What are the 4 different types of blockchain technology?

1. Public blockchain

A public blockchain is where cryptocurrencies like bitcoin originated and helped to popularize DLT. It removes the problems of a central authority, including less security and transparency. DLT doesn't store information in any one place, instead distributing it across a peer-to-peer network.

Its decentralized nature requires some method for verifying the authenticity of data. That method is a consensus algorithm whereby participants in the blockchain reach agreement on the current state of the ledger. Proof of work and proof of stake are two common consensus methods.

A public blockchain is nonrestrictive and permissionless, and anyone with internet access can sign on to a blockchain platform to become an authorized node. This user can access current and past records and help conduct mining activities, which are the complex computations used to verify transactions and add them to the ledger.

No valid record or transaction can be changed on the network without the participants' knowledge. Anyone can verify the transactions, find bugs or propose changes because the source code is usually open source.

Advantages

• Public blockchains are completely independent of organizations. For example, if the company that started the network ceases to exist, the public blockchain will continue running as long as computers are connected to the network.
• Public blockchains have network transparency.
• Public blockchains are mostly secure if users follow security protocols and methods.
• The consensus algorithm enables users to make democratic decisions. For example, a majority of users can decide when, where and how to upgrade the network.

Disadvantages

• The network can be slow, depending on the number of participating nodes.
• Companies can't restrict access or use.
• Despite the hype that public blockchains are immutable, the technology can be exploited. For example, if a majority of users decide to take over the network, malicious parties can mount a 51% attack against the entire network.
• Public blockchains do not scale well because the technology requires real-time updates about every past and present transaction, which can limit the network's growth. Resources such as compute power, servers and bandwidth must be able to support the network's continued growth.
• Like all types of blockchain technology, public blockchains have an outsized environmental impact, including intense energy requirements, greenhouse gas emissions and hardware usage, as seen with cryptomining.

Use cases

The most common use cases for public blockchains are mining and exchanging cryptocurrencies. They can also be used to create a fixed record with an auditable chain of custody, such as electronic notarization of affidavits, public records of property ownership and digital assets. One example of this is non-fungible tokens (NFTs).

This type of blockchain is ideal for organizations that are built on transparency and trust, such as social support groups or nongovernmental organizations. Because of the network's public nature, private businesses likely want to steer clear.

2. Private blockchain

A private blockchain works in a restrictive environment, like a closed network or when it is under the control of a single entity. While it operates like a public blockchain network in the sense that it uses peer-to-peer connections and decentralization, this type of blockchain is on a much smaller scale and can be customized to suit a company's needs.

Instead of just anyone being able to join and provide computing power, private blockchains are typically operated on a small network inside an organization.

Advantages

• The controlling organization sets permission levels, security, authorizations and accessibility. For example, a company setting up a private blockchain network can determine which nodes can view, add or change data.
• The controlling organization can prevent third parties from accessing certain information.
• Private blockchains can process transactions much more quickly than public blockchains because they are limited in size.
• The typically smaller size of a private blockchain means the consensus mechanism is often simpler.

Disadvantages

• Critics claim that private blockchains aren't true blockchains since the core philosophy of blockchains is decentralization.
• It's more difficult to fully achieve trust in the information since certain centralized nodes determine what is valid.
• The small number of nodes can mean less security. For example, if a few nodes go rogue, the consensus method can be compromised.
• The source code from private blockchains is often proprietary and closed. External users don't have the ability to independently audit or confirm it, which can lead to less security.
• There is no anonymity for participants.

Use cases

The speed of private blockchains makes them ideal for cases where the blockchain needs to be cryptographically secure but the controlling entity doesn't want the information to be accessed by the public, such as personal data or financial records.

The healthcare sector might use a private blockchain to exchange confidential patient information among collaborating providers, improving a patient's quality of care. A private blockchain for supply chain management (SCM) creates a secure online record that tracks every transaction and movement of goods in real time, improving transparency and efficiency.

Other use cases for private blockchains include asset ownership and internal voting.

3. Hybrid blockchain

A Hybrid blockchain combines elements of both private and public blockchains. It lets organizations set up a private, permission-based system alongside a public, permissionless system, enabling them to control who can access specific data stored in the blockchain and what data is opened up publicly. When a user joins a hybrid blockchain, they have full access to the network. The user's identity is protected from other users unless they engage in a transaction. Then, their identity is revealed to the other party.

Typically, transactions and records in a hybrid blockchain are not made public but can be verified when needed, such as allowing access through a smart contract. Confidential information is kept inside the network but is still verifiable. Even though a private entity might own the hybrid blockchain, it cannot alter transactions.

Advantages

• Hackers can't mount a 51% attack on the network because the technology works within a closed ecosystem.
• It protects privacy but enables communication with third parties.
• Transactions are cheap and fast, offering better scalability than a public blockchain network.

Disadvantages

• It isn't completely transparent because information can be shielded.
• Upgrading the network can be a challenge.
• There is no incentive for users to participate or contribute to the network.

Use cases

Highly regulated markets, such as financial services, can see benefits from using hybrid blockchains. Real estate companies can use a hybrid blockchain to run systems privately but show certain information, such as listings, to the public.

The retail industry can streamline existing processes with hybrid blockchains. Hybrid blockchains can also potentially improve existing healthcare practices, such as safeguarding data, improving medical records management and monitoring outbreaks via digital tracking.

4. Consortium blockchain

A consortium blockchain, also known as a federated blockchain, is like a hybrid blockchain in that it has private and public blockchain features. But it's different in that multiple organizational members collaborate on a decentralized network.

Essentially, a consortium blockchain is a private blockchain with limited access to a particular group, eliminating the risks that come with a single entity controlling the network on a private blockchain. In a consortium blockchain, the consensus procedures are controlled by preset nodes. It has a validator node that initiates, receives and validates transactions. Member nodes can receive or initiate transactions.

Advantages

• A consortium blockchain tends to be more secure, scalable and efficient than a public blockchain.
• It has consistently low transaction fees, regardless of the number of users.
• Like private and hybrid blockchains, it also offers access controls.

Disadvantages

• Setting up a consortium blockchain can be difficult. Any changes to the system must be approved by all participants.
• It is less transparent than a public blockchain.
• It can be compromised if a member node is breached.
• The regulations and permissions of a consortium blockchain can impair the network's functionality. For example, disputes among users who fail to reach a consensus might occur.

Use cases

Banking and payments are two uses for this type of blockchain. For example, different banks can form a consortium and decide which nodes validate the transactions.

Research organizations can create a similar model. Consortium blockchains are also ideal for SCM, particularly food and medicine applications.

What type of blockchain should you choose?

Blockchain technology can be a part of an enterprise IT strategy. Each type of blockchain has potential applications that can improve trust and transparency and create a better record of transactions.

Understanding the distinctions between the types of blockchains is crucial to determine which model fits specific applications and use cases, balancing the tradeoffs among control, security and accessibility.

For example, when a company's primary concern is privacy, opting for a private blockchain might be a likely choice. Investing in a hybrid blockchain is an option if an organization wants to share important data but protect confidential information. A consortium blockchain is ideal if the participants want to easily share data with other nodes that depend on the data.

Editor's note: This article was updated in March 2025 to improve the reader experience.

Christine Campbell is a freelance writer specializing in business and B2B technology.

Guilliean Pacheco, MFA, is associate site editor for Informa TechTarget's SearchCIO, SearchERP and Sustainability & ESG sites.