There are three different types of blockchains- private, public, and hybrid. Among these three types, hybrid blockchains are considered to be the most effective by many in the industry.
Even if you don’t know much about blockchain technology, the chances are that you have come across the word. Over the past few years, blockchain technology has captured the imagination of experts from different industries.
Blockchain technology was last year’s buzzword and is still one of the most discussed and talked about topics in corporate circles. Experts believe blockchain technology to be the next big thing. As the technology continues to improve and goes mainstream, blockchain will impact our everyday lives and will be used by different industries.
Hybrid blockchain: An introduction
While public blockchains are decentralized, meaning that no person or group controls them, private blockchains are controlled by one or more entities that decide who can join the network. Hybrid blockchains combine the best of both worlds to include the preferred features of both private and public blockchains.
Hybrid blockchains focus on using the strengths of both private and public blockchains. While some processes are kept private, others are not controlled by any entity.
Hybrid blockchains are also customizable. Members can decide who should be permitted to join the system and which transactions should be made public. Even though some transactions can be kept private, they are verifiable, which helps improve security.
Like other types of blockchains, they are designed to be immutable, meaning that transactions can be written only once and cannot be changed. This immutability ensures that data cannot be altered with.
Once a user is granted permission to join the network by the members of a hybrid blockchain, they can participate in different activities. The person, now a member of the network, can also conduct transactions. For enhanced privacy, the identity of the members is not revealed. The only way to know the identity of another member is to transact with them.
Some businesses have already started using hybrid blockchains. Take, for instance, Ramco Systems that is using a unique network developed by XinFin to manage its supply chain. XinFin is credited with developing the world’s first hybrid blockchain that is built on both Etherium and Quorum.
Benefits of hybrid blockchains
- Enhanced privacy and security (thanks to the ability of hybrid blockchains to work in a closed ecosystem)
- Flexibility (rules can be changed easily and when required)
- Designed to facilitate communication with external entities without compromising on security
- Immune to 51 percent attack
- Low transaction cost
Hybrid blockchains: The road ahead
Hybrid blockchains are still evolving and have a long way to go. Many businesses realize the immense promise that hybrid blockchains hold and are conducting various studies to come up with unique applications.
In the future, hybrid blockchains will likely be used by businesses that are required to maintain critical private records. For those in the banking, insurance, and healthcare sectors, this would allow them to share their blockchain but restrict the access to data.