Blockchains are compelling vehicles of technological change with decentralization, security, immutability, and transparency lying at their core. Distributed databases that enable secure, transparent, and tamper-proof transactions, blockchains have seen a massive surge in usage over the past ten years. But to achieve these characteristics, blockchains rely on architectures that distinguish them from conventional databases. 

As noted above, the primary benefits of blockchain technology include decentralization, security, immutability, and transparency. Decentralization denotes the absence of a central authority or server for database management. Here, power is dispersed across a network of peers, making the structure resistant to hacking and data breaches. Blockchain security is maintained by utilizing a variety of cryptographic techniques. Once data has been published on the blockchain, its immutability ensures that it cannot be modified or removed. Transparency refers to the visibility of blockchain transactions to all network participants. 

Individual blockchains often feature trade-offs between security, transparency, decentralization, and more, depending on their unique type and architecture. In this article, we’ll discuss various blockchain networks, their strengths, and their weaknesses.

The Four Main Types of Blockchain Networks 

There are four main types of blockchain networks: public, private, hybrid, and consortium. Let’s take a look at the main features, advantages, and disadvantages of each. 

  1. Public: Public blockchains are permissionless, decentralized networks accessible to anyone. They are typically quite resilient, as they are not susceptible to single point of failure (SPOF) vulnerabilities. Instead, public blockchains are supported by a globally distributed network of nodes. The decentralized nature of public blockchains makes them highly resistant to data tampering and censorship as no single entity can control what is published on the network. But it also requires some medium for verifying information and reaching agreement; this is called a consensus mechanism. Proof-of-Work (PoW), Proof-of-Stake (PoS), and Proof-of-History (PoH) are examples of consensus mechanisms. Bitcoin and Ethereum are two popular public blockchains. 
  2. Private: Private blockchains are dedicated networks that restrict access to transaction data to invited users only, which means they are “permissioned”. Businesses often utilize private blockchains for keeping a secure and tamper-proof ledger of transactions. Unlike public blockchains, which are accessible to anyone, private blockchains provide a more centralized and regulated environment.  Private blockchains offer numerous advantages over public blockchains, such as privacy, faster transaction times, and improved scalability. However, potential downsides of private blockchains include centralization and counterparty trust.
  3. Hybrid: A hybrid blockchain is a type of blockchain that combines public and private blockchain characteristics. Designed to give the best of both worlds, hybrid blockchains combine the security and immutability of a public blockchain with the scalability and adaptability of a private blockchain. Enterprises that need to share data with partners or consumers while retaining control over who can access or modify that data often use hybrid blockchains. They can also be used to establish community-owned platforms, such as social networks and marketplaces, that enable users to communicate directly with others while retaining a degree of centralization.
  4. Consortium: A consortium blockchain is a distributed ledger in which multiple organizations can operate a node on the network. They are typically used for business applications where it is desirable to have several organizations involved in validating transactions but where it is undesirable or impractical for all parties to have equal access to the ledger. A consortium blockchain offers the benefits of decentralization, immutability, and security while allowing transactions to be validated by a small group of trusted entities.

The Architecture of Blockchains 

Blockchain networks are typically peer-to-peer (P2P) as opposed to client-server (C/S) architectures in traditional databases. In a P2P network, there is no central server; instead, each node in the network connects directly to other nodes without an intermediary. This architecture is implemented in blockchain networks because it offers more decentralization and security. However, P2P networks can be more difficult to scale than C/S databases. 

In a traditional C/S architecture, a central server manages all transactions on the network. However, C/S networks are less decentralized and consequently less secure than P2P networks. 

Blockchain Security

When contemplating the right network or architecture for the blockchain, security is a crucial factor that must be carefully considered. Both public and private blockchains are vulnerable to distinct attack vectors. A private blockchain, for instance, may be susceptible to hacks and data breaches, while PoW-based public blockchains may be vulnerable to 51% attacks. Additionally, blockchains host smart contracts that may contain vulnerabilities. The growing importance of decentralized ledger technology strengthens the case for enhanced security measures such as penetration testing and smart contract audits.

For inquiries about smart contract security audits, please contact our blockchain security experts at halborn@protonmail.com.

The Four Main Blockchain Networks Compared 
Rob Behnke
11.09.2022