Author: Mohamed Hamza Ghaouri
Blockchain technology is transforming the world. Since its inception, blockchain has been regarded to be the next big technology to transform industries such as banking, finance, healthcare, manufacturing, logistics and many more. By changing the way we store, access, and use data to enhance technological growth, it enables businesses, governments and other organizations to better manage their workflow and improve their systems with better solutions. As a decentralized peer-to-peer ledger, it mainly has two important components: the network (public or private) and the ledger (permissionless or permissioned).
Finterra, a leading fintech organization, has been able to develop blockchain systems of different types for its customers and also develop its own hybrid blockchain called Gallactic blockchain. The architecture of this technology consists of offering the most important blockchain features such as integrity, transparency and security of the transactions. Even though transactions are not made public, they are verifiable when needed. Every transaction that takes place in this platform are be kept private but can be open for auditability if needed. Finterra can provide the Galactic blockchain to clients willing to use this technology on their business activity. In addition, Finterra has the ability to build and offer an entirely customizable blockchain platform for its clients. This blog introduces the different types of Blockchain technology that Finterra can offer and explains the difference between them.
When blockchain technology was first introduced to the world, it was a type of public blockchain with a use case of cryptocurrency that provides the concept of decentralized ledger technology (DLT). The concept of DLT has changed the way we solve things around us. It gave organizations the ability to work without depending on a centralized entity.
A public blockchain network is a blockchain network where anyone can join whenever they want. Basically, there are no restrictions on participation. In addition, anyone can consult the ledger and participate in the consensus process. Due to its permissionless nature, any party can view, read and write data on the blockchain and the data is accessible to anyone. No particular participant has control over the data in a public blockchain. Public blockchains are also decentralized and immutable. Once an entry is made and validated on the blockchain, it cannot be changed or deleted once the entries are validated.
The term ‘private blockchain’ in itself is contradictory. Sticking with the initial philosophy of blockchains, there should be nothing private in a blockchain. Here we are using the term blockchain to imply the use of a DLT. In fact, private blockchain does not really offer the true decentralization functionality of the blockchain since it allows a single authority or organization to look after the network. Instead, it offers a partial decentralized network with a set of rules and regulations.
In contrast to the public blockchain network, a private blockchain network is configured in such a way that only restricted parties can join the network and participate in reading or writing data. The permissioned ledger ensures varying levels of permissions for participants to interact with the blockchain. Private blockchains have always control over who can join the network, write into and read from the blockchain.
Transactions are processed by selected participants, also a higher level of data privacy compliance and performance are ensured. When compared, private blockchains are less decentralized than other blockchain variants. Private blockchain knows who the participants are, hence it can assign different roles and permissions to different users. As the number of participants is limited, the transaction throughput is really high, making the performance of private blockchains remarkably high.
Features of the private blockchain:
- Full Privacy
- Empowering Enterprises
Some use cases for private blockchains include:
- Vote counting: governments could use this technology in democratic processes.
- Digital Identity: Governments and businesses could use private blockchains to store the digital identities of citizens and employees.
- Asset Ownership: Institutions can use a blockchain to track ownership of financial assets such as stocks and bonds.
- Supply Chain Management: Businesses can use blockchains to track goods in their supply chain.
Blockchain consortium (Federated Blockchain)
Many seem to confuse private blockchain with consortium blockchains, but in reality they are different and used for specific niches and industries. Blockchain consortium is a type of permissioned, non-public blockchain network in which multiple organizations maintain the system. However, it can effectively offer a decentralized structure. Several organizations participate in the consortium instead of one, therefore each organization receives similar treatment. There is no single entity ruling the network.
A consortium blockchain is a creative approach to meeting the needs of organizations where public and private blockchain functionalities are required. In a consortium blockchain, some aspects of organizations are made public, while others remain private.
The hybrid blockchain architecture is distinguished by the fact that it is not open to everyone but still offers blockchain features such as integrity, transparency and security. It means both controlled access and freedom. The hybrid blockchain architecture is entirely customizable. Members of the hybrid blockchain can decide who can participate in the blockchain or what transactions are made public. This brings the best of both worlds (public and private) and ensures that a business can work with its stakeholders in the best possible way.
Even though transactions are not made public, they are nonetheless verifiable when needed. Every transaction that takes place in the hybrid blockchain platform can be kept private and still open for auditability if needed. Hybrid blockchain ensures that every transaction is written once and cannot be changed in due time. Even if a group of individuals controls it, they cannot change the immutability and security of transactions. They can only control which transactions are made public and which are not.