Types of Blockchain

Permissioned Blockchain
• participants of the network are already known
and trusted.
• no need to use a distributed consensus
mechanism; instead, an agreement protocol is
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used to maintain a shared version of the truth
about the state of the records on the block chain.
• For verification of transactions on the chain, all
verifiers are already preselected by a central
authority and, typically, there is no need for a
mining mechanism.
 Permissionless Block chain
• known as trustless or public blockchains,
• are available to everyone to participate in the
blockchains process that use to validate
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transactions and data.
• used in the network where high transparency
is required.
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 1. Public Blockchain

• completely open to following the idea of

decentralization.
• don’t have any restrictions, anyone having a
computer and internet can participate in the
network.
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• open to the public, which means it is not owned
by anyone.
• All the computer in the network hold the copy of
other nodes or block present in the network
• can also perform verification of transactions or
records
 Advantages:

• Trustable: There are algorithms to detect no fraud.

Participants need not worry about the other nodes in the
network
• Secure: This blockchain is large in size as it is open to the
public. In a large size, there is greater distribution of
records
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• Anonymous Nature: It is a secure platform to make your
transaction properly at the same time, you are not required
to reveal your name and identity in order to participate.
• Decentralized: There is no single platform that maintains
the network, instead every user has a copy of the ledger.
 Disadvantages:

• Processing: The rate of the transaction process is

very slow, due to its large size. Verification of
each node is a very time-consuming process.
• Energy Consumption: Proof of work is high
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energy-consuming. It requires good computer
hardware to participate in the network
• Acceptance: No central authority is there so
governments are facing the issue to implement
the technology faster.
 Private Blockchain

• not as decentralized as the public blockchain only

selected nodes can participate in the process,
making it more secure than the others.
• These are not as open as a public blockchain.
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• They are open to some authorized users only.
• These blockchains are operated in a closed
network.
• In this few people are allowed to participate in a
network within a company/organization
 Advantages:

• Speed: The rate of the transaction is high, due to

its small size. Verification of each node is less
time-consuming.
• Scalability: We can modify the scalability. The size
of the network can be decided manually.
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• Privacy: It has increased the level of privacy for
confidentiality reasons as the businesses
required.
• Balanced: It is more balanced as only some user
has the access to the transaction which improves
the performance of the network.
 Disadvantages:

• Security- The number of nodes in this type is

limited so chances of manipulation are there.
These blockchains are more vulnerable.
• Centralized- Trust building is one of the main
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disadvantages due to its central nature.
Organizations can use this for malpractices.
• Count- Since there are few nodes if nodes go
offline the entire system of blockchain can be
endangered.
 Hybrid Blockchain

• It is the mixed content of the private and public

blockchain, where some part is controlled by
some organization and other makes are made
visible as a public blockchain.
• It is a combination of both public and private
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blockchain.
• Permission-based and permissionless systems are
used.
• User access information via smart contracts
• Even a primary entity owns a hybrid blockchain it
cannot alter the transaction
 Advantages:

• Ecosystem: Most advantageous thing about this

blockchain is its hybrid nature. It cannot be hacked as
51% of users don’t have access to the network
• Cost: Transactions are cheap as only a few nodes verify
the transaction. All the nodes don’t carry the
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verification hence less computational cost.
• Architecture: It is highly customizable and still
maintains integrity, security, and transparency.
• Operations: It can choose the participants in the
blockchain and decide which transaction can be made
public.
 Disadvantages:

• Efficiency: Not everyone is in the position to

implement a hybrid Blockchain. The organization also
faces some difficulty in terms of efficiency in
maintenance.
• Transparency: There is a possibility that someone can
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hide information from the user. If someone wants to
get access through a hybrid blockchain it depends on
the organization whether they will give or not.
• Ecosystem: Due to its closed ecosystem this blockchain
lacks the incentives for network participation.
 Consortium Blockchain

• It is a creative approach that solves the needs of

the organization. This blockchain validates the
transaction and also initiates or receives
transactions.
• Also known as Federated Blockchain.
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• This is an innovative method to solve the
organization’s needs.
• Some part is public and some part is private.
• In this type, more than one organization manages
the blockchain.
 Advantages:

• Speed: A limited number of users make verification

fast. The high speed makes this more usable for
organizations.
• Authority: Multiple organizations can take part and
make it decentralized at every level. Decentralized
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authority, makes it more secure.
• Privacy: The information of the checked blocks is
unknown to the public view. but any member
belonging to the blockchain can access it.
• Flexible: There is much divergence in the flexibility of
the blockchain. Since it is not a very large decision can
be taken faster.
 Disadvantages:

• Approval: All the members approve the protocol

making it less flexible. Since one or more
organizations are involved there can be
differences in the vision of interest.
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• Transparency: It can be hacked if the organization
becomes corrupt. Organizations may hide
information from the users.
• Vulnerability: If few nodes are getting
compromised there is a greater chance of
vulnerability in this blockchain
 Tokenized blockchains
• These blockchains are standard blockchains
that generate cryptocurrency as a result of a
consensus process via mining or initial
distribution.
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• Bitcoin and Ethereum are prime examples of
this type of blockchain.
 Tokenless blockchains
• These blockchains are designed in such a way
that they do not have the basic unit for the
transfer of value.
• They are valuable in situations where there is no
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need to transfer value between nodes and only
the sharing of data among various trusted parties
is required.
• This is similar to fully private blockchains, the
only difference being that the use of tokens is not
required.
 Sidechains
• A Sidechain is a discrete blockchain linked to the main
blockchain (mainchain) using a 2-way peg.
• Sidechain enables token or digital assets to be
transferred between mainchain and sidechain at a
predetermined rate.
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• Sidechains need to interact with the mainchain and
require tokens to be locked on the mainchain.
• A sidechain can be public or private.
• Each sidechain is an independent blockchain network
with its own token, protocol, consensus and security.
 Consensus
• Consensus is the backbone of a blockchain, as
it provides the decentralization of control
through an optional process known as mining.

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• Not all consensus mechanisms are suitable for
all types of blockchains.
• Consensus is a process of achieving
agreement between distrusting nodes on the
final state of data.
• To achieve consensus, different algorithms
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are used.
• This process of attaining agreement on a
common state or value among multiple nodes
despite the failure of some nodes is known as
distributed consensus.
 Consensus mechanism
• set of steps that are taken by most or all
nodes in a blockchain to agree on a proposed
state or value.

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 Faults
• Fail-stop faults:
• fault occurs when a node merely has crashed.
• Fail-stop faults are the easier ones to deal with
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of the two fault types.
• Paxos or the RAFT protocol are used to deal
with this type of fault.
• These faults are simpler to deal with.
• Byzantine faults:
• faulty node exhibits malicious or inconsistent
behavior arbitrarily.
• difficult to handle since it can create confusion
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due to misleading information.
• This can be a result of an attack by adversaries, a
software bug, or data corruption.
• SMR protocols such as Practical Byzantine Fault
Tolerance (PBFT) was developed to address this
second type of faults
 Requirements
• Agreement: All honest nodes decide on the same value.
• Integrity: This is a requirement that no node can make the
decision more than once in a single consensus cycle.
• Validity: The value agreed upon by all honest nodes must
be the same as the initial value proposed by at least one
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honest node.
• Fault tolerant: The consensus algorithm should be able to
run correctly in the presence of faulty or malicious nodes
(Byzantine nodes).
• Termination: All honest nodes terminate the execution of
the consensus process and eventually reach a decision.
 Types of consensus mechanisms
• Proof-based consensus mechanisms:
• nodes compete in a leader-election lottery, and the
node that wins proposes the final value.
• The algorithm works on the principle of providing proof
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of some work and the possession of some authority or
tokens to win the right of proposing the next block.
• For example, the PoW mechanism used in Bitcoin
where a miner who solves the computational puzzle as
proof of computational effort expended wins the right
to add the next block to the blockchain.
• Traditional fault tolerance-based:
• designed to ensure that a distributed system can reach
agreement on a shared value or decision, even when some
of the nodes in the system are faulty or fail.
• The most widely used traditional fault tolerant consensus
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mechanism is the Byzantine fault tolerance (BFT) algorithm
• This type of consensus mechanism relies on a simple
scheme of nodes that publish and verify signed messages in
a number of phases.
• Eventually, when a certain number of messages are
received over a period of rounds (phases), then an
agreement is reached
 Proof of Work (PoW):
• This type of consensus mechanism relies on
proof that adequate computational resources
have been spent before proposing a value for
acceptance by the network.
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• This scheme is used in Bitcoin, Litecoin, and
other cryptocurrency blockchains
 Proof of Stake (PoS)

• a node or user has an adequate stake in the system;

that is, the user has invested enough in the system so
that any malicious attempt by that user would
outweigh the benefits of performing such an attack on
the network.
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• used in the Ethereum blockchain version called
Serenity.
• Another important concept in PoS is coin age, which is
a criterion derived from the amount of time and
number of coins that have not been spent.
• In this model, the chances of proposing and signing
the next block increase with the coin age.
 Delegated Proof Of Stake (DPoS)
• This is another type of Proof of Stake consensus
algorithm.
• In DPoS, token holders in the network elect a group of
nodes, known as "delegates" or "witnesses", to
validate transactions and produce new blocks on
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behalf of the network.
• This type of consensus mechanism depends on the
basis of the delegation of votes.
• The users delegate their votes to other users.
Whichever user then mines the block will distribute the
rewards to the users who delegated to that particular
vote
 Proof of Elapsed Time
• used in permissioned Blockchain networks.
• every validator on the network gets a fair chance to create their
own block.
• All the nodes do so by waiting for a random amount of time, adding
proof of their wait in the block.
• The created blocks are broadcasted to the network for others’
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consideration.
• The winner is the validator which has the least timer value in the
proof part.
• The block from the winning validator node gets appended to the
Blockchain.
• There are additional checks in the algorithm to stop nodes from
always winning the election, and stop nodes from generating the
lowest timer value.
 Proof of Deposit
• nodes that wish to participate in the network
have to make a security deposit before they
can mine and propose blocks
• PoD and PoS rely on validators holding a
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certain amount of collateral to validate
transactions and create new blocks, there are
differences in how validators are chosen, the
level of collateral required, and their approach
to network security
 Proof of Burn (PoB)
• With PoB, instead of investing in expensive hardware
equipment, validators ‘burn’ coins by sending them to an
address from where they are irretrievable.
• By committing the coins to an unreachable address,
validators earn the privilege to mine on the system based
on a random selection process.
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• Thus, burning coins here means that validators have a long-
term commitment in exchange for their short-term loss.
• Depending on how the PoB is implemented, miners may
burn the native currency of the Blockchain application or
the currency of an alternative chain, such as bitcoin.
• The more coins they burn, the better their
chances of being selected to mine the next
block.
• While PoB is an interesting alternative to PoW,
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the protocol still wastes resources needlessly.
• And it is also questioned that mining power
simply goes to those who are willing to burn
more money.
 Proof of Activity (PoA):
• This scheme is a combination of PoS and PoW,
which ensures that a stakeholder is selected in a
pseudorandom but uniform fashion.
• It utilizes a new concept called "Follow the
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Satoshi." achieve consensus and a good level of
security.
• This scheme is more energy efficient as PoW is
used only in the first stage of the mechanism;
after the first stage, it switches to PoS, which
consumes negligible energy.
• In PoA, miners first compete to solve a cryptographic
puzzle using PoW.
• Once the puzzle is solved, the winning miner creates a
new block and broadcast it to the network.
• Then, a group of validators, chosen based on their
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stake in the network, must verify the block using PoS.
• The validators must put up a stake, which they will lose
if they validate a fraudulent block.
• If the block is verified, it is added to the blockchain and
the validators earn a reward
 Proof of Importance (PoI):
• PoI not only relies on how large a stake a user
has in the system, but it also monitors the
usage and movement of tokens by the user in
order to establish a level of trust and
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importance.
• It is used in the NEM coin blockchain
 Proof of Authority
• Proof of Authority (PoA): This scheme utilizes
the identity of the participants called
validators as a stake on the network.
• Validators are known and have the authority
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to propose new blocks.
• Validators propose the new blocks and
validate them as per blockchain rules.
Commonly used PoA algorithms are Clique
and Aura.
 Proof of Storage
• It is designed to validate and verify that a certain
amount of digital storage capacity is being used to
store data on a blockchain network.
• In PoS, storage providers are required to store and
maintain a copy of the blockchain's data, and are
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rewarded for their storage efforts.
• PoS works by creating a challenge for the storage
provider, asking them to prove that they still have the
data stored in their possession.
• The proof is then validated by the network, and the
storage provider receives a reward for their effort.
 CAP theorem and blockchain
• The CAP theorem, also known as Brewer's
theorem, was introduced by Eric Brewer in
1998
• The theorem states that any distributed
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system cannot have consistency, availability,
and partition tolerance simultaneously:
• Consistency is a property that ensures that all
nodes in a distributed system have a single,
current, and identical copy of the data
• Availability means that the nodes in the system
are up, accessible for use, and are accepting
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incoming requests and responding with data
without any failures as and when required
• Partition tolerance ensures that if a group of
nodes is unable to communicate with other
nodes due to network failures, the distributed
system continues to operate correctly
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• CAP theorem is violated by blockchain
• In blockchains, consistency is sacrificed in favor of
availability and partition tolerance. In block chain
consistency is achieved over time(eventual
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consistency)
• achieved as a result of validation from multiple
nodes over time.
• It means that there can be a temporary
disagreement between nodes on the final state,
but it is eventually agreed upon.