• From 2016, interest in private/permissioned blockchains increases. Source: Google Trends 2018.
    image
  • Comparing the different types of blockchains. Source: Patientory 2017.
    image
  • A flowchart to aid in selecting the right blockchain. Source: Wagenaarm 2018.
    image

Types of blockchains

Summary

Historically, Blockchain started as a public permissionless technology when it was used for powering Bitcoin. Since then, other types of blockchains have been created. These can be categorized as a combination of public/private and permissionless/permissioned. Each type fits a specific set of use cases. When choosing a particular type, we have to be aware the tradeoffs.

In general, public/permissionless blockchains are open, decentralized and slow. Private/permissioned blockchains are closed and centralized, either partially or completely. They're also more efficient. It's also important to note that for some use cases, traditional databases may suffice instead of a blockchain.

Milestones

Jan
2009

Bitcoin is launched using blockchain technology. It's the first application of public blockchain.

2012

Ripple, a permissioned blockchain is launched.

2013

Ethereum, an open permissionless blockchain, is described in a white paper by Vitalik Buterin, a programmer involved with Bitcoin Magazine.

Jul
2015

Initial release of Ethereum, an open-source, public, blockchain-based distributed computing platform and operating system featuring smart contract (scripting) functionality.

Dec
2015

Linux foundation announces the creation of the Hyperledger Project, a permissioned open-source blockchain.

2016
image

The year when people start showing greater interest in private plus permissioned blockchains than in public blockchains. This increased interest continues through 2018, as shown by Google Trends data collected in March 2018.

Discussion

  • Could you describe the different types of blockchains?
    image
    Comparing the different types of blockchains. Source: Patientory 2017.

    Broadly, there are two types of blockchains:

    • Permissionless: Anyone can join the network. They can read/write/verify transactions. The system is open. There's no central authority. This system makes sense when no one wants to use a trusted third party (TTP). Trust is therefore established among peers via an agreed consensus mechanism. While transactions can be read by anyone, it's also possible to hide sensitive information if so desired.
    • Permissioned: A central authority grants permissions to only some folks to read/write/verify transactions. Since write access is given to a trusted few, consensus is achieved in a simpler and more efficient way. Public read access may be allowed.

    Some classify blockchains as public, private and permissioned. In a private blockchain, controlling power is with only one organization. In a permissioned blockchain, controlling power is given to a few selected entities. Thus, no single entity can tamper the system on their own. These are also called federated or consortium blockchains. They are a compromise between the openness of public blockchain and the closed control of private blockchains.

  • How does one go about selecting a suitable blockchain type?
    image
    A flowchart to aid in selecting the right blockchain. Source: Wagenaarm 2018.

    Blockchain is useful in applications where multiple entities write to a shared database, these entities don't trust one another and don't want to use a trusted third party intermediary. If entities are unknown or wish anonymity, then a permissionless blockchain is desired. Otherwise, go for a permissioned blockchain.

    Blockchain is also useful when multiple copies of a ledger are maintained. In this case, blockchain enables real-time reconciliation without have a third-party trusted intermediary.

    A public permissioned blockchain is one in which some trusted entities write to the chain but public is allowed to verify. For example, a consumer might want to verify the source of the fish she buys but only those involved in the supply chain have permissions to write to the chain. In some applications, such as Cryptologic, confidential transaction data is hashed before added to the public blockchain.

    A private permissioned blockchain can be used when control rests with a single trusted entity. If multiple organizations are involved, then a consortium blockchain is preferred.

  • What are the advantages of using a permissioned blockchain?

    A permissioned blockchain is similar to a permissionless one except for an additional access control layer. This layer controls who can participate in the consensus mechanism, and who can create transactions or smart contracts.

    A permissioned blockchain gives the following advantages:

    • Performance: Excessive redundant computation of permissionless blockchains is avoided. Each node will perform only those computations relevant to its application.
    • Governance: Enables transparent governance within the consortium. Also, innovation and evolution of the network can be easier and faster than in permissionless blockchains.
    • Cost: It's cost effective since there's no need to do spam control such as dealing with infinite loops in smart contracts.
    • Security: It has the same level of security as permissionaless blockchains: "non-predictive distribution of power over block creation among nodes unlikely to collude." In addition, an access control layer is built into the network by design.
  • Can you name some examples of the different types of blockchains?

    Bitcoin and Ethereum are well-known examples of public blockchains but Ethereum can also be used to create a private blockchain. OpenChain enables private blockchains. Chain supports permissioned blockchains suited for financial applications. Patientory is a permissioned blockchain for electronic health records. Ripple is a permissioned blockchain.

    Bitcoin Cash, Zilliqa and Cypherium are permissionless blockchains. Universa and Oracle Network are permissioned blockchains.

    Some platforms can be configured to manage either any type of blockchain. For example, MultiChain and HydraChain can be used for private or permissioned blockchains. Hyperledger can be used for private or public blockchains. Hyperledger Fabric and R3 Corda are for private or permissioned blockchains.

    William El Kaim has curated a useful list of blockchains, blockchain platforms and applications.

  • What's the point of private blockchains where immutability can be compromised?

    It's true that since a private blockchains is controlled by a single entity or organization, it can be easily tampered. It's therefore argued that private blockchains are no better than shared databases. If trust and robustness are already guaranteed, one could simply use a database. Moreover, databases have for long supported code execution (example, via stored procedures) that are similar to what blockchain calls smart contracts.

    However, others argue that the use of cryptography and Merkle trees prevent non-valid transactions from getting added to the chain. With shared databases, hack on a single entity will corrupt the database for everyone. This isn't possible with private blockchains when a consensus algorithm such as Juno is used.

References

  1. Bauerle, Nolan. 2017. "What is the Difference Between Public and Permissioned Blockchains?" CoinDesk, March 9. Updated 2017-04-20. Accessed 2018-03-27.
  2. Bradbury, Danny. 2018. "Hyperledger 3 years later." The Register. January 2. Accessed 2018-03-28.
  3. Greenspan, Gideon. 2016. "Blockchains vs centralized databases." MultiChain Blog, March 17. Accessed 2018-03-27.
  4. Greenspan, Gideon. 2017. "Three (non-pointless) permissioned blockchains in production." MultiChain Blog, November 22. Accessed 2018-03-27.
  5. Iansiti, Marco and Karim R. Lakhani. 2017. "The Truth About Blockchain." Harvard Business Review. January-February. Accessed 2018-03-28.
  6. James, Febin John. 2018. "How to Validate If Your Ideas Need a Blockchain." We Think Ideas, February 12. Accessed 2018-03-27.
  7. Khatwani, Sudhir. 2017. "Different Types Of Blockchains In The Market and Why We Need Them." CoinSutra, December 5. Updated 2018-01-02. Accessed 2018-03-27.
  8. Ma, Sebastian. 2018. "Getting Started With Ethereum Private Blockchain." DZone. Accessed 2018-03-28.
  9. Marvin, Rob. 2017. "Blockchain: The Invisible Technology That's Changing the World." PCMag Australia. August 30. Accessed 2018-03-28.
  10. Monax. 2018. "Permissioned Blockchains." Accessed 2018-03-28.
  11. Morris, Chris. 2017. "What is Ripple and Why Is it Beating Both Bitcoin and Litecoin." Fortune. December 13. Accessed 2018-03-28.
  12. Narayanan, Arvind. 2015. "“Private blockchain” is just a confusing name for a shared database." Freedom to Tinker, September 18. Accessed 2018-03-27.
  13. Orcutt, Mike. 2017. "This is the Reason Ethereum Exists." MIT Technology Review. October 26. Accessed 2018-03-28.
  14. Patientory. 2017."Blockchain in Healthcare 101." August 22. Accessed 2018-03-27.
  15. Purkayastha, Shyam. 2017. "Have an idea around Blockchain? Here are eight Blockchain platforms that you can choose from." Radio Studio, September 6. Updated 2018-03-06. Accessed 2018-03-27.
  16. Sandner, Philipp. 2017. "Comparison of Ethereum, Hyperledger Fabric and Corda." June 25. Accessed 2018-03-28.
  17. Thompson, Collin. 2016. "Private Blockchain or Database?" The Blockchain Review, October 4. Updated 2017-07-25. Accessed 2018-03-27.
  18. Tual, Stephan. 2015. "Ethereum Launches." Ethereum Blog. July 30. Accessed 2018-03-28.
  19. Wagenaarm. 2018. "Blockchain Decision Tree." steemKR. Accessed 2018-03-27.
  20. Wüst, Karl, and Arthur Gervais. 2017. "Do you need a Blockchain?" Cryptology ePrint Archive: Report 2017/375, April 27. Accessed 2018-03-27.
  21. ZebraCrossing. 2018. "Permissioned and Permissionless Blockchains?" Medium, January 25. Accessed 2018-03-28.

Milestones

Jan
2009

Bitcoin is launched using blockchain technology. It's the first application of public blockchain.

2012

Ripple, a permissioned blockchain is launched.

2013

Ethereum, an open permissionless blockchain, is described in a white paper by Vitalik Buterin, a programmer involved with Bitcoin Magazine.

Jul
2015

Initial release of Ethereum, an open-source, public, blockchain-based distributed computing platform and operating system featuring smart contract (scripting) functionality.

Dec
2015

Linux foundation announces the creation of the Hyperledger Project, a permissioned open-source blockchain.

2016
image

The year when people start showing greater interest in private plus permissioned blockchains than in public blockchains. This increased interest continues through 2018, as shown by Google Trends data collected in March 2018.

Tags

See Also

Further Reading

  1. Jayachandran, Praveen. 2017. "The difference between public and private blockchain." IBM Blog, May 31. Accessed 2018-03-27.
  2. Greenspan, Gideon. 2015. "Avoiding the pointless blockchain project." MultiChain Blog, November 22. Accessed 2018-03-27.
  3. James, Febin John. 2018. "How to Validate If Your Ideas Need a Blockchain." We Think Ideas, February 12. Accessed 2018-03-27.

Top Contributors

Last update: 2018-03-31 14:28:09 by arvindpdmn
Creation: 2018-03-27 13:57:35 by arvindpdmn

Article Stats

1009
Words
2
Chats
2
Authors
8
Edits
3
Likes
3045
Hits

Cite As

Devopedia. 2018. "Types of blockchains." Version 8, March 31. Accessed 2018-12-15. https://devopedia.org/types-of-blockchains
BETA V0.18