Types of Blockchains

Welcome to the topic on types of blockchains! Though you have understood these types earlier, you will explore each type at a detailed level in this segment. Before you dive into the types of the blockchain, take a look at a scenario where an individual is leveraging blockchain technology to expand his business.

A major transformation is taking place in the Indian banking system where all banks are coming together to form a common lending platform - India Lending Blockchain, under the leadership of RBI. In addition to the banks, this platform will also consist of credit bureaus, risk departments, legal and technical panels and other stakeholders of the banking industry. Can this blockchain platform be purely democratic like the bitcoin network or heavily regulated like the SWIFT network? Let’s find out by exploring each of the blockchain types in detail.

A public permissionless blockchain is free for anyone to join or leave. Bitcoin blockchain is the best example of a public permissionless network. This type of network provides anonymity, immutability and transparency but compromises on efficiency.
 

A public permissioned blockchain is an intermediate between private and public networks. It values efficiency and immutability over transparency and anonymity, where every participating member is aware of the identities of the other members in the network. For example, Goods and Services Tax (GST) network in India will be most suitable for a permissioned blockchain since it is operated by known entities, and all participants are verified before they join the network.
 

However, the above-mentioned blockchains cannot be suitable for the India Lending Blockchain network. Permissionless blockchains do not provide the identity of the participants and lack in efficiency; whereas public permissioned blockchains, though they restrict access, are still exposed to the public at large raising concerns over the security of the network since they do not provide anonymity of the participants. So, in the case of a GST network, you wouldn’t want other taxpayers in the country to know the details of your tax filings.

Having looked at the public blockchains earlier, let’s now take a look at the private blockchains in detail. Additionally, we will also discuss the applicability of a private blockchain to the India Lending Blockchain network. 

A private blockchain is one which is operated and managed by a single entity. These type of blockchains are generally applicable in case of a conglomerate where the parent company runs the network for the underlying group of companies. In such a situation, they value efficiency over anonymity, transparency and immutability. If we consider India Lending Blockchain, RBI could be considered as the entity having supreme authority over the entire network. However, this raises the question of concentrating too much power in the hands of a single entity.

A consortium blockchain is largely similar to a private blockchain but differs when you consider who controls or manages the network. Instead of concentrating all power in one entity, authority is distributed across two or more participants. This scenario is also suitable for the India Lending Blockchain where authority can be distributed between RBI and a few of the major banks to ensure benefits for all of its members. 
 

Let’s summarize the key differences between the types of blockchains: