Types of Blockchain Technologies
The term Blockchain does not refer to any application, web portal or any sort of tool. It is a concept. Blockchain is an encrypted, distributed database of all types of information including dates, numerical values, names, and contact details among others. Hence, it can be considered as a large file that stores and organizes millions of tons of information. One of the key features of Blockchain is that the information is accessible across several hundreds and thousands of computers. Blockchain technology refers to a set of tools or software that can be used to streamlines these abundant blocks of information.
How does it work?
It is named Blockchain, because it stores the transaction data in blocks, that are linked together to form a chain. Blocks are data structures whose purpose is to bundles sets of transactions and are replicated to all nodes in the network. Blocks in blockchain are created by miners. Mining is the process to create a valid block that will be accepted by the rest of the network. Nodes take pending transactions, verify that they are cryptographically accurate, and package them into blocks to be stored on the blockchain. As the number of transactions grows, so does the size of the Blockchain. Information is contained here as a block header and transactions. Block header is the metadata that helps in verifying the validity of a block.
A Blockchain is maintained on a decentralized and distributed network of computers. Hosting a Blockchain on a distributed network of systems allows secure transactions to occur across a Blockchain with minimal or no possibility of fraudulent activities. In simple words, Blockchain refers to data stored on varied computers across the globe and not on one system. There are mainly three types of Blockchain:
1.Public Blockchain has no access restrictions and anybody powered with internet can conduct their transactions and perform their validations (execution of consensus protocol). Under public Blockchain, no single authority is authorized to perform the action. Anybody can indulge in reading, writing or auditing within public Blockchain. The public Blockchain remains open.
2.Private Blockchain is kept private within the community and requires permission to access. The private Blockchain moreover functions like a private property of an individual or an organization to perform specific job functions defined by them. A private Blockchain is always preferred for business organizations.
3.Consortium or Federated Blockchain can be classified as partially public and partially private. In this, the power of authority or control over all the data is semi- decentralized. That is, a single individual or member does not have full authority. A federated Blockchain can be operated by a group of users, each of whom will have unique rights such as reading, writing and auditing rights. There are two types of users here: users who have control over the Blockchain and decide who should have permission to access the Blockchain, as well users who can access the Blockchain.
The types of blocks can also be differentiated. Most blocks simply extend the current main blockchain which is also the longest chain in the network. These blocks are called “main branch blocks”. Others may indicate parent blocks that are also known as “side branch blocks”. Parent blocks can also be classified as “orphan blocks” that are not known to the nodes processing the blocks.
Blockchain has already made an impact on the financial sector as the data of customers in a branch in London can be accessed and perhaps even modified at a branch in Jacksonville. Several public entities have included ‘blockchain’ to their company name and there was even a public discussion In the U.S Senate about cryptocurrency which is a popular application of Blockchain.
In conclusion, each type of Blockchain defines a set of characteristics that will be helpful for different industries. The adaptation of Blockchain resolves major problems faced by businesses such as:
- Removes need for large servers
- Speed and Cost Effectiveness
- Gives options for rights and access management while leveraging the same Blockchain technology and reaping its benefits.
- Reduces redundant work.
- Distributes consensus between interested parties becomes fast even though despite distances.
SGS Technologie in a Blockchain consulting and application development firm in Jacksonville, Florida. Our team has subject matter expertise in different variants of Blockchain technology. Contact us for discussion of what blockchain solutions we can give to suit your specific business.