Blockchain Types

Blockchains are classified based on their network topology and permission model.

• Permission model:

  • Permissioned Blockchain
    • The blockchain operator grants nodes or organizations prior permission and different roles.
  • Permissionless Blockchain
    • No prior permission is required.
    • Anyone can join.

• Network topology:

  • Distributed Blockchain
    • All nodes are peers.
  • Consortium Blockchain
    • Selected nodes communicate on behalf of the organization.

Public Blockchains

There is no restriction on joining a public blockchain. Anyone can maintain a transaction ledger and become a validator, meaning they can participate in the consensus protocol.

In many cases, validators are encouraged through economic incentives. For example, they may be required to perform Proof of Work.

Private Blockchains

Permission is required to use a private blockchain. To join, a participant must first receive an invitation from the network administrators. There may also be several restrictions on becoming a user or validator, and participants may receive different roles.

This type of blockchain is suitable for businesses and other organizations because authority is distributed among everyone on a public blockchain, which is not appropriate for many businesses.

Businesses want accounting and record-keeping to work correctly while retaining autonomy and protecting sensitive data. For these reasons, businesses often prefer private blockchains.

Consortium / Federated Blockchains

A consortium blockchain is semi-decentralized. Like a private blockchain, permission is required to access its blocks. However, the chain is controlled by several organizations, and only selected participants are allowed to read data and operate the consensus protocol.