Blockchain Technology - Why We Need Its Different Types?

It is not news when we say that the integration of blockchain technology completely revamped how transactions take place around the world.

However, due to its growing popularity, people did start to think about all the possibilities it could have apart from financial uses. Recently people have worked on it to establish its use in healthcare, politics and polling system, real estate, etc.

Notice how each category differs from another? This means that the blockchain technology of one industry would only work for that certain industry.

Curious to know what is blockchain technology and how does it work? And why do we need its different types? Well, we will discuss the topic that just mentioned.

What Are the Different Types of Blockchain Technology?

Before we begin talking about the different types of blockchain technology, how about we take a quick look at what blockchain technology is? Check out this video below to get a better idea:

Now that we have blockchain technology explained, let's check out some interesting blockchain stats before we talk about the different types of it.

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Some Interesting Stats Related To Blockchain Technology

• According to Statista, global spending on blockchain technology is anticipated to increase to 15.9 billion by 2024, from 1.5 billion in 2018.
• According to Fortunly,  it is anticipated that businesses will spend $20 billion every year on blockchain technical services by 2024.
• It is reported that about $552 million has been spent on blockchain-powered projects by financial institutions alone.
• According to Techjury,  the use of blockchain can help financial companies can save up to $12 billion a year.

What are the different types of blockchain and why do we need them?

Read down below to find out more about the different types of blockchain technology.

Blockchain For Cryptocurrency

Originally designed to facilitate sensitive Bitcoin transfers, blockchain technology was initially used for safe currency transfers. The method works in this way the user stores every piece of information in a block with a special code.

The user then sends code forward to the next block and so on till the information within reaches its desired destination. Here, once the information is stored inside any block, it is given a unique hash (code) which changes upon even the smallest of changes.

This kind of works like fingerprints; creating uniqueness. This ensures security that none of the blocks in the chain were tampered with.

Public Blockchain Technology

A public blockchain is one that is not restricted. Anyone who has access to the internet can get into the network and begin validating blocks and sending transactions. These kinds of networks usually offer some type of incentive for users who validates the blocks.

To validate the transactions this network uses Proof of Stake or Proof of Work consensus. This was the model that was conceptualized by a person named Satoshi Nakamoto in 2009. It can be referred to as "mother technology."

Private Blockchain Technology

A private blockchain is a restrictive or permission blockchain operating in a closed network, for example within an organization. Here, authorization is granted to only selective members of an organization.

The level of security, permissions, authorizations, and accessibility remains in the hands of the organization itself. Therefore, private blockchains are similar to how public ones work, but on a much smaller scale.

The organization might deploy blockchain technology for voting, digital identity, supply chain management, or asset ownership.

Blockchain in Banking

In banking, blockchain technology can work similarly to the private version of it. However, do keep in mind that the banks have to deal with several interbank and intrabank transactions daily.

Using a completely private blockchain might not be possible for this sector. Instead, the blockchain is restricted not just to one node but to other trusted nodes as well.

The nodes having access to the blockchain should also be authorized. In short, you can think of this as a blockchain that is shared and restricted to authorized and trusted nodes only.

Consortium Blockchain

Here, some nodes control the consensus process. This is like a hybrid of public and private blockchain technology. This is more of a decentralized type where more than one organization manages a blockchain network.

In this type of blockchain, multiple organizations can participate as important parts and share information or contribute to the process of mining. The consortium blockchain can not only work for the banking sector but it can also work for government organizations.

Hybrid Blockchain

As the name suggests this is a combination of private and public blockchain technology. It uses features from both types, giving users more control over who gets to access which data is stored in the blockchain.

Only a selected data section from the chain can go to public keeping, whereas most are stored in confidential blockchains. A transaction in a private network of hybrid blockchain is usually verified within that network. However, users can release it in public for further verification as well.

Conclusion

Blockchain technology has caused major shifts in the landscapes of different industries. One thing is for sure; this technology is here to stay!

Today, different types of blockchain platforms are encouraging the development of blockchain-based applications, which means that the technology is expected to become much more mainstream in the coming years.

We hope this article helped you get a better idea about what blockchain technology is, and what are its different types.