You’ve probably been seeing several articles about cryptocurrency and NFTs, and you must be wondering what the underlying technology powering this incredible technology is and how it works. We know the benefits of cryptocurrencies and the different things you can do with owning one of them. One notable example is that you can bet on a game slot online at casinos.
To understand the technical part of cryptocurrency, you need to know the technology powering the digital assets. In this case, it is Blockchain. All the cryptocurrencies operate with the aid of an underlying technology called Blockchain, a series of nodes connected. It also applies to NFTs.
There are several parts to a blockchain, and in this guide, we will be covering four types of blockchain structures that power your cryptocurrencies and NFTs. So, let’s dive right into it.
The public blockchain is open to anyone with an internet connection. They can become an authorized node since a public blockchain is non-restrictive and permissionless. The user has access to the current and past records on the chain. In addition, they have to perform mining operations, and these are usually sophisticated calculations needed to verify transactions and include them in the ledger.
The valid records on the network are not open to modification because the source code is open-source, meaning that anybody can verify the transactions, discover bugs, and even offer fixes. This kind of blockchain is perfect for organizations that want to provide transparency and trust, including NGOs and social assistance groups. Most private enterprises avoid this kind of blockchain because of its public nature.
A managed or private blockchain operates in a restricted mode like a closed network or can be controlled by one entity. Although it functions almost similar to the public blockchain systems as it also uses peer-to-peer connectivity and decentralization, it is smaller. Managed blockchains are usually closed to a group of users in a particular team or organization.
Instead of allowing everyone with an internet connection to join the network, supplying a computer, it is often run on a smaller network within the group. It is called permissioned blockchains and business blockchains other than managed or private blockchain. Undoubtedly, these names explain how it works.
A consortium blockchain, also referred to as a federated blockchain, is a combination of private and public blockchain concepts. However, it involves different members working in a group on a more decentralized network to make it better. In that case, a consortium blockchain is a private chain with restricted access to one group, eliminating the hazards that come with a private blockchain owned by a single business.
This kind of blockchain uses preset nodes to regulate consensus methods, and it has a validator node responsible for starting, receiving, and verifying transactions. And member nodes can initiate or receive these transactions on the blockchain. As a result, it perfectly works for a more specific team in the organization.
Organizations that want to have the best of both worlds would often employ hybrid blockchain. It is a type of blockchain that has public and private blockchains characteristics. It lets businesses develop a private, permission-based system with a public, permissionless system allowing them to regulate those that can see data stored on the blockchain and what is made public.
In hybrid blockchains, records and transactions are not usually public. However, they can be verified when it is needed through smart contracts. In this case, confidential information is stored and secured, but it remains verifiable. Although a private entity can own a hybrid blockchain, it cannot modify transactions.
Blockchain is the leading technology for cryptocurrency and NFTs, and if you want to understand how everything works, you need to understand blockchain. Although it is a simple concept of peer-to-peer connections, there are plenty of complex computations going on underneath.
Undoubtedly, you can build on a blockchain network, and most projects in the industry go on the public and hybrid blockchains. You can find most NFT projects on the Ethereum blockchain, a public blockchain technology.