Till now, we have covered public, private, and hybrid blockchain technology in detail. In this guide, we are going to see consortium blockchain, its advantages, and disadvantages with use cases.
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Let’s see the introduction first. Consortium blockchain, also known as a federated blockchain, is the fourth type of blockchain technology which is similar to a hybrid blockchain in the way that it has private and public blockchain features. But it differs in that multiple organizational members unite on a decentralized network. In short, it offers all the features of a private blockchain, including transparency, privacy, and efficiency, without one party having consolidated power.
Definition: A consortium blockchain is a private blockchain when it comes to access as it ensures to offer bounded access to a particular group. However, it removes the risks of just one entity controlling the network on a private blockchain. In a consortium blockchain, some aspects of the organizations are made public, while others remain private.
Working: In a consortium blockchain, the consensus procedures are controlled by preset nodes. Although it’s not visible to a large number of people, it still holds a decentralized nature. How? Well, more than one organization manages a consortium blockchain. So, no one single entity can bind the force.
It involves a validator node that initiates, receives, and validates transactions which help to maintain functionality. While participating nodes can receive or initiate transactions.
When an organization needs both public and private blockchain features, a consortium blockchain is a creative approach to solve such needs.
What are its advantages?
- A consortium blockchain is more secure, scalable and efficient than a public blockchain network.
- It offers access controls just like private and hybrid blockchain, it also.
- It offers better customizability and control over resources.
- Works with well-defined governance structures.
What are its disadvantages?
- Consortium blockchain is less transparent than public blockchain.
- It can still be compromised if a member node is breached, the blockchain’s own regulations can impair the network’s functionality.
What are its use-cases?
- Banking and payments: Different banks can unite and form a consortium, and then they can choose or decide which nodes will validate the transactions.
- Research organizations: Such types of organizations can share the data related to research and output via consortium blockchain.