Ins and Outs Of Blockchain
Blockchains are a type of platform used to securely store and transfer data. Learn more about types of blockchains and popular blockchain platforms.
Blockchain is a term that is frequently discussed, but rarely defined. Part of the lack of clarity comes from how new blockchain technology is. Technically, blockchain technology has existed for many years, but it was considered a niche area. Today, blockchain technology is almost synonymous with Bitcoin and similar digital currencies. Blockchain technology is sometimes referenced by the more formal name, distributed ledger technology (DLT). This refers to how the data is stored. What sets DLT apart from similar software is the data cannot be altered due to how the data is decentralized and encrypted.
When information is passed through the blockchain, it goes through a series of systems. These systems act as links. Each system stores a certain amount of information. When all the systems are chained together, it not only creates a large storage system, but it is self-sustaining and more secure than other systems. While blockchains are mostly brought up when discussing bitcoin and similar technology, there are other uses for blockchains and numerous platforms to choose from. There are several different types of blockchains, each with their own purposes.
Benefits of Using a Blockchain Platform
There are many benefits to using a blockchain platform. Blockchain platforms are normally difficult to develop, but with the popularity of Bitcoin, more developers are focusing on new platforms, providing many more options compared to previous years. One of the most appealing benefits of blockchain platforms is the simplicity. While the software itself is complex, using an existing platform is an easy process. Everything is handled through the platform, and you do not have to worry about managing multiple programs to get the platform working.
Blockchains are also some of the most efficient platforms currently available. Blockchains excel at peer-to-peer transactions and have become a favored way of running online stores. Not only are blockchains more efficient, but it requires less troubleshooting and oversight compared to other options. Blockchains also have the best security available. All the data transferred is completely encrypted and impossible to steal or edit, so there is no risk of identity theft or financial data leaking. This has become especially important to customers after so many other major companies have experienced data breaches.
Public blockchains are the most common platform, in no small part because it is what Bitcoin uses. With a public blockchain, anyone is able to access the network as long as they have an active internet connection. Once you are connected, your device becomes part of the system and you can start validating blocks. While it is an effective method of running a blockchain, it is not a good choice if you want to use your blockchain for your business.
Private blockchains are also known as permissioned blockchains. In order to get access to the blockchain, you must be given permission by the ledger administrator. The administrator can grant invitation rights to other users as well. Private blockchains offer the most security and are commonly used by businesses.
A consortium blockchain is similar to private blockchains. The difference is instead of one administrator managing the blockchain, it is overseen by multiple organizations. These types of blockchains are most often used by the government. Larger businesses, such as banks and major corporations may also benefit from a consortium blockchain. It is an excellent way to transfer and securely store private information.
Hybrid blockchains are a unique mix of public and private blockchains. With these blockchains, an administrator creates a network and limits what portions of data public users are able to access. The rest of the data is confidential and only accessible with permission from the administrator. Hybrid blockchains are a good way to collect and share information while preserving the anonymity of the participating users.
Ethereum is one of the largest blockchain platforms. It is a completely decentralized platform, open to the general public. There is even a cryptocurrency, ether, named after the platform. In recent months, the platform has also become famous for exchanging non fungible tokens (NFTs). Ethereum is a popular choice because the community is constantly growing and is open to all users, which also means there are no costs to use it.
A common criticism of Ethereum was it used too much energy, making it harmful to the environment. The Ethereum community has acknowledged this issue and as of writing is taking steps to switch from a proof of work consensus mechanism to a proof of stake, which is significantly more energy-friendly. These new types of chains are called Beacon chains and only use a fraction of the energy of a traditional Ethereum blockchain.
Another popular platform is the IBM Blockchain. IBM is a private blockchain primarily used by larger businesses. The blockchain administrator manages the network using a fully customizable development tool. IBM created a simplistic interface, providing real time data to the administrator. Many banks use IBM Blockchain as their chosen platform.
There are several different plans available depending on how much data you want to store and transfer. All of the IBM Blockchain are available without creating a membership or signing any contracts. If you already use IBM cloud services, you can upgrade and transfer your data to the blockchain. A standard account costs $.29 cents for each allocated CPU-hour. As of writing, IBM is offering a free 30-day trial.
EOSIO is one of the newest blockchain platforms, first established in 2018. The goal of the project was to modernize how blockchains operated. While the technology was only a few years old at the time, developers were already spotting major improvements that were difficult to implement into an existing system. Instead of trying to update an existing system, the developers got together to create EOSIO.
EOSIO is constantly being updated and typically offers better performance compared to other platforms. It is used for both public and private blockchains and has become especially popular among healthcare services. A cryptocurrency, EOS, was created in 2021 for the platform. Because it is open source, it does not cost any money to license the platform.