Blockchain is a distributed and immutable ledger that enables the recording of transactions and asset management in a collaborative platform. Blockchain reduces data management costs for everyone. Almost anything can be recorded and traded on the blockchain platform; At the same time, you should note that there are different types of blockchain networks with unique features. In this article, we are going to introduce the types of blockchain. Stay with us until the end.
The most important features of blockchain technology
In the article What is Blockchain, we described this technology in detail. Nevertheless, we briefly explain the unique characteristics of blockchain. The most important features of blockchain technology are:
- High speed: By eliminating intermediaries in transactions, the two sides of the transaction are directly connected.
- Permanence: Blockchain networks are permanently available at any moment of the day or night.
- Cheapness: Transaction fees in blockchain networks are more limited than in centralized systems.
- Security: Blockchain networks are highly secure and use a collective protection mechanism against hacker attacks.
- Transparency: All processes in the blockchain are done in front of the public, and for this reason, the possibility of data manipulation is zero.
What are the types of a blockchain network?
In general, blockchain types can be classified into four groups, which are:
Public blockchain network
When a public domain will assign to a blockchain network, it means that anyone anywhere in the world can access it. Among the types of blockchain, the most famous type are public networks. Bitcoin, Ethereum, etc., are the main public blockchain networks known in the cryptocurrency market.
Public networks will govern by consensus algorithms. This means that all network users must accept and follow the rules and frameworks set in the form of consensus algorithms. Proof-of-work and proof-of-stake consensus algorithms will two of the most widely use public blockchain management mechanisms. Based on this, it can be claimed that public blockchains are completely decentralized; This means that no third party monitors the activities and transactions.
The real identity of people in public blockchain networks remains completely hidden. This issue has caused many people to welcome public blockchains. Along with these positive features, one should not forget that a lot of computing power is needed to manage transactions and secure the network. Furthermore, one can never be 100% sure that public blockchains are impenetrable.
Private blockchain network
Another type of blockchain is a private network. This type of network is also called a managed blockchain. This means that a certain person or institution is in charge of managing the network. In this situation, the central administrator of the blockchain decides who will be present in the network or who will play the role of the node. In other words, the access level of each of them in the network will determine by the central entity.
Consortium blockchain network
One type of blockchain will know as a consortium network. Unlike private blockchains that will manage by a single entity, a consortium of organizations together are responsible for managing these blockchain networks; As a result, in terms of decentralization, consortium networks will in a better position compare to private blockchains; For this reason, their security is also higher.
Of course, creating a consortium is not an easy task; Because establishing interaction and cooperation at a high level between several organizations has many challenges. All members of the consortium must be at a certain level in terms of technological infrastructure, and achieving this is not an easy task.
In the meantime, some companies operate in the field of blockchain consortium services. R3 software development company is one of them. CargoSmart is another blockchain non-profit consortium working on the digitization of the transportation industry.
Consortium blockchains have very good privacy; Because the information of the blocks in their chain will hide from public view and only the members of the consortium have access to this information. The fact is that the idea of consortium blockchains has many flaws and ambiguities; For this reason, companies in the world have not welcomed them much.
Licensed blockchain network
One the types of blockchain is the permissioned network. In simple words, every person must have permission to be present and active in such networks. Although permissioned blockchain networks are mostly set up by private companies; It is also possible to define public blockchains that people need permission to enter.
Data storage in the licensed blockchain network will do in a decentralized manner. This means that all authorized persons can access a copy of the data. In this way, network security will improve. In addition, the identity of people active in the network remains hidden. Permissioned blockchains are a good solution for companies and private organizations.
In this article, we examined the types of blockchain. Public and private blockchains will be more widely used than the other two models. Also, there are many challenges in the way of blockchain networks, some of which have been solved in these years. It cannot be asserted with certainty that the types of blockchain networks will limit to these four. We have to wait and see if new networks will introduce in the future.
Why Bitcoin cloud mining?
An unknown individual or group called Satoshi Nakamoto introduced the Bitcoin network in 2009. In 2021, there will be more than 10,000 different projects in cryptocurrencies. So each of them has its role in building the future of money.
The market value of cryptocurrencies reached $ 1 trillion. It happened for the first time in January 2021. It passed $ 2.5 trillion less than three months later. So it shows that this market is one of the growing markets favoring its investors.
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