Blockchain is a technology that attempts to be a single source of truth. It is a tamper-resistant chain of ledger entries distributed over a network and shared with multiple parties. A blockchain securely cuts out the middleman in asset exchange by setting up a block of peer-to-peer transactions.
Each transaction is verified and synced with every node within the blockchain prior to being written to the system. Until this final step has transpired, the next transaction cannot move ahead.
There are two primary breeds of blockchain technology, the choice of which is dependent on the specific use case.
Public Blockchain (for example- Ethereum, Bitcoin)
- Any and all the public can be participants. In theory, anyone who has a computer and an internet connection.
- Open, read, and write by all participants. If valid, any participant can contribute to the blockchain.
- Consensus by proof of work or proof of stake- Based on the principle that the degree to which someone can have an influence in the consensus process is proportional to the quantity of economic resources that they contribute.
- Appropriate when there is a need for the business to be completely decentralized
Enterprise (private, consortium) Blockchain ( for example- Ripple, Multichain)
- All the participants are known and belong to one or a few trusted organizations
- Read and write permissions are roles-based and requires consensus of several participants, consensus consisting of multiple algorithms
- Appropriate to more traditional business and governance
- Private- Typically internal to a single organization with network participants from units or divisions within the company. While “read’ permissions may be public in nature, “write” permissions are restricted to the company. These are “fully private” blockchains.
- Consortium- In this case, the blockchain network is managed by multiple trusted institutions and block validation requires consensus by multiple participants. These typically “partially decentralized” blockchains.