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Blockchains can be divided into two categories: private blockchains and public blockchains. There are, however, various alternatives, such as Consortium and Hybrid blockchains, to consider. Before delving into the specifics of the various types of blockchains, let us first examine the similar characteristics they share. Every blockchain is comprised of a cluster of nodes that operate on a peer-to-peer (P2P) network system, as described above. It is possible to have a copy of the shared ledger on every node in a network, and it is automatically updated. Each node is capable of verifying transactions, initiating or receiving transactions, and creating blocks of information.
Let's take a closer look at the primary two different sorts of blockchains.
A private blockchain is administered by a network administrator, and participants must obtain permission to join the network, making it a permissioned blockchain. The network is controlled by one or more entities, necessitating reliance on third-party transactions. Only the entity participating in the transaction has knowledge of the transaction completed in this sort of blockchain, and others will not be able to access it, i.e. transactions are private.
Some of the benefits of private blockchain include:
Complete Privacy - It focuses on privacy issues.
Control - Private Blockchains have a higher degree of centralized control.
High Efficiency and Faster Transactions — When nodes are distributed locally but there are fewer nodes participating in the ledger, performance is improved.
Better Scalability - The flexibility to add nodes and services on demand can greatly benefit the organization.
There are no limits on a public blockchain. Anyone with an internet connection can join the network and begin validating blocks and sending transactions. In most cases, such networks provide some sort of incentive to users who validate the blocks.
In any case, for transaction validation, this network often uses Proof of Work or Proof of Stake consensus algorithms.
You can download the protocol at any time in public blockchain architecture, and you will not require permission from anyone.
As a result, it is fully decentralized, with no single organization controlling the ecosystem. On the other hand, a private blockchain can only be edited and amended by the entity that owns it.
A public blockchain eliminated the need for a third party. The system has its own inherent flow, much like a moving river. The flow path is not controlled by anyone, but everyone uses it.