Blockchain is defined as a decentralized data ledger that is safely shared. Blockchain cloud services make it simple to gather, integrate, and distribute transactional data from various sources. Data is divided into chained shared blocks with cryptographic hashes serving as unique IDs. Blockchain eliminates data duplication and boosts security by providing data integrity with a single source of truth.
Since the information is managed and stored decentralized, no particular central authority makes all the decisions. Instead, a consensus of all the network’s participating nodes, which are dispersed throughout the world, is used for making decisions.
1. Public Blockchain
- Public blockchains are public chains that allow anyone to join and are completely decentralized. Public blockchains allow all nodes of the blockchain to have equal rights to access, and create, new blocks of data, and validate them. The majority of today’s bitcoin mining and trading takes place on public blockchains. You may be familiar with well-known public blockchains like Bitcoin, Ethereum, and Litecoin. On these open blockchains, the nodes “mine” for bitcoin by building blocks for the network-requested transactions and solving cryptographic challenges. A small amount of cryptocurrency is given to the miner nodes as compensation for their diligent work. In essence, the miners play the part of contemporary bank tellers who initiate a transaction and obtain (or “mine”) cash in return.
2. Private (managed) blockchain
- Private blockchains are permissioned blockchains that are administered by a single entity. They are also known as managed blockchains. Who is permitted to be a node on a private blockchain is decided by the central authority. Additionally, the central authority may not always accord each node an equal right to execute certain responsibilities.
- Private blockchains are not only partially decentralized because public access to these blockchains is restricted. Some examples of private blockchains include the business-to-business virtual currency exchange network Ripple and Hyperledger, an umbrella project of open-source blockchain applications.
Both private and public blockchains have limitations; Private blockchains typically offer shorter validation times for new data, making them more vulnerable to fraud and abuse by bad actors. At the end of the day, blockchain technology is growing in acceptance among businesses. Each of these blockchain kinds has the potential to be used in ways that will increase trust and transparency and improve the documentation of transactions.
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