Blockchains can be classified into 4 types based on their transparency and the degree of control a common person can have within the network.
1. Public Blockchain
Public Blockchains are permissionless networks where anyone can join, use their technology, and participate in decision-making as long as they follow the network’s rules. These chains are open to everyone for participation.
These chains are democratically controlled and decentralized in operations, meaning decision-making takes place via voting, and the blockchain itself is composed of multiple independent nodes.
An example of a public blockchain is Bitcoin, where anyone can create a wallet address to join the network. Further, based on the amount of BTC in a person’s wallet, they can even participate in governance decisions.
2. Private Blockchain
A private blockchain is a chain owned by an individual or a company where the blockchain is controlled by that entity (person or a company), its decision-making is centralized, and its processes are non-transparent. Often, these chains are created to take advantage of the efficiency of blockchain technology.
An example of a private blockchain is eCNY, a blockchain where the Digital Chinese Yuan is issued. Most CBDCs are issued on their own private blockchains.
3. Hybrid Blockchain
A hybrid blockchain combines elements of public and private blockchains to retain the best features of both or to create a set of features suitable for a specific application. Such chains can have a certain degree of democratization, where lower-level decisions can be taken by voting, whereas higher-level decisions are often taken by a centralized entity.
An example of such a blockchain is the BNB Chain. Anyone can take part and use the blockchain, but the decision-making takes place in Binance, the exchange that launched the blockchain.
4. Consortium Blockchain
A consortium blockchain is a chain that is created by multiple entities (persons or companies) to realize a unique goal. These chains are often governed by a central council as opposed to centralized governance in private chains and voting-based decisions in public chains. The purpose of these chains is to develop a shared technology without releasing control to the end user.
An example of a consortium blockchain is Hedera Hashgraph. Only sanctioned companies like Adobe, Meta, etc., can participate in the network to verify transactions, whereas the chain is free for the public to use.
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