Types of Blockchain and Chain Terminology
Prerequisites: Introduction to Blockchain technology | Set 1, Set 2
In the above two articles, we have seen what blockchain technology is and got brief information about types of blockchain. In this article, we will discuss in detail about two main types of blockchain and the terminologies related to types of chains.
There are mainly three types of blockchains:
Public, Private, and Consortium
In this article, we will discuss in detail about Public (Permissionless) and Private (Permissioned) Blockchains.
- Public (Permissionless) blockchain:
Public blockchains are permissionless blockchains where anyone can join the network and read and write to the ledger. Such blockchains allow users from anywhere in the world to interact with the blockchain and submit or read transactions as far as they are connected with the blockchain network. In a permissionless blockchain, any user can develop and add smart contracts to blockchain without any intervention forced by developers.
Permissionless blockchains bring complete decentralization , which means that there exists no central authority to edit the ledger state or make any kind of modifications to the network protocols. This makes the system robust against a single point of failure with distributed trust.
Such blockchains bring anonymity which in turn provides privacy to its users. A user is not supposed to reveal any kind of personal information before submitting transactions and smart contracts. Since all the participants can see each and every transaction, it makes the system transparent.
Examples: Bitcoin, Ethereum, Litecoin
- Private (Permissioned) blockchain:
Permissioned blockchains do not allow any user to freely join the network and read or write to the ledger. It maintains an access control mechanism between the list of users connected to the network. Such blockchains are widely adopted by centralized organizations where the company consortiums are likely to securely record transactions, and interchange important information between one another.
Such blockchains can be partly decentralized or fully centralized as the users have the right to do negotiation and reach a consensus with desired varying decentralization.
In private blockchains, users’ identity is known to everyone but transactions are only visible to those who have appropriate permission. Also, since all the users are not involved in the consensus process, such blockchains have higher throughput compared to public blockchains.
Examples: Hyperledger, Multichain
Now we will discuss the following chain terminologies within the blockchain:
It is a chain that contains the block headers of all blocks that are digitally signed and contains the validated records of ownership that are irreversible, depleting the necessity for the reconciliation of data.
It refers to the main chain that is implemented according to bitcoin codebase.
It refers to the main chain that is implemented according to the alternative codebase.
It is a chain that allows transfer of assets to the main chain and vice versa. So the main benefit is that it can store assets and data that are not possible to store or maybe too expensive to store on the main chain. Sidechains help in increasing the transaction speed significantly by using pre-mined main chain addresses.
It is a sidechain that provides a two way peg which allows transfers of cryptocurrency from a mainchain to another mainchain requiring low third party trust.
- Pegged Sidechain:
This sidechain allows assets to be moved between multiple mainchains, and thus cancelling counterparty risk, enabling atomic transactions and making chains independent from each other.