockchains are constrained by the requirement for a centralized Identity and Access Management (IAM) solution.This system provides complete administrative and monitoring capabilities.

Applications of a Private blockchain

Supply Chain Management: A private blockchain can be used to manage a company's supply chain.

Asset Ownership: Using a private blockchain, assets may be traced and validated.

Internal Voting: Internal voting can also be done using a private blockchain.

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3. Hybrid Blockchain

Features of a Hybrid Blockchain :

  • Businesses who want the best of both worlds utilize a hybrid blockchain, which combines the benefits of both private and public blockchains.
  • Businesses can use it to establish both public and private, permission-based and permission-less systems, allowing them control over who has access to which Blockchain data and what data is made public.
  • In a hybrid blockchain, transactions and records are typically private, but access can be allowed through a smart contract if verification is necessary.

Advantages of a Hybrid Blockchain 

Security : 
  • Because it operates in a closed system that prevents outside hackers from mounting a 51 percent attack on the network, hybrid blockchain is secure.
Cost-effective :
  • It maintains anonymity while allowing third-party interaction. The transactions' speed and cost are better than those of a public blockchain network, and their scalability is superior.

Disadvantages of a Hybrid blockchain 

Lack of Transparency :
  • Because information can be hidden, this type of blockchain isn't completely transparent.
Less Incentive :
  • There is no incentive for users to participate with or support the network, and upgrading could be difficult.

Applications of a Hybrid Blockchain :

Real estate: Businesses in the real estate sector can run their systems and give the general public information through hybrid networks.

Retail: The hybrid network can help merchants by streamlining their operations.

Banking: Hybrid blockchains are a good fit for industries like the banking sector that are subject to stringent regulations.

4. Consortium Blockchain

Features if a Consortium Blockchain

  • Similar to how a hybrid blockchain has both private and public blockchain features, a consortium blockchain, also known as a federated blockchain, has both.
  • But it differs in that it involves many organizational members working together on a decentralized network.
  • The consensus mechanisms in a consortium blockchain are managed by predefined nodes.
  • With regard to transaction initiation, receipt, and validation, it has a validator node.

The Advantages of Consortium Blockchain

Secure : 
  •  A consortium blockchain is more scalable, efficient, and secure than a public blockchain network. Access controls are present, just like in private and mixed blockchains.

Disadvantages of the Consortium Blockchain

Lack of Transparency :
  •  The consortium blockchain has less transparency. The Blockchain's rules could make the network inoperable even if a member node is compromised.

Applications of Consortium Blockchain

Banking and payments :
  • A group of banks can form a consortium by working together. They have the option of selecting the nodes that will do transaction validation.
Research :
  • A consortium blockchain may be used to share research data and findings.
Monitoring :
  • It is suitable for meal monitoring as well.

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How Does a Blockchain Work?

As we've learned, a distributed database is utilised to store transaction records, and this is what the blockchain is. Records are kept in blocks, and each block is chained to the one before it to build a blockchain. Because of this design, blockchains can withstand data modification and tampering. The transactions that have been cryptographically verified by network nodes are kept in a public ledger. This ledger is distributed to each node in the network, and each one updates it independently. Blockchains are safe and resistant to hacking because of their decentralization. Numerous forms of data, including voting data, medical records, and financial transactions, are stored on blockchains. Blockchains' decentralized data storage makes them ideal for storing private information.

Why Do We Need Different Types of Blockchain?

As blockchain technology continues to grow, various types of blockchain platforms are being created. While there is still some debate on the most effective blockchain type, it is clear that each form has benefits and drawbacks. The various blockchain architectures will be looked at in this essay along with their usefulness. The creation of many types of blockchains is addressing the requirements of numerous industries and enterprises. For instance, some blockchains are designed for speed and efficiency while others are more streamlined and user-friendly. Some blockchains are designed to be more secure than others, even while some are built to be more scalable. It is obvious that several types of blockchain are required to satisfy market demands given the diverse needs of enterprises and industries. Each kind of blockchain has advantages and disadvantages. For instance, some blockchains are more appropriate than others for particular tasks. Additionally, some blockchains are more centrally controlled than others, which may have an impact on security and scalability.

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In this post, you learned about a variety of blockchain types, their features, and the advantages and disadvantages of each type. After reading this, we want you to use your knowledge to select the blockchain that will best meet your needs.

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As a Senior Writer for HKR Trainings, Sai Manikanth has a great understanding of today’s data-driven environment, which includes key aspects such as Business Intelligence and data management. He manages the task of creating great content in the areas of Digital Marketing, Content Management, Project Management & Methodologies, Product Lifecycle Management Tools. Connect with him on LinkedIn and Twitter.

There is no simple answer to the question of which Blockchain to adopt because each Blockchain offers a unique set of advantages. To guarantee that you choose wisely, though, consider your needs.

  • Chainalysis KYT.
  • IBM Blockchain.
  • Ripple.
  • Ethereum.
  • Hyperledger Fabric.

Bitcoin and Ethereum are two popular examples where blockchains are frequently used. Anyone can use a blockchain connection to make transactions on them.

  • Enhanced security.
  • Greater transparency.
  • Instant traceability.
  • Increased efficiency and speed.
  • Automation.