All About Blockchain Consortiums And The 10 Amusing Difference between Private and Public Blockchain Consortiums

All About Blockchain Consortiums And The 10 Amusing Difference between Private and Public Blockchain Consortiums

Blockchain News
March 6, 2024 by Diana Ambolis
In the ever-evolving realm of blockchain technology, various models are emerging to cater to different needs and applications. One such model, blockchain consortiums, presents a unique approach that fosters collaboration and addresses specific industry challenges. Here’s a deep dive into the world of blockchain consortiums: Understanding the Fundamentals: Collaborative Efforts: Unlike public blockchains, open to anyone,
blockchain consortiums Blockchain Adoption The Difference between Private and Public Blockchain Consortiums

In the ever-evolving realm of blockchain technology, various models are emerging to cater to different needs and applications. One such model, blockchain consortiums, presents a unique approach that fosters collaboration and addresses specific industry challenges. Here’s a deep dive into the world of blockchain consortiums:

Understanding the Fundamentals:

  • Collaborative Efforts: Unlike public blockchains, open to anyone, and private blockchains, controlled by a single entity, blockchain consortiums involve a pre-selected group of organizations working together. These organizations can be competitors, industry peers, or even government agencies.
  • Shared Governance: The consortium establishes joint governance mechanisms where member organizations participate in decision-making processes related to the blockchain’s operation, maintenance, and development. This shared governance fosters collaboration and ensures all members have a say in shaping the platform.
  • Permissioned Access: Access to the consortium blockchain is restricted to authorized members and pre-approved participants. This controlled access allows for a more secure and permissioned environment compared to public blockchains, while offering greater transparency and traceability compared to private blockchains.

Benefits of Blockchain Consortiums:

  • Enhanced Trust and Collaboration: By bringing together organizations with shared interests, consortiums foster trust and collaboration within the industry. This collaborative environment facilitates the development of standardized protocols and industry-specific solutions that benefit all members.
  • Improved Efficiency and Scalability: Consortiums can leverage the combined resources and expertise of member organizations to improve the efficiency and scalability of the blockchain network. This collaboration can lead to faster transaction processing and a more robust infrastructure.
  • Reduced Costs: By sharing the development and maintenance costs of the blockchain platform, consortiums can reduce the financial burden on individual members. This cost-sharing model makes blockchain technology more accessible for a wider range of organizations.
  • Increased Regulatory Compliance: Consortiums can work together to navigate regulatory frameworks surrounding blockchain technology. By establishing clear governance and access control mechanisms, consortiums can ensure their platform complies with relevant regulations, fostering trust and confidence among stakeholders.

Real-World Applications:

  • Supply Chain Management: Consortiums can be used to track the movement of goods throughout the supply chain, ensuring transparency, traceability, and improved efficiency. This can benefit various industries, including food and beverage, pharmaceuticals, and logistics.
  • Trade Finance: Consortiums can streamline trade finance processes by enabling secure and efficient document exchange, trade finance transactions, and risk management. This can benefit banks, businesses, and other stakeholders involved in international trade.
  • Healthcare: Consortiums can be used to securely manage patient data, facilitate healthcare research collaboration, and improve medication supply chain management. This can enhance patient privacy, streamline research efforts, and improve the overall healthcare system.

Challenges and Considerations:

  • Governance Complexity: Managing a consortium with diverse stakeholders can be complex. Establishing fair and transparent governance models that ensure all members have a voice can be challenging.
  • Interoperability: As more consortiums emerge, ensuring interoperability between different blockchain platforms remains a crucial challenge. This is essential for seamless collaboration and data exchange across different industry verticals.
  • Security Concerns: Even with permissioned access, security breaches and cyberattacks remain a risk for consortium blockchains. Implementing robust security measures and protocols is crucial to protect sensitive data and transactions.


Private blockchain: what is it?

Distributed Ledger Technology (Dlt)

Users can have the complete privacy they want, thanks to private blockchains.

Unlike public, permissionless blockchains, private blockchains restrict who can view and add to the chain. These systems are not decentralized since they have a distinct control structure. They are scattered because numerous nodes continue to save a copy of the chain on their computers.

Businesses generally use a permissioned network to establish private blockchains. This restricts who can use the web and for what kinds of transactions. An invitation to join a private blockchain network, which the network starter must approve, or a set of rules, is required. Participants must receive prior authorization or invitation.

Prospective entrants may be chosen by current participants, a regulatory body issuing participation licenses, or a consortium. Once a business joins the network, it will contribute to maintaining the decentralized nature of the blockchain.

With this kind of permission blockchain architecture, users can get significant advantages by utilizing more than 30 years of technical literature.

Private chains are a better fit when a business wants to take advantage of blockchain features without opening its network to the public. Some use-cases for private blockchains include digital identity, addressing supply chain challenges, upending the banking industry, or enabling secure healthcare patient/provider data exchanges. An excellent illustration of a private blockchain is Hyperledger Fabric from the Linux Foundation.

One of the drawbacks of private blockchains is the contested claim that they are not true blockchains, given that decentralization is the fundamental tenet of the blockchain.

Building information correctly in private blockchain consortiums is even more difficult because centralized nodes decide what is acceptable. If a few nodes behave erratically, the consensus mechanism could be compromised. A low node count may also indicate a low level of security. On a private blockchain, anonymity does not exist. Users can’t independently verify or check it, making security less secure. Additionally, personal blockchain source code is typically restricted and proprietary.

Public blockchain: what is it?

In a public blockchain, anyone can participate and receive compensation for their contribution to reaching a consensus. An open blockchain network is a network in which anybody may join and participate. The majority of networks use an incentive scheme to entice new members. among the most often used public blockchain networks nowadays is Bitcoin.

The enormous amount of processing power needed to keep a distributed ledger functioning at a large scale is one of the drawbacks of a public blockchain. Each node in a network must resolve a complex, resource-intensive cryptographic puzzle known as proof-of-work (PoW) to achieve consensus, guaranteeing that everyone is on the same page. Another issue is a public blockchain’s openness, which implies tiny to no transaction privacy and only supports a basic understanding of security.

What distinguishes a private blockchain from a public blockchain consortium?

Web3 Metaverse

A blockchain was developed to eliminate the middleman in every asset exchange situation securely. A private blockchain permits the middleman to reenter the picture to some extent.

A public blockchain is more decentralized than a private or centralized blockchain. By validating and adding data to a public blockchain, everyone can take part in it. In private blockchains, the network is controlled by authorized parties only. Bitcoin and Ethereum are two instances of open blockchain technology. Examples of private blockchains include Ripple and Hyperledger.

Public blockchains have fewer transactions per second than private blockchains do. Since fewer authorized users exist, a private blockchain can support hundreds or even thousands of transactions per second.

A public network is safer due to its decentralization and active participation. The increased number of nodes in the network makes it virtually hard for “bad actors” to attack the system and seize control of the consensus network. A private blockchain is more susceptible to hacks, dangers, and data breaches/manipulation than a public blockchain. Malicious users might easily endanger the entire network.

A public blockchain uses more energy than a private blockchain since it needs a lot of electrical resources to function and establish network consensus. Compared to public blockchains, private blockchains consume significantly less electricity and energy.

A private blockchain eliminates the possibility of minor collisions. Each validator is identified and is equipped with the required authorization to connect to the network. In contrast, nobody knows the validators’ identities in a public blockchain, which raises the risk of collusion or a 51 percent assault.

Also, read – EU-backed Blockchain Consortium PharmaLedger Declares Use Cases

What is a blockchain consortium?

A combination of public and private blockchains is known as a blockchain consortium.

The consortium blockchain blends elements of both public and private chains, straddling the boundary between them.  The degree of consensus may be where the two systems most noticeably diverge.

A consortium chain makes use of a few equally spaced strong parties as validators instead of an open system where anybody can validate blocks or a closed system where only one party chooses block producers. The best use case for a consortium blockchain is when numerous businesses in the same industry want a centralized platform to conduct transactions or send data. Examples include the consortium blockchains Quorum and Corda. A consortium blockchain is more efficient, scalable, and secure than a public blockchain network. Access controls are present as well, much as private blockchain. A consortium blockchain, however, has less transparency. If a member node is compromised, it is still vulnerable to hacking, and the blockchain’s rules may render the network inoperable.

Is the blockchain for Bitcoin private or public?

Since Bitcoin was created using open-source computer code, it has a public blockchain that anybody may access and utilize. The Bitcoin blockchain supports anonymity, whereas private blockchains do not. It guarantees fair treatment for everybody. For instance, anyone can buy and sell Bitcoin without disclosing their identity.

Due to the decentralized structure of Bitcoin, all transactions can be transparently tracked using a personal node or blockchain explorers, which let anybody view transactions in real-time. Every node keeps a copy of the chain updated as new blocks are accepted. This implies that you could follow Bitcoin wherever it went if you so desired.

How does a personal blockchain operate?

A private blockchain is a blockchain technology where a single entity controls the network.

The group of companies shares the entire network in a private permissioned blockchain. The network administrator can define the responsibilities and permissions for users and nodes, including who is allowed to take part in consensus, who can read and write to the ledger, and how blockchain nodes are dispersed around the network.

The following steps are taken in a private blockchain network’s operation:

  • Users of the network do not all have the same rights based on their membership in the consortium.
  • Users who have been given authority can only access specific categories of data.
  • The rules that apply to network participants govern the access method.

How does an open blockchain function?

The public blockchain network is a blockchain network that anybody can join at any moment. Public blockchains are non-restrictive and permissionless since anyone with internet access can join a platform and register as an approved node. This user can perform mining operations, which are complex calculations needed to validate transactions and add them to the ledger, and has access to current and historical data.

On the network, no legitimate record or transaction may be changed. Because the source code is typically open-source, anybody may check the transactions, find any flaws, and provide changes. Each user registers an account and links a node to it to interact with the public blockchain. For sending and receiving money, think of it as a bank account. Software programs called wallets are used to store funds.

On a public blockchain, the decision to include a transaction in the chain is made by consensus. This implies that most “nodes” must accept the transaction. Owners of the machines in the network receive compensation for validating transactions. This process is known as “proof-of-work (PoW).”

How do blockchain consortiums operate?

The consortium blockchain network is a blockchain where several companies manage the platform.

Newcomers may join a consortium and assist in managing the established structure and shared data rather than beginning from scratch. At the same time, firms can save time and money on development by collaborating to address common problems. Finally, by allowing different subjects to share responsibilities rather than perform the same task twice, coordination of actions and the sharing of expertise help prevent duplication.

Fewer participants in a consortium blockchain are known. It typically uses a voting-based mechanism, which guarantees low latency and good speed. A node can add a block, but all nodes can write and read transactions. That block must be confirmed by every node to proceed. If this condition is not satisfied, the block cannot be inserted.