Advantages And Disadvantages Of Different Types Of Blockchain

If you want to become an expert Crypto trader, then it’s important that you first and foremost understand blockchain technology. This is because this is the technology by which all the transactions are made across a network of connected computers and recorded as well as secured in the crypto industry. So let’s look at what is a blockchain technology. Let’s explore the possibilities of blockchain technology.

What is a Blockchain?

Simply put, a blockchain is a network of computers that record and secure crypto transaction data in a way that it becomes almost impossible to hack or steal into the data. Each of the computers connected to this network also serves as a real-time ledger for the transactions recorded – each system contains a copy of the same. This way, any loss of data can be easily compensated for without a breach in the trading flow.

A primary feature of a blockchain is that it focuses on decentralising the entire network by distributing its data and functions to all the computers connected to the network. This also helps in cutting off the mediator processing and transaction charges a great deal. 

Different Types of Blockchains

There are broadly two types of blockchains. They are as follows:

  • Private – This type of blockchain network is owned and controlled by one person who acts as a central authority and takes responsibility for the security of all the data that flows across the network, in exchange for a transaction fee.
  • Public – This type of blockchain is fully decentralised, i.e., owned by no one, and is fully open to the public. People who create new blocks and manage these blockchains are called “miners” and they receive a small amount of crypto assets as fees for the services they render.

Besides these two types, two new types have been introduced recently. They are as follows:

  • Consortium – This type of blockchain is owned and managed by a group of individuals, coworkers, or organisations and acts as a centralised system. It follows a hybrid method of decentralisation along with a managing authority.
  • Hybrid – As the name suggests, it is a combination of a centralised blockchain that allows some permissionless features as a public network does.

Advantages of Different Types of Blockchains

Each type of blockchain has its own advantages:

  • Private – New and budding traders get to learn different tips and tricks of crypto trading through the centralised work pattern of a blockchain even as they never feel the burden of managing and securing their transaction data themselves. Since crypto is a relatively new concept, private networks are more preferred by users worldwide.
  • Public – Advanced and experienced traders who desire for complete control of their transactions prefer using a public network. The private key to decode encoded data is also a proof of ownership for a particular token and is provided to the users in a public blockchain, thus giving the users full control of their assets.
  • Consortium – Since this type of blockchain is maintained by a group, it provides greater features of decentralisation along with a sense of security. This is because a user doesn’t have to take full end-to-end responsibility for everything.
  • Hybrid – When a private network allows some public-like features such as providing the private key for each purchase and rights to create new blocks and contribute to the system, it adds up as an advantage of a hybrid blockchain.

Disadvantages of Different Types of Blockchains

A common disadvantage of every blockchain is the amount of computing power required to manage all the data and the electricity burned due to it. Apart from this, each of the types has its own disadvantages to a select group of users. They are as mentioned below:

  • Private – Due to its controlling authority, the decentralisation aim is lost from this type of blockchain network. Furthermore, when a lot of data accumulates in one place, the chances of hacking through malicious codes become that much more likely.
  • Public – New users who do not have extensive knowledge in crypto trading might find this type of blockchain very difficult to handle since a lot of responsibility comes in for an individual. Losing the private key is one of the main risks embedded in this type.
  • Consortium – The group of people in authority might face coordination issues among themselves. It becomes evident that not all the members of this group would have access to the same amount of computing power to equally manage the network. Added to this,internal conflicts can pose a greater risk to the integrity of the network.
  • Hybrid – It becomes very hectic for the central authority to maintain a real-time ledger of all the users based on their chosen features from the network. Except for this, hybrid blockchain stands as the safest type of all.


Blockchain solves many problems in a centralised system, such as transactions through mediators, transparency, and maintaining copies of the same database. Blockchain is a promising technology that can fight the risks of hacking and cyber theft. Thinking of entering the crypto world? Come and start trading at Zebpay, India’s largest and oldest crypto exchange.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

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