Blockchain is a distributed database that maintains an ever-expanding list of data records, ensuring protection against tampering. It serves as the underlying technology for bitcoin, functioning as a public ledger for its transactions. With the rise of bitcoin, numerous alternative coins, commonly referred to as altcoins, have emerged, all built upon the foundation of blockchain technology.
As people gained a better understanding of how blockchains operate, they began utilizing them for various purposes, such as storing value, managing identities, establishing agreements, and securing property rights. Among the significant innovations subsequent to bitcoin's inception, Ethereum stands out as it enables the creation of online markets and facilitates programmable transactions through smart contracts.
Currently, there are three main types of blockchains in existence.
Public blockchains are open-source, allowing individuals from anywhere in the world to access information, and initiate transactions and have them included if they meet the validity criteria. Moreover, anyone can take part in the consensus process, which determines the inclusion of blocks in the chain and establishes the current state. Prominent examples of public blockchains are Bitcoin and Ethereum.
In contrast, consortium blockchains operate the consensus process through a predetermined group of nodes.
For instance, a consortium may consist of 15 financial institutions, each operating a node. In this setup, for a block to be considered valid, it requires the signature of at least 10 members within the consortium. The accessibility to read the blockchain can vary, ranging from public access to being restricted solely to the participants.
An example of a consortium blockchain: R3.
A single center organization is in charge of permitting writings on a private chain, while the read permissions can vary from public access to being restricted to a certain extent.
This setup is commonly employed for internal functions within a company, such as database management and auditing. Consequently, public readability may not be required in many instances.
Eris Industries and Multichain serve as examples of such blockchain implementations.