When people hear the word “blockchain,” people usually think of Bitcoin. Bitcoin is known as a public blockchain, which is the most common type of blockchain. However, many people are not aware that other blockchains exist in addition to public blockchains. The list includes private and consortium blockchains. So, what is the difference between public, private, and consortium?
A public blockchain is the most popular type of blockchain. Bitcoin, Litecoin, and Ethereum are public blockchains. The common denominator in a public blockchain is the fact that all transactions can be sent and received by anyone in the world.
All nodes within a public blockchain are given the same transmission power. Additionally, each node has the authority to audit transactions. Therefore, all nodes in a public blockchain are decentralized and fully distributed.
Most people in the crypto community would agree that decentralization is a major benefit offered by public blockchains. Another added benefit is the high level of security. Due to the fact that all transactions can be checked by anyone, fraudulent activity is much easier to detect.
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A private blockchain is the exact opposite of a public blockchain. A single authority or organization has control over the network. Users must obtain permission from the organization to gain access.
Private blockchains are most useful to businesses that need to maintain privacy and security. For example, two companies that are collaborating on a top-secret project would benefit from a private blockchain.
A private blockchain is completely centralized because public access is not ordinarily permitted. But private blockchains have similarities with decentralized public blockchains.
The network is based on a peer-to-peer format, where each user maintains a complete copy of the ledger. Additionally, the ledger is immutable, which means it can’t be changed or altered. Also, the private blockchain requires consensus approval for any additions to the network.
A consortium blockchain is a mixture of public and private blockchains. In a consortium blockchain, only a select few nodes of the network reserve the right to authorize transactions. The remaining nodes within the network are assigned the tasks of creating new transactions, reviewing transactions, and examining blockchain history.
The division of power within the consortium is dependent on the network. Each consortium can be different from other consortiums in terms of the consensus process. The remaining features of a consortium blockchain are generally a mixture of public and private blockchains.
Brief Summary of Public, Private, and Consortium Blockchains
- A public blockchain is the most common blockchain.
- Bitcoin blockchain is an example of a public blockchain.
- All nodes in a public blockchain are decentralized and fully distributed.
- The major benefit of a public blockchain is decentralization.
- A private blockchain is the opposite of a public blockchain.
- Permission is required prior to gaining access to a private blockchain.
- Public and private blockchains have many similar mechanisms.
- A consortium blockchain is a mixture of public and private blockchains.
- Only a select few nodes of the network reserve the right to authorize transactions on a consortium blockchain.