In essence, the blockchain is a distributed database where all changes are recorded in the form of a chain of blocks. Blockchain structure itself assumes different levels of information access. This parameter is used as a criterion for classifying blockchains, which is conditional in nature since blockchain technology is consistent.
So, based on these criteria, there are two blockchain classification versions: Canadian and British.
The Canadian Version
The Canadian version is based on Vitalik Buterin's vision, the creator of the Ethereum blockchain platform. The classification assumes three types of blockchains.
A public blockchain is a chain of blocks that anyone can access and read. Additionally, anyone can send transactions, wait for them to be included if they are valid, and participate in a consensus process. This process determines which blocks are added to the chain and establishes the current state of the network. Public blockchains serve as an alternative to centralized or semi-centralized trust systems. They rely on economic incentives and cryptographic verification mechanisms, such as proof-of-work or proof-of-stake. The underlying principle is that participants' influence on the consensus process is directly proportional to their economic resources. Blockchains are typically decentralized.
Consortium blockchains are blockchain types where negotiation is controlled by a pre-selected group of nodes. For example, a consortium of 15 financial institutions, with each operating a node. For a block to be valid, 10 institutions must sign it. The right to access blockchains may be public or restricted to members. Such a blockchain can be considered "partially decentralized."
A fully private blockchain has restricted data access. Confirmation of transactions, auditing, and database management in such networks are available to a clearly defined group of individuals. When it comes to data access, it can be public or heavily restricted.
The British Version
The British version is based on Mark Walport's report, the main scientific adviser to the UK government. In his report "Distributed Ledger Technology: Beyond Blockchain" on distributed registries and blockchain potential in the field of public administration, he divided blockchain into three types.
- Unauthorized public ledgers
- Authorized public ledgers
- Authorized private ledgers
This classification is similar to Vitalik Buterin's. In this classification, the equivalent of Public Blockchain in the British version is Unauthorized public ledgers, the equivalent of Consortium Blockchain is Authorized public ledgers, and the equivalent of Fully private Blockchain is Permitted private ledgers. Moreover, the report proposes a small test called "Classification of Distributed Registries," which enables individuals to independently determine the type of blockchain to which it belongs.
In public blockchains, user participation is always determined independently and depends on their personal (financial or hardware) resources. In addition, no one can disconnect a user from the distributed network, as all participants in the public blockchain are equal. In some cases, they can ignore or block a user who sends incorrect transactions or transmits information that does not correspond to the protocol. However, these initiatives are solely self-regulatory and not protocol-based.
In private blockchains, dedicated trusted nodes or groups of nodes with a higher level of authority than other users may connect existing users to the network. In addition, they may be responsible for disconnecting them. Private blockchains are hierarchical structures consisting of two or more levels. Key pairs that grant access to the system are issued and managed by dedicated administrative nodes and can be revoked if needed.
Private blockchains do not fully adhere to technology principles - decentralization and equality of participants. This is because their implementation in corporate systems can pose significant risks.
Classification on The Level of Control Over The Blockchain
The next criterion that adds another layer to blockchain classification is the level of control over the blockchain. According to this criterion, blockchains can be divided into four groups.
- Public Decentralized Blockchains
- Public blockchains with delegated governance
- Private Controlled Blockchains
- State Blockchains
Modern public blockchains have single-level structures. In these systems, all participants are considered equal, and consensus is reached through indirect voting by nodes that create a block. Public decentralized networks do not restrict participation in management, and participants' opportunities are determined solely by the proportion of their available resources in relation to the total.
After over a decade of blockchain development, it can be concluded that achieving complete decentralization in self-regulated, or rather spontaneously regulated, networks is nearly impossible in practice. Public blockchains eventually encounter centralization. In this regard, an attempt was made to introduce centralization elements to enhance management functions and other indicators of the blockchain. This led to the emergence of the first public blockchains with a two-level structure in 2015, where nodes with enhanced capabilities played a prominent role. It is a sign of multiple levels of control in the blockchain network, with varying degrees of authority. This is particularly prominent on public blockchains with delegated control.
Privately controlled (corporate) blockchains are technological solutions to corporate needs. In such systems, each node has a pre-assigned access level. Unlike a public blockchain, data is not always publicly available, even for reading. Control of such blockchains is carried out by special nodes with increased authority. These nodes are responsible for implementing the data distribution policy, verifying user identification, and certifying the entry of data onto the blockchain.
Distributed ledgers for public use generally differ slightly from corporate blockchains and require controlled access to information. However, state departments have specific requirements for blockchain technology, including the maximum level of unaltered information that can be added. In addition, they have the strictest control over its addition. At the same time, information already available on the blockchain can often be made public, as government entities should aim to enhance transparency. State blockchains can be considered a distinct subset of corporate blockchains, possessing their own unique characteristics while also belonging to a separate category.
Thus, the classification of blockchain based on the level of information access can be presented as a two-tier structure. The first level determines the transparency criterion, while the second level determines the level of blockchain control.
Public blockchains are open and permissionless networks that anyone can join and participate in. Private blockchains, on the other hand, are closed and permissioned networks that restrict access to specific participants, providing more control and privacy over data. Public blockchains are commonly used for cryptocurrencies and decentralized applications, while private blockchains are often employed for enterprise use cases and consortium networks
Summing up the discussion on the technological aspects of blockchain, it should be noted that it should be seen as a new technological paradigm. The technology encompasses several conceptually different ideas: distributed storage registers, consensus algorithms, and cryptographic data protection mechanisms. Blockchain technology is based on storage logic that does not rely on a centralized server or group of servers. The technology generates and stores a list of ordered records called blocks. Each block contains a timestamp and, most importantly, the image (hash) of the previous block. This technology effectively "binds" the data blocks, preventing changes to individual blocks without altering the entire sequence.
Due to the integration of technological solutions, blockchain possesses several distinctive features: openness, the immutability of stored data, and the capability to publish and monitor executable logic (program code) in a decentralized network. All these aspects indicate that blockchain is not just a fascinating and promising technology, but a truly unique technological solution allowing for absolute decentralization.