What are the Different Types of Blockchains?
There are different types of blockchains, each with its own pros and cons. This article covers exactly what a blockchain is, its different types, as well as how they differ. Blockchain has taken the world by storm in the last couple of years. With so many new technologies emerging almost every day, it can be extremely difficult to keep track of everything. However, there’s one technology that has proven to be more useful than any other — the blockchain! The blockchain is basically a digitized, decentralized ledger that records transactions securely and permanently. But what are its different types? Keep reading to find out more…
What is a blockchain?
A blockchain is a decentralized public ledger that is used to record transactions between two parties digitally. Simply put, it is a chain of blocks that keeps a record of digital transactions by tracking assets through a process called “mining”. A blockchain is secure because it’s decentralized, meaning it isn’t controlled by one central authority. Instead, it’s hosted on millions of computers around the world. A blockchain is made up of different types of blocks: A transaction block stores the details of a single transaction; a hash pointer block links the transaction block to the previous block; a hash pointer block links the current block to the next block, and a data block contains the actual data.
Distributed Ledger Technology (DLT)
A distributed ledger technology (DLT) is a type of database that is replicated across multiple nodes. Each node contains an identical copy of the ledger, and the replication of these ledgers creates a decentralized network. The key difference between a blockchain and DLT is that the former is a specific type of DLT that uses a “proof of work” consensus algorithm. Distributed ledger technology is the technology that underpins cryptocurrencies like Bitcoin, Ethereum and Ripple.
Blockchain 3.0: Ethereum and Bitcoin
Bitcoin is considered the first generation of blockchain technology, often referred to as Blockchain 1.0. It is a public decentralized ledger that records transactions between two parties. Ethereum, on the other hand, is often referred to as the second generation of blockchain technology or Blockchain 2.0. It is a public decentralized ledger that records transactions between two parties and enables the execution of smart contracts. The difference between the Ethereum blockchain and the Bitcoin blockchain is that Ethereum is capable of more than just recording transactions. Bitcoin uses blockchain technology to record transactions, but it does not use the technology to execute smart contracts.
Blockchain 2.0: Hyperledger and Corda
Grid resources that contribute to the management of the distributed ledger are rewarded with tokens. If they fail to perform their duties, they will be penalized by losing their tokens. This system is called “proof of stake,” and it was first implemented by the blockchain-based cryptocurrency called “Corda.” The blockchain-based distributed ledger technology, “Hyperledger,” also uses the “proof of stake” system. The difference between the two is that “Corda” was designed primarily for financial services industries, whereas “Hyperledger” can be applied to a variety of industries.
Blockchain 1.0: Bitcoin and Ripple
The Bitcoin blockchain is an example of Blockchain 1.0. It is a public decentralized ledger that records transactions between two parties and is powered by a proof of work consensus algorithm. The Ripple blockchain is another example of Blockchain 1.0. Like the Bitcoin blockchain, it is a public decentralized ledger that records transactions between two parties and is powered by a proof of work consensus algorithm. The difference between the Bitcoin blockchain and the Ripple blockchain is that the first was designed for peer-to-peer payment, whereas the latter aims to disrupt the banking industry by providing real-time settlement of cross-border payments.