Everyone everywhere will have heard the term blockchain before. It’s one of the driving factors behind recent changes in technology and forms the foundation of emerging trends throughout the past few years such as cryptocurrency, Non Fungible Tokens (NFTs) and Web3. But what is it? A lot of people may well have heard of it and know that it plays a pivotal role in a lot of software, but that doesn’t mean that they necessarily know how it works or the different types of blockchain available. All of this is going to be discussed in more detail below.
Blockchain technology is behind the running of the blockchain. This is responsible for cryptocurrency and NFTs and has grown to such a large extent in recent years that there are ecosystems such as Cosmos that combine a number of independent blockchains (check out OKX’s guide to cosmos to find out more).
Blockchain is a digital ledger that can’t be changed, altered or replicated in anyway. When you hear of NFTs, the thing that makes them non-fungible is the blockchain. Using this means that it’s now possible for people to own parts of the internet. It’s the most tangible form of something that is intangible to ever exist. Whenever something is purchased on the blockchain, a record of that transaction is kept, so it’s easy to see who owns what.
The unchangeable element of the blockchain means that you can always trust that what you’re reading is accurate. All of the accurate information contained on one block is linked to the previous, forming a chain of transactions, hence the name.
There are four different types of blockchain out there and these include:
These kinds of blockchain are open, decentralized networks that are accessible to anybody who is interested in requesting or validating a transaction. These blockchains use proof-of-work mechanisms. Some of the most common public blockchains that you have probably heard of are Bitcoin and Ethereum.
All blockchains are encrypted but this privacy can extend even further with private blockchains. Private blockchains, as the name suggests, are not open but have restrictions. If somebody wants to join, then they need to get permission from the system administrator to do so. Generally, these blockchains are governed by just one entity, so they are centralized.
A sidechain is a type of blockchain which runs parallel to a main blockchain. It gives users the ability to move digital assets between two different blockchains and as such improves the scalability and efficiency of them. One of the more common examples of a sidechain is the Liquid Network.
Finally, there are consortiums. These are a combination of both a private and a public blockchain. They contain features which are centralized and decentralized, so everyone has the ability to access some parts and then other aspects can only be accessed by those who have permission. Some of the most common examples of a consortium are Dragonchain, R3 and the Energy Web Chain.
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