The blockchain is a huge part of technology that powers Bitcoin and has recently made quite a splash. Today, we’re going to talk about the shortcomings and benefits of different types of blockchain and how they are commonly used.
To show us the benefits of a decentralized ledger, the blockchain was able to give us a first look at how it can be put into practice. Some of the aspects of Bitcoin, such as the energy it requires and other shortcoming, have made the blockchain a bad choice for many businesses, depending on their needs.
We’re going to explain this more thoroughly, but this is because Bitcoin operated on a public blockchain, which is something that cannot be used to store data or sensitive information. Other forms quickly emerged for these types of needs, and so there are four new types of varieties to consider.
This is the most common and open form of the blockchain, in which anyone can participate in transactions within it and maintain they own copy of the ledge, as long as they have a steady access to the internet. This was the very first form of the blockchain created, and as we mentioned before, it is the one that usually powers cryptocurrencies that are becoming huge and very popular. Another use might be for voting or fundraising, since the system is very open.
This openness mentioned is one of the public blockchain’s biggest advantages because it has transparency, and a trust-based nature. But it does also have a few issues. One of these major issues is that the transactions it can register are at a very slow rate. This created another disadvantage, which is that the blockchain network is limited in scope, and this is to simply proven the rate of transactions from dipping down further than they do based on speed.
This type of blockchain is very similar to a public blockchain but with a key major differences that set the two apart, which results in different disadvantages and advantages.
This private form of blockchain is not accessible to everyone and is held in a closed network that is maintained by one entity, usually a business, and requires permissions to anyone entering, using a level of trust through their organization and operations. Apart from this major point of build up, the private blockchain is relatedly made the same way that a public one is.
With a level of centralization, this blockchain is more efficient but requires a little bit of sacrifice on the security side of things. This is very important to consider when using a private blockchain because they are often used for internal processes like supply chain management, asset ownership, and internal voting.
This is the combination of the two previously mentioned blockchain, the private and public. This one allows businesses to take advantage of some key elements from each time, like maintaining the privacy and creating customizable rules. With these advantages, there are some disadvantages that come with using this form of blockchain. One major one is the fact that they lack transparency of other forms, and that there is no prerogative for a business to challenge the adoption process. However, these blockchains can be used effectively for retail, real estate, and other markets that have steep regulations they need to follow.
This type of blockchain, the federated blockchain, is similar to the hybrid, it combines beneficial parts of private and public ones. This can make some records open, while still having high security benefits, such as being decentralized. Federated blockchains are customizable and an efficient option that allows your business to control access and keep transparency. These are often used for research purposes, banking, and food tracking.
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