Types of Blockchain Networks

Why This Matters

Understanding blockchain network types is fundamental to everything else you'll study in this course—from consensus mechanisms to smart contract deployment to enterprise adoption patterns. You're being tested on your ability to match the right blockchain architecture to specific use cases, which means knowing the trade-offs between decentralization, privacy, scalability, and control. These aren't just theoretical distinctions; they determine whether a solution will work for a global cryptocurrency, a hospital's patient records, or a multi-company supply chain.

Don't just memorize the five network types. Know why each exists, what problems it solves, and when you'd choose one over another. Exam questions will often present a scenario and ask you to justify which network type fits best—or compare two types and explain their fundamental differences. The key insight: blockchain architecture is always a balancing act between openness and control.

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Open Networks: Maximizing Decentralization

These networks prioritize trustless participation—anyone can join, validate, and transact without permission from a central authority. The trade-off is speed and efficiency for maximum censorship resistance and transparency.

Public Blockchains

• Permissionless access—anyone can read, write, and participate in consensus without approval, making these networks truly open and censorship-resistant
• Decentralized security relies on distributed nodes and economic incentives (mining/staking rewards) rather than trusted authorities
• Immutable by design—once transactions are confirmed, they cannot be altered, providing the strongest data integrity guarantees but zero privacy

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Controlled Networks: Prioritizing Privacy and Performance

When organizations need blockchain benefits without public exposure, they restrict who can participate. Centralized or semi-centralized control enables faster consensus, lower costs, and confidential transactions.

Private Blockchains

• Restricted membership—only authorized participants can access the network, with a single organization typically controlling governance and validation
• High throughput results from fewer nodes and simplified consensus mechanisms, often processing thousands of transactions per second
• Enterprise-focused for internal use cases like supply chain tracking or inter-departmental data sharing where public transparency isn't needed or wanted

Permissioned Blockchains

• Selective access control—participants must be vetted and approved, but the network can include multiple organizations rather than just one
• Regulatory compliance is easier to achieve since identity is known and governance rules can enforce legal requirements (critical for finance and healthcare)
• Customizable governance allows network operators to define who can validate transactions, who can read data, and how rule changes are approved

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Collaborative Networks: Balancing Multiple Stakeholders

When no single organization should have complete control but full public access isn't appropriate, collaborative models emerge. These architectures distribute trust among known parties while maintaining barriers to outside participation.

Consortium Blockchains

• Shared governance—multiple pre-selected organizations jointly manage the network, with no single entity able to dominate decision-making
• Eliminates single points of failure since validation and control are distributed across consortium members, increasing resilience and trust
• Industry-specific applications dominate, including supply chain networks, interbank settlement systems, and energy trading platforms where competitors must cooperate

Hybrid Blockchains

• Selective transparency—organizations choose which data remains private and which gets anchored to a public chain for verification
• Interoperability features allow hybrid networks to bridge private operations with public blockchain benefits like timestamping and external auditability
• Flexible architecture supports use cases where some transactions need privacy (internal records) while others need public proof (certifications, compliance attestations)

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Quick Reference Table

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Self-Check Questions

1. A hospital system wants to share patient records between its facilities while meeting HIPAA requirements and maintaining complete control over access. Which network type best fits, and why would a public blockchain be inappropriate?

2. Compare consortium and private blockchains: what do they share in terms of access control, and what fundamentally differs about their governance structure?

3. An exam question describes a scenario where a company needs to keep transaction details confidential but also wants to publish cryptographic proofs of those transactions to a public chain. Which network type addresses this, and what's the key architectural feature that enables it?

4. Why do public blockchains typically have lower transaction throughput than private blockchains? Connect your answer to the trade-offs between decentralization and performance.

5. Three competing shipping companies want to create a shared tracking system where no single company controls the data. Identify the most appropriate network type and explain why a private blockchain controlled by one company would undermine the project's goals.