The popularity of Bitcoin has made blockchain technology no longer obscured, and there are thousands of applications based on this. Although they are all applications of blockchain technology, there are still some differences in different scenarios. In many cases, blockchain does not mean that it is completely decentralized and is not completely open and transparent. According to the different degree of openness of blockchain, blockchain can be divided into three namely Public chain, Alliance chain and Private chain.
The public chain is usually also called Permissionless Blockchain. Anyone can participate in the maintenance and accessing to the data on the blockchain, easy to deploy applications, and completely decentralized without being controlled by any institution.
The public chain is a fully decentralized blockchain. It uses cryptography to ensure that transactions cannot be tampered with. At the same time, it uses cryptography verification and economic incentives to establish consensus in an unfamiliar network environment to realize decentralized credit mechanism. The consensus mechanisms in the public chain are generally Proof of Work (PoW) and Proof of Stake (PoS).
The public chain has the potential to break the current centralized business model through decentralized solutions, and it does not need to maintain a server or management system, which fundamentally reduces the cost of creating and running decentralized applications (dApp).
Alliance chain is a kind of blockchain that requires registration permission. This kind of blockchain is also called Permissioned Blockchain. The alliance chain is limited to the participation of alliance members, and the scale of the alliance can be as large as between countries, or between different institutions and enterprises.
The number of nodes is much smaller compared to public blockchain, such as bitcoin blockchain, since the nodes can join the network only when they are trusted.
The read and write permissions and the permission to participate in accounting are determined according to the rules of the alliance. The entire network is jointly maintained by member institutions, and network access is generally accessed through the gateway nodes of institutions, and the consensus process is controlled by pre-selected nodes. Therefore, the alliance chain generally does not use the proof-of-work mining mechanism, but mostly uses consensus algorithms such as Proof of Stake (PoS), PBFT (Practical Byzantine Fault Tolerant), and RAFT.
Compared with the maximum 3-20 transactions per second completed by the public chain, the alliance chain can reach 1,000-10,000, the transaction speed is faster and the transaction cost is greatly reduced.
The alliance chain can solve settlement problems, reduce the cost and time of settlement between the two parties, and is suitable for B2B scenarios such as transactions and settlements between institutions. Therefore, the financial industry is where alliance chain is most widely used. One of the most well-known is the R3CVE organization, the R3 Alliance, which has more than 50 banking institutions including Citibank, Ping An Bank of China, and Bank of New York.
Another scenario that is often used with alliance chain is supply chain alliance. Instead of using an open source public network, entities that involved in this scenario are business partners or venders and customers, with more or less trust basis.
Private chains, which are limited to enterprises, state agencies or individuals, cannot completely solve the trust problem, but can improve auditability. It is often used for internal database management, auditing, government budget and execution, or government industry statistics, etc. They need to be transparent to each other, but not to the public.
The value of the private chain is mainly to provide a secure, traceable, non-tamperable, automatic execution computing platform, which can prevent both internal and external security attacks on data, which is difficult to achieve in traditional systems.
The public chain, completely decentralized, has no worries about its use in all walks of life, and it has become a general trend now; alliance chains are connecting trusted parties, and because of the transparency of the blockchain, there is no need to worry about who will shoot in the back; private chain is able to support more personalized customization, more transparent and safe.
Although the classifications are different and the application fields are different, they all benefit a lot from the blockchain technology. By leveraging different attributes of blockchain technology to different extents, public chain, alliance chain and private chain have all proved its respective importance in modern business and people’s life. As a newly developed industry, there’s still some limitations for all of them, but the future is bright.