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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. This uniqueness meant that blockchain had to evolve into different types. So, how many types of blockchains are there and what do they talk about?
What Are the Different Types of Blockchain Technology?
Before we begin, how about we take a quick look at what the blockchain technology is? Watch below:
Blockchain for Cryptocurrency
Originally designed to facilitate sensitive Bitcoin transfers, blockchain technology was initially for safe currency transfers. The method works in such a way that the user stores every 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.
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 at the hands of the organization itself. Therefore, private blockchains are similar to how public one’s work, but on a much smaller scale. The organization might deploy the blockchain technology for voting, digital identity, supply chain management, or asset ownership.
Uses 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 other trusted nodes as well. The nodes having access to the blockchain should also be authorized. In short, you can think of this as blockchain that is shared and restricted till authorized and trusted nodes only.
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. More than one organization can act as a node in this type of blockchain and exchange information or do mining. The consortium blockchain can not only work for the banking sector but it can also work for government organizations.
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 stored in the blockchain. Only a selected data section from the chain can go to the 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.
In conclusion, we at InvoZone want you to use this knowledge and decide how cryptography and encryption can serve you better. If you want to tackle the uses of a public blockchain network or any other, then do not miss an opportunity for a chat with team InvoZone.