Different blockchains for different applications
There's no doubt that you’ve already heard about Bitcoin and other crypto currencies. You must also know that these digital currencies are hosted on a very specific type of network, the blockchain. However, you might not be aware that the blockchain technology has much wider applications than simply serving as a network to monitor crypto currency transactions. Many of these applications rely on what we call a private blockchain, which is different from the famous public blockchains that frequently make the headlines (Bitcoin, Etherum …).
A public blockchain is a distributed decentralized public ledger, a growing list of records stored in the form of blocks if you will (hence the name blockchain), that anyone is free to join. In order to extend the network, everyone can participate in the addition of new blocks but must be following a precise consensus protocol. The two main protocols used today in public blockchains are Proof of Work (PoW), used in Bitcoin and LiteCoin, and Proof of Stake (PoS), used in Etherum (they decided to switch from PoW to PoS).
For the Proof of Work protocols, all computer nodes are competing to be the first to solve a complex math problem (computing the hash value of the new node) to validate the new block in the network. The first to do so, i.e. who spent the most computing power, is rewarded with crypto for his work. In Proof of Stake, each participants can put at stake a certain amount of crypto behind the block that needs to be added, then they all vote on the validation of the new block. As a reward for voting on legitimate transactions, participants receive a small fee in crypto depending on their bid.
Both these protocols require crypto currencies to function, which explains why every public blockchain has a crypto associated with it. When a blockchain network is created, it can be decided that not everybody can participate in the validation of new blocks, and that the consensus protocol can be very different from the two we’ve just seen. This is what we call a private blockchain.
A private blockchain is a blockchain with control and restrictions over which people can participate in the network. A sole entity decides on who gets access to the network and the consensus protocol : you might encounter protocols such as Proof of Authority (PoA), relying on the sole verification of an authority, or Proof of Elapsed Time (PoET) where each node is assigned a random waiting time before being validated. Both these protocols don’t require any crypto, and are often used in private blockchains.
Private blockchains are very relevant for businesses because they act as a closed and secured database relying on cryptographic concepts. They are easily scalable because their consensus protocols are efficient and fast. They offer some advantages over a public blockchain such as transparency and authenticity, but also the tracking and control of every modification made to the blockchain. Hyperledger Fabric by the Linux Foundation is an example of a private blockchain architecture provider.
Private blockchains really shine is the supply chain management field. Private blockchains' features meet the exact needs of the supply chain management sector : traceability, authenticity, security, auditability … Therefore, many companies aim at exploiting the blockchain technology to facilitate supply chain management. As an example, Tilkal provides a platform of data aggregation and real time analysis built on a B2B blockchain network.
Hopefully by now, you are convinced that blockchain is more than just the network upon which is built crypto currency like Bitcoin, and that businesses have potentially a lot of value to exploit from this new technology.