Blockchain is a digital ledger that's decentralised and immutable and uses consensus algorithms, digital signatures, hashing, and digital signatures to ensure trust and security.
Be sure to read the previous article to learn more. [https://www.mugdhap.com/post/blockchain-simplified]
There are three major types of blockchain:
Today, we will only be discussing the first two.
Let's understand it with an example. If you've ever used Instagram, you know that there's an option to keep your account private or public. Even if you don't know, I'll explain it to you real quick.
If you make your account public, anyone who uses Instagram can see your page and comment on your pictures or videos. You may not know them, but they can still follow you.
But what if you want only your close friends and family to see your pictures and like your videos? A private account allows you to do just that. You can choose your followers and you know the people who follow you. You're the administrator here.
Blockchain is similar. (not the same)
Similar to a public Instagram account, this is a permissionless network. Anyone can join the network and read, write, or participate within the blockchain.
No single entity has access to who can join the network. It's truly decentralised.
Participants don't know each other, i.e. they are anonymous.
All participants verify transactions and participate in the consensus algorithm. This large number of participants means that the possibility of hackers hacking the system or bad actors gaining control of the consensus is very low, making it more secure.
A large number of participants means that verification and the consensus mechanism will take time. It is slower.
Public blockchains require a lot of energy and computing power for all participants to function and verify transactions
Examples: Bitcoin, Ethereum, Litecoin, Dash.
With a private Instagram account, you’re the admin and can choose your followers. Likewise, a private blockchain is managed by an admin and to join the network you must have the admin’s permission. Hence, it is a permissioned blockchain.
A single entity has control over who can join the network. It is more centralised.
Since you gave permission to join the network, you know the participants and they know each other.
There are fewer participants to verify transactions and participate in consensus. Bad guys have an easy time gaining control of the network and performing hacks or privacy breaches. It is less secure.
Here, there are fewer nodes participating in the network. The performance in a private blockchain is faster.
Compared to a public blockchain, it requires less energy and power.
Examples: R3 - Banks, EWF - Energy
There is another type of blockchain called a Consortium blockchain. Read more about it here in the post published by Vitalik Buterin.