Different Types of Blockchains

Public blockchains are fully decentralized, meaning anyone with internet access can participate in the network. All participants can read, write, and audit the blockchain in real time. 

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To picture this better, let's imagine we have a network with 5 participants: Vince, Josh, Andrea, Chelle, and Mitchie. In a public blockchain, all five people can contribute to the blockchain as long as they follow the blockchain's protocols. No one is excluded, and even their friends can join the network.

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Whenever a new piece of data needs to be added to a public blockchain, all the network participants must agree and gain consensus before adding.

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Bitcoin (BTC) and Ethereum (ETH) are famous cryptocurrencies with this type of blockchain. To maintain decentralization, they have proof-of-work and proof-of-stake consensus mechanisms - we'll discuss these mechanisms later.

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Private blockchains are the opposite of public blockchains. They are centralized, meaning a private blockchain is controlled by an organization and transactions are rarely transparent to anyone. Only a few members can participate in the network. 

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To picture this better again, let's imagine we have a network with 5 participants: Vince, Josh, Andrea, Chelle, and Mitchie. In a private blockchain, let’s say only Andrea and Chelle, out of the five participants, can contribute to the blockchain since they’re the only ones that have been chosen to follow and execute the blockchain's protocols. This means that Vince, Josh and Mitchie are excluded from participation. 

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The benefits of a centralized network are that there are less bad actors who are able to harm the network and that there are fewer participants needed to confirm transactions. However, the drawback is that there must be complete trust in the organization not to harm its own network. 

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New information in the blockchain is added when participants (such as Andrea and Chelle) in the network agree and gain consensus.

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Ripple (XRP) is a famous cryptocurrency with its own private consensus mechanism. The participants in their network are a group of bank-owned servers that confirm transactions. Private blockchains are perceived to be a better fit in managing business enterprises.

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Hybrid blockchains are a mix of both public and private blockchains. They are less centralized than private blockchains. There is still an organization behind the network, however the process of confirming transactions is still decentralized.

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Going back to our 5-participant example, in the case of a Hybrid Blockchain, Andrea and Chelle are the chosen ones who contribute to the blockchain and approve transactions (private aspect). If a problem comes up regarding one of their confirmations, the process of deciding who between the two gets to confirm the transaction may be decided by either Vince, Josh or Mitchie (public aspect). In this way, the process of confirming transactions have both public and private aspects.

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This type of blockchain takes the best of both worlds: a private blockchain’s governance and a public blockchain’s transparency. 

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XinFin is a cryptocurrency based on Ethereum and Quorum, which are public and private networks, respectively. Hybrid blockchains are perceived to be a better fit in managing business operations. For example, XinFin has been used to aid in managing supply chain logistics. 

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From decentralized (public) to centralized (private), and even a mix of both (hybrid), you can already differentiate blockchains by just looking at how they are governed. Now that we already have an idea of how we can classify them, let’s proceed to the micro view of the blockchain through the Layers of Blockchain Architecture.

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