Why We Need Blockchain & Types Of Blockchain

Blockchain’s invasion of the IT industry with Bitcoin has changed the way the world views online transactions. When blockchain became popular, people realized that blockchain is beyond Bitcoin. Over the years, various industries such as healthcare, real estate, politics, etc. have tried to adopt blockchain technology. And because each industry functions uniquely, blockchains have had to evolve in different ways. In this blog, I will explain the different types of blockchain and their basics.

Topics covered on this blog are:

– Why different types of blockchain are needed?

– Types of blockchain

Why do we need different types of blockchain?

As mentioned earlier, different industries use blockchain technology in different ways. So before I talk about the different types of blockchain, I would like to discuss some blockchain applications where the requirements and the way the application uses the blockchain are different.

I’ll start with the app that introduced blockchain: Bitcoin!


Bitcoin is one of the most popular cryptocurrencies. Bitcoin is a way to make money transactions online without intermediaries. Say you want to send some bitcoins from your account to another account. You use the recipient’s account ID to transfer bitcoins. Transactions are sent for validation by blockchain mining to avoid fraud. Once the transaction is confirmed and verified, the transaction is added to the blockchain block and the recipient receives the Bitcoin.

When it comes to cryptocurrencies like Bitcoin, everyone needs to have access to it, make transactions, and be a validator. Because of this, Bitcoin has no restrictions on who can access it. Open a web browser and go to https://www.blockchain.com/explorer. Here you can see lots of details like price, hash rate, difficulty level, etc.

You can see that a lot of information is publicly available. However, this does not mean that the data is not protected. All this is encrypted data and sensitive data is still safe.


Multichain is a blockchain application used by organizations to increase security. By setting up Multichain, you can prevent unauthorized access to sensitive data. Here, the blockchain is not open to the public, but only to authorized persons within the same organization.

If you own an organization and choose to store details of financial transactions on the blockchain, you do not want that data to be publicly available. Data should be limited to relevant people.

In such blockchain applications, the nodes that can join the network and have access to the blockchain must be restricted. A person can only join the network if invited by the network administrator. In addition, participant and validator access is restricted.

A multichain is a blockchain that is only used by one organization. There is a slightly different version of the one used in the banking sector.

Blockchain in the banking sector

Similar to how Multichain is restricted to people in the same organization, the blockchain used in banking restricts blockchain access to certain banks. The difference, however, is that the blockchain must be available to all bank branches and possibly different banks for inter-transactions.

In such an application, the blockchain is not limited to just one node, but also other trusted nodes. Nodes that have access to the blockchain must be authorized. Just like a shared blockchain and limited to trusted nodes.

Now that you’ve learned how blockchain is used in different ways for different applications, let’s take a look at the different types of blockchains.

Different types of blockchain

Blockchain can be divided into 3 types, depending on the needs of the application:

1. Public blockchain

2. Private blockchain

3. Consortium Blockchain

Public blockchain

As the name suggests, the Public Blockchain is publicly available and there is no limit to who can participate or become a validator. In a public blockchain, no one has complete control over the network. This ensures data security and helps with consistency, as one person cannot manipulate the blockchain.

The power of the blockchain is evenly distributed among every node on the network and therefore public blockchains are known to be fully distributed.

Public blockchains are mainly used for cryptocurrencies such as Bitcoin, Ethereum, and Litecoin.

Private Blockchain

Private blockchains have restrictions on who can access them and participate in transactions and validations. Only pre-selected entities have blockchain access permissions. These entities are selected by the relevant authorities and permission is obtained from the blockchain developer when creating blockchain applications. Assuming it is necessary to grant permissions to new users or to revoke permissions from existing users, the network administrator can handle this.

Private blockchains are mainly used in private organizations to store sensitive information that should only be accessible to certain people in the organization. Since a private blockchain is a closed blockchain, the data is located within the organization and cannot be accessed by outsiders.

Consortium Blockchain

In consortium blockchain, several nodes control the consensus process, and several other nodes may be allowed to participate in transactions. The consortium blockchain is like a mix of public and private blockchains. It is public because the blockchain is shared by different nodes and private because the nodes that have access to the blockchain are restricted. Therefore it is partly public and partly private.

There are two types of users here: first, users who have control over the blockchain and decide who should have permission to access the blockchain, and second, users who have access to the blockchain.

This type of blockchain can be used when organizations are willing to share the blockchain but restrict access to data for themselves and keep it from public access.

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