4 Types of blockchain and Their Pros & ConsBlockchain Insight4 Types of blockchain and Their Pros & Cons

4 Types of blockchain and Their Pros & Cons

4 types of blockchain


Which blockchain solution will be best for the business? Let’s learn about the basic definitions and pros & cons of the 4 main types of blockchain!

I. General characteristics of blockchain

I once wrote a very thorough explanation of blockchain. We will summarize some information about the core common characteristics of blockchain!

  • Addition-only ledger: A chain-to-block structure, in which each block is linked to its previous, is required for a system to be classified as a blockchain. A blockchain can be thought of as a collection of spreadsheet cells, with each block representing a single cell.
  • Peer-to-peer network: Each node in the blockchain interacts with each other peer-to-peer without any hierarchy, and they both keep a copy of the blockchain.
  • Consensus Mechanism: There is a common rule, or mechanism, that assists nodes in validating transactions and verifying that they are correct in order to prevent fake transactions from being preserved in the chain.

II. 4 Types of blockchain

The two basic types of blockchains are private and public blockchains. Certain variations, such as Consortium and Hybrid blockchains, do exist. Each form of blockchain will have its own set of qualities, each with its own set of uses in business processes.

4 types of blockchain


1. Public Blockchain

Right from its name, “public” – public to everyone, anyone has the right to access and write data on the chain. It’s like when you post an article on Facebook, everyone can see that post, like, comment on the post, or share as much as you want on their personal page.

Popular examples of public blockchain are Bitcoin, Ethereum… 


No 3rd party involvement: Public Blockchain has absolutely no 3rd party engagement, so it entirely eliminates the risk of any form of intermediary.

Security: Besides, due to the large number of nodes involved in the validation process, it is impossible to attack the public blockchain. Bad actors are unable to band together and influence the consensus network.

Transparency: It is also a very prominent advantage of this type. All features are open to the user. Anyone can retrieve the data to check the validity of transactions.


Slow processing speed: Public blockchain takes time for the entire network to reach consensus on a transaction state, so processing speed will be affected.  In addition, the number of transactions that may be matched as well as the time it takes to execute a single block are also limited on the Public Blockchain.

Energy Consumption: Public Blockchain consensus algorithms require significant energy consumption, which has raised environmental concerns. There has been a survey that shows that Bitcoin is consuming the same amount of electricity as the country of Ireland.

Unable to store personal data: It is not impossible but rather not advisable. Even when encrypted, this is not something experts recommend.

2. Private Blockchain

Because the private blockchain is owned by an organization such as a corporation or a government, it is not a decentralized system, but it is still a distributed network with each node storing a copy of the blockchain.

Private blockchains were created to allow businesses and government organizations to benefit from the qualities of blockchain, such as transparency and data integrity, while also safeguarding the network from outsiders peering.

The application of private blockchain is that companies can use this type to manage records, trade commercial secrets, and audit information.


Security: Private Blockchain employs a variety of security solutions for organizations with the primary purpose of information protection. Information is the lifeblood of any business or organization, and it should be secured at all costs.

Efficiently use less energy: Many older blockchain systems, such as Ethereum, rely on PoW consensus, which is energy-intensive, slow, and wasteful. Voting-based consensus or other types of consensus algorithms used in private blockchains utilize a lot less energy.

No price fluctuations: The public blockchain requires gas fees for each transaction, which are required to keep the network running, whereas the private blockchain in use by corporations and organizations does not.

Business Direction: Enterprise blockchain is all about security risk, with a high level of security and a range of blockchain adaptations customized to the needs of that business.


Because centralized nodes determine what is genuine, full confidence in the information is difficult to acquire, and a small number of nodes might also mean less security. If any of the networks are unavailable, the consensus technique can take advantage of the 51 percent attack.

3. Hybrid Blockchain

Hybrid blockchain combines the best aspects of the two previous blockchain types: private and public blockchain. As a result, businesses will benefit from their greatest qualities.

Organizations can use this technology to combine a private, permission-based system with a public system, allowing them to manage who has access to the data. Smart contracts verify transactions in the hybrid blockchain, which are not public. Confidential data is stored in the network but can still be verified.

Hybrid blockchain is used to store medical records or to store government-citizen data privately and securely. Obviously, the 3rd party cannot view the record, but the user can trace the information through the smart contract.


The preeminent advantage of this type of blockchain is that it functions in a well-closed ecosystem, making it impossible to hack. Transactions are inexpensive, quick, and scalable, compared to public blockchain networks.


Transparency is weak in this type of blockchain, as information can be hidden or concealed by the organization.

4. Consortium Blockchain

Consortium blockchain (federated blockchain) – The federated blockchain is also a hybrid between a private blockchain and a public blockchain. The difference is that multiple organization members collaborate on a decentralized network. Essentially, a federated blockchain is a private blockchain with limited access to a specific group, eliminating the risks that come with only one entity controlling the network on a private blockchain.

In a federated blockchain, the consensus mechanisms are controlled by reservation nodes. There is a validator node to initiate, receive and validate transactions. Member nodes can receive or initiate transactions.

This type’s intended usages are banking and payments. Different banks can band together to build a federated blockchain, with each node selecting which transactions will be validated.


The federated blockchain tends to be more secure, scalable, and efficient than a public blockchain network. Like private and hybrid blockchain, it also provides corresponding access controls for different entities.


In comparison to the public blockchain, the consortium blockchain is less transparent. It can still be hacked if a member node has issues, and blockchain’s own rules can limit the network’s usefulness.


As we can see, there are four different types of blockchain, each of which provides advantageous solutions for organizations. The following are some of the most common advantages:

  • The distributed system benefits from a decentralized structure, which eliminates single points of failure
  • Improve information security and privacy for network participants; data is almost impossible to alter in a bad way, therefore it supports the reduction of fraud and dishonesty
  • Keep operational costs to a minimum for all parties concerned. For example, the banking system will shorten the time it takes for the parties to reconcile their transactions
  • Provides data traceability and transparency
  • Provides immutability; block history is difficult to change
  • Can turn traditional assets into digital assets through tokenization

To stay ahead of the technology curve, your company should consider incorporating blockchain into your management and production processes right now. If you don’t know how to blockchainize your business, think about blockchain outsourcing enterprises. Contact Arcanic Tech – one of the leading reputable units providing comprehensive blockchain outsourcing services right now!

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