2. Types of Blockchain - Public blockchain
• A public blockchain is a blockchain where anyone in the world can become
a node in the transaction process.
• Economic incentives for cryptographic verification may or may not be
present.
• It is a completely open public ledger system. Public blockchains can also be
called permissionless ledgers.
• These blockchains are secured by crypto-economics, that is, economic
incentives
and cryptographic verification using mechanisms such as PoW or PoS or
any
other consensus mechanism.
• Some popular examples of this type of blockchain are Bitcoin, Ethereum,
Litecoin, and so on.
3. Semi-private blockchain
• A semi-private blockchain is usually run by a single organization or a
group of individuals who grant access to any user, who can either be a
direct consumer or for internal organizational purposes.
• This type of blockchain has a public part exposed to the general
audience, which is open for participation by anyone.
4. Private blockchain
• In private blockchains, the write permissions are with one
organization or with a certain group of individuals.
• Read permissions are public or restricted to a large
set of users.
• Transactions in this type of blockchain are to be verified by very
few nodes in the system.
• Transactions in this type of blockchain are to be verified by very
few nodes in the system.
5. Consortium blockchain
• As the name suggests, the consensus power is restricted to a set of
people or nodes. It can also be known as a permission private
blockchain.
• Transaction approval time is fast, due to fewer nodes.
• Economic rewards for mining are not available in these types of
blockchains.
• A few examples of consortium-based blockchains are Deutsche
Boerse and R3
6. Byzantine generals problem
• The problem at its root is about consensus, due to mistrust in the nodes of
a network.
• Let's imagine that various generals are leading the Byzantine army and are
planning to attack a city, with each general having his own battalion.
• They have to attack at the same time to win.
• The problem is that one or more of generals can be disloyal and
communicate a duping message.
• Hence, there has to be a way of finding an efficient solution that helps to
have seamless communication, even with deceptive generals.
• This problem was solved by Castro and Liskov, who presented the Practical
Byzantine Fault Tolerance (PBFT) algorithm.
• Later, in 2009, the first practical implementation was made with the
invention of Bitcoin by the development of PoW as a system to achieve
consensus.
7. Consensus
• Consensus is the process of reaching a general agreement among
nodes within a blockchain.
• There are various algorithms available for this especially when it is a
distributed network and an agreement on a single value is required.
• Mechanisms of consensus: Every blockchain has to have one
mechanism that can handle various nodes present in the network.
8. Mechanisms of consensus
• Proof of Work (PoW): This is the most commonly used consensus
mechanism, also used by the first ever cryptocurrency, Bitcoin.
• This algorithm has proven most successful against Sybil attacks.
• Proof of Stake (PoS) this makes the mining of new blocks easier for those
who have the highest amount of cryptocurrency.
• Delegated Proof of Stake (DPOS) one small change it has over PoS is that
each node that has a stake can delegate the validation of a transaction to
other nodes by means of voting.
• Proof of Importance (POI) this is designed to be energy efficient and can
also run on relatively less powerful machines. It relies on stake as well as
the usage and movement of tokens to establish trust and importance.
9. Mechanisms of consensus
• Proof of Elapsed Time (PoET) this is a blockchain algorithm created by
Intel, using Trusted Execution Environment (TEE) to have randomness
and security in the voting process using a guaranteed wait time.
• Proof of burn (PoB) this is mostly used for bootstrapping one
cryptocurrency to another. The basic concept is that miners should
prove that they have burned coins, that is, they have sent them to a
verifiable unspendable address.
• Proof of activity (PoA): A random peer is selected in this from the
entire network to sign a new block that has to be tamper-proof.
10. Benefits - Banking records
• Record keeping and ledger maintenance in the banking sector is a
time and resource-consuming process, and is still prone to errors.
• In the current system, it is easy to move funds within a state, but
when we have to move funds across borders, the main problems
faced are time and high costs.
• Even though most money is just an entry in the database, it still incurs
high forex costs and is incredibly slow.
