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Types of Blockchain

Types of Blockchain

Ever since the inventors of bitcoin cryptocurrency have introduced the concept of the blockchain, it has gained much popularity and interest in several areas like digital currencies, financial services, businesses, intellectual property, privacy, digital identity and authentication, information technology and IoT etc.

Here we will discuss the types of the blockchain, their benefits, and drawbacks, to understand and make the decision of selecting the right one, in order to achieve our goals and purposes. There are mainly three types of blockchain:

1.    Public blockchain

2.    Consortium or federated blockchain

3.    Private blockchain


As this was the main idea of bitcoin inventors, public blockchain is the distributed ledger and it is also decentralized, means it is not controlled or owned by any authority and it can be accessed by everyone on the internet. It is the most general and popular type of blockchain most widely being used in several applications.

Public blockchain consists of records of transactions which are first get verified by the miners in the process of mining, and miners get new bitcoins as the reward for adding the record of transaction in a new block. Miners verify the transactions using consensus algorithms: Proof of Work (PoW) and Proof of Stake (PoS) which determine either the transaction is valid to be added in the blockchain or invalid and should be deleted from the blockchain.

In public blockchain, any person can be the user and anyone can be the validator. It is the most transparent blockchain because there are not specified or selected people who review and audit it, but it can be audited and reviewed by any person in the world. But public blockchain takes a certain amount of energy consumption and power of computer machines to be maintained. Bitcoin, Ethereum, and other most digital currencies are the applications of the public blockchain.


Consortium blockchain is the distributed ledger in which pre-selected entities maintain the blockchain by using consensus algorithms, so it is a partially centralized blockchain, neither owned or controlled by any single entity nor it is accessible to everyone to audit or maintain the blockchain.

The entities can be the group of companies who want to grow their business and they decide to control single blockchain together. For example, the consortium of 10 companies, each of which operates one node of blockchain network, and to add or verify the block, 6 companies must sign it in order for the block to be defined as valid. This same concept is also used in public blockchain in which 51% of nodes should declare the block valid for that block to be added in the blockchain.

Consortium blockchain works faster than a public blockchain because here the selected nodes are maintaining the blockchain, hence saving the costs and energy consumptions as compared to public blockchain where thousands of individuals maintain the blockchain, and hence spending so many costs for powerful computers with higher GPUs. Consortium blockchain mostly used by the financial institutions which are associated or linked. Corda, B3i (Insurance), EWF, R3 (Banks) are the applications of consortium blockchain.


Private blockchain is controlled and owned by the organizations, so it is the centralized system where organization rules are applied and only allowable entities of that organization can add or change information in the blockchain and only allowable authorities can read the information, or the information can be kept hidden to anyone, as it is the property of specific organization who decides the Read/Write operations on its blockchain.

The private blockchain is the much faster than the public blockchain because here only organization’s entities are maintaining the blockchain hence less energy and cost is being used.

But, there is a lot of discussion on this concept is going on that how private blockchain can be considered or called as blockchain because it is totally against the general concept of blockchain which means the decentralized system. But it still is cryptographically secured and uses the other core features of blockchain like cryptography, encryption, and hashing, which make private blockchain different from the general database management systems. MONAX, Multichain are the examples of the private blockchain.


There is no doubt that private blockchain is much faster than the public blockchain and provides several other benefits like the owner has the authority to change the rules of the blockchain if needed, but it does not mean that private blockchain is better choice than public blockchain, it can be in some situations like an organization need a full control over its blockchain then It has the option of creating or using private blockchain.

 And, public blockchain is much popular than the private blockchain as it is completely based on the general concept of blockchain and can be used in situations like if we want to make a system completely decentralized and distributed as done in the bitcoin or ethereum, so that anyone can access it without any third parties or intermediaries, now here we cannot use private blockchain as it is a centralized system. Finally, consortium blockchain can be used when there are certain associated companies which require shared blockchain in which each company will play a role of one entity or node in maintaining and controlling the blockchain. 

Written by Alessandro Civati
For Lirax Blockchain & AI Platform

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