Introduction
Blockchain technology has been expanding rapidly over the last few years. You might have seen some experts talk about various applications of blockchain other than just cryptocurrency. Blockchain is not just related to crypto; it is a technology that helps store and securely share data sets. Each block contains a data set that is added to the block using complex algorithms. These algorithms are called hash and provide cryptographic security to the block. Each blockchain allows participants, called nodes, to access and edit the data. Public blockchains allow anyone to become a node, while private ones define specific criteria.
Now, constituting some parts of both, there is a consortium blockchain that only some people understand so far. In this post, let’s see an answer to the question ‘What is a consortium blockchain?’
What is a Consortium Blockchain?
As mentioned just now, there are three kinds of blockchains. One is where every action is public, and anyone can join as a node. The other one is owned by a private entity and accepts nodes only after certain criteria are met. Both these types of blockchains are more popular in the cryptocurrency sector. However, there is also a consortium blockchain between these two, broadening blockchain technology’s scope.
When asked ‘what is a consortium blockchain?’, people often confuse it with a private blockchain. Like a private chain, a consortium blockchain is privately owned but not by a single entity or individual. Instead, a group of individuals from different sectors or a group of companies owns such a chain. It also differs in functions since a consortium blockchain is used to collaborate data from multiple sources. It helps keep the flow of data secured and efficient between entities.
How Does a Consortium Blockchain Work?
Now that we know the answer to ‘what is a consortium blockchain?’, let’s move on to its working mechanism. A collection of companies or individuals runs a consortium blockchain network. More people might join a consortium and help manage an established structure and shared data rather than beginning from scratch.
By collaborating to find solutions to shared issues, businesses may cut expenses and promote development. A consortium blockchain enables different organizations to share duties, resulting in the coordination of operations, information sharing, and prevention of job duplication.
A consortium blockchain features a multi-party consensus. All activities are confirmed by unique pre-approved nodes rather than by an entire global community, like in the case of a public blockchain like Bitcoin.
A consortium blockchain often employs a voting-based method, which results in minimal latency and efficient performance due to the small number of known members. While only a supermajority of nodes may contribute to a block, all nodes can write and see transactions. This regulation must be followed in order to insert a block into the chain.