Here is a complete guide on consortiumblockchains, including all the advantages, disadvantages, explanations, and even a comparison between hybrid blockchains!
Blockchain technology is one of the hot topics in today’s tech world. Every day, more people want to find out about it and search for guides with brief explanations. The consortium blockchain technology is one of the most searched of all, and today; we will be giving you information about it. Here is everything you need to know about consortiumblockchains!
A type of hybridbetweenpublicand privateblockchains, consortium blockchains strike a compromise between centralization and decentralization. They compromise between centralized and locked private blockchains and open and transparent public ones.
Only pre-selected entities, such as banks, governments, or major enterprises, are permitted to participate in the network in a consortiumblockchain. These organizations establish a consortium to jointly manage and regulate the blockchain, with the level of decision-making authority among the members being equal or varied depending on the agreement.
The consortium blockchain provides numerous advantages, including enhanced security and privacy, quickertransactionprocessing, and betterdependability. Additionally, it offers a platform for intra-organizational cooperation, allowing participants to exchange resources, information, and knowledge.
Consisting of a balance between decentralization and centralization, consortiumblockchains are a type of blockchain network that distributes control among a pre-selected set of organizations and offers a platform for inter-organizational collaboration.
Consortium blockchains: Advantages and Disadvantages
There are many advantages and disadvantages that consortium blockchains offer. We separately talked about both and let you weigh the options on whether it is positive. Let’s start!
First, let’s talk about all the advantages it offers. Here is the list:
One of the main benefits of consortium blockchains is enhanced security. The network is safer than public blockchains because of the smaller number of participants. With thousands or even millions of nodes, public blockchains are susceptible to 51% of attacks. A hostile actor might seize control of more than half of the network’s computational capacity and engage in destructive activity.
Contrarily, the consortium blockchain has fewer nodes, which lessens the possibility of a 51% attack. Additionally, because the consortium blockchain participants are pre-selected companies, there is a higher level of trust and accountability, which improves the network’s security.
The consortium blockchain frequently uses private and permissionedaccess, limiting who can access and participate in the network. Preventing unwanted access makes it more challenging for bad actors to compromise the network.
A consortium blockchain has a higher level of trust and responsibility than public blockchains because the participants are pre-selected companies. Because the members are recognized and have a stake in the network’s success, the networkis more secure.
Anyone can participate in and validate transactions on a public blockchain, which opens the network up to attacks from hostileparties. A consortium blockchain has vetted and trusted partners, which lowers the possibility of fraudulent activity and boosts the network’s dependability.
Greater transactional speed
The network is more effective than public blockchains, which can contain dozens or even millions of nodes because the number of participants is constrained. Because there are fewer nodes in a consortium blockchain, transactions can be validated and processed quicker because network communication and consensus methods aren’t as burdensome.
Every node in the network must verify all transactions in a public blockchain, which can increase processing times and congestion. Transactions in a consortium blockchain are validated by fewer nodes, which might result in quicker processing times.
Collaboration between organizations
Because everyone involved has a stake in the network’s success and shares the same purpose, this fosters a more collaborativeenvironment.
The consortium blockchain structure enables businesses to collaborate in a safe and open environment, lowering the possibility of fraud and enhancing the network’s overall effectiveness. This is crucial in fields like supplychainmanagement and finance, where cooperation is essential for success.
The agreement details between the buyer and seller are directly encoded into code in self-executing smart contracts. They allow businesses to automate procedures, lowering the possibility of mistakes and enhancing network effectiveness.
We listed some of the advantages that consortium blockchains offer, but now it is time to look at the opposite side of the medal. Below, you will find some of the disadvantages that this type of blockchain gives:
The limited decentralization of consortium blockchains is one of its drawbacks. Contrary to public blockchains, in which everyone can join, consortium blockchains are only open to a select fewbusinesses, meaning that network ownership is not equitably divided among all users. This can be detrimental because it lowers the network’s decentralization and transparency.
A public blockchain ensures that the network is decentralized and not under the control of a single entity by giving each participant an equal voice and the ability to validate transactions. Contrarily, a limited number of firms control consortium blockchains, which means that decision-making authority distribution is unequal.
A predetermined collection of organizations manages consortium blockchains in contrast to public blockchains, which are decentralized and open to everyone. The degree of decentralization may be constrained by this centralization, which also raises the possibility of censorship and control.
Anyone can participate in and validate transactions on a public blockchain, resulting in a decentralizednetwork without any centralauthority. However, a consortium blockchain results in a more centralized network because only a small number of carefully chosen companies can validate transactions. A single entity or small group of entities may come to control the network due to this concentration, which may result in censorship and manipulation.
Due to the pre-selection of participants and potential conflict of interest, the centralization of consortium blockchains may reduce the amount of transparency. This can lower trust and responsibility and make it challenging to verify that all participants behave in the network’s best interests.
One of the reasons they might not be appropriate for all use cases is because of this. Consortium blockchains may provide benefits like higher security and quickertransactionprocessing, but the network’s centralization may limit the degree of decentralization and raise the possibility of censorship and control. Before establishing a consortium blockchain, it is crucial to weigh the trade-offs thoroughly.
Consortium blockchains are private and permissioned, meaning only approved users can connect to and use the network. The degree of decentralization and the possibility for innovation and growth may both be hampered by this restricted accessibility.
Anyone can join and contribute to a public blockchain, creating a more diverse and decentralizednetwork. However, in a consortium blockchain, just a few pre-selected firms can access the network, which can constrict the opportunity for development and innovation. A more homogeneous network with fewer opinions and ideas expressed may result from fewer participants.
Due to the involvement of numerous businesses, governance arrangements for consortium blockchains are frequently intricate and multi-layered. Due to this intricacy, it may be challenging to agree and judge, which could cause delays and inefficiency. The community of users on a public blockchain often decides decisions using a consensus mechanism like proof of work or stake
With several organizations involved, there is a chance that participants’ objectives may conflict, making it challenging to come to a resolution and act in the network’s best interests.
Consortium blockchain vs hybrid blockchain
Two distinct kinds of blockchain networks, a consortium blockchain and a hybrid blockchain, each have unique properties and use cases.
A private, permissioned blockchain network that a pre-selected group of companies manages is known as a consortium blockchain. This particular blockchain is made to allow for inter-organizational collaboration while yet delivering greater security and dependability. Blockchain consortiums are frequently employed in finance and supply chain management sectors, where the participants must uphold network control and guarantee that only authorized users have access.
A blockchain with hybrid characteristics incorporates features from both public and private blockchains. A hybrid blockchain combines the security and privacy advantages of both public and private blockchains with the decentralization and increased accessibility of a public blockchain. Several applications and sectors can use this kind of blockchain because it is made to be versatile and flexible.
A consortium blockchain, controlled by a pre-selected set of businesses, offers greater security than a public blockchain. On the other hand, a hybrid blockchain can offer even more security because it combines the advantages of both public and private blockchains.
The decision between consortium blockchains and hybrid blockchains will depend on the particular requirements of the use case. Both have advantages and downsides. Consensus blockchains offer greater security and dependability but are harder to use and less decentralized. Conversely, hybrid blockchains offer better adaptation, flexibility, security, and accessibility.