Hybrid Blockchain: Working and Benefits

  • Soumyaa Rawat
  • Nov 24, 2021
  • Financial Analytics
Hybrid Blockchain: Working and Benefits title banner

Introduction

 

A blockchain is a way of storing data in a set of nodes connected in a private, secure, and independent manner. 

 

A digital ledger of nodes consisting of data or transactions carried out over the internet, a blockchain can be of various types. Here is a list of the 4 types of blockchain networks. 


This banner enlists the types of blockchains - 1. Public 2. Private 3. Consortium 4. Hybrid

Types of blockchain 


  1. Public Blockchain

 

Permissionless (do not demand permission to access the blockchain) in nature, public blockchains can be accessed by anyone. Such blockchains are completely decentralized in nature as they provide equal access to all nodes of the blockchain regardless of the data. 

 

Features of public blockchain also allow the participants equal access to validate any new nodes or even add them on their own. The popular cryptocurrencies - Bitcoin , Ethereum, and Litecoin are all public blockchain examples. 

 

Mining of cryptocurrencies can also take place on these blockchains. Public blockchains work on the basis of distributed ledger technology that distributes the information in a peer-to-peer network. 

 

(Must read - How does a blockchain work?

 

  1. Private Blockchain

 

As opposed to the 1st type of blockchains, private blockchains work differently. Also known as managed blockchains, private blockchains work in a more restrictive environment as compared to public blockchains. 

 

These blockchains are permissioned blockchain in nature, that is, they demand authorized permission to have access to their data. 

 

Herein, the central authority of the blockchain does not grant equal access to each node and might conceal some layers of data from other participants. 

 

Even though this blockchain uses a peer-to-peer network, it might not necessarily be as decentralized as the public blockchains are. Private blockchains are also known as enterprise blockchains. 

 

(Related blog: Private vs Public Cloud)

 

  1. Consortium Blockchain

 

Also known as federated blockchains, consortium blockchains are permissioned blockchains supervised by a group of organizations, unlike a private blockchain that is governed by a single entity or an organization. 

 

As compared to private blockchains, these blockchains are more decentralized as the authority is shared among a few organizations. 

 

Even though the consortium blockchain architecture enjoys a lot more security, they are difficult to establish as cooperation is needed among a group of organizations to keep it in order. 

 

That said, consortium blockchains share the power among a group of organizations, preventing total control of one organization over such a matter. 

 

  1. Hybrid Blockchain 

 

Yet another type of blockchain, hybrid blockchain, is where the best of both worlds meet. 

 

Wherein organizations are confused between public and private blockchains, they go with hybrid blockchains to carry out their data storage operations. It lets organizations create a private permissioned system alongside a permissionless public system. 

 

Broadly, transactions are not made accessible to all in such blockchains but can be made public for verification purposes. It is important to note that even though the hybrid blockchain is owned by a single entity, it still cannot be altered by that organization. 

 

 

Hybrid Blockchain 

 

Out of all the blockchains that we have discussed, we shall now dig deep into the concept of hybrid blockchain. In this blog, we will understand how a hybrid blockchain works and its benefits. 

 

In simple terms, a hybrid blockchain is a combination of private and public blockchains. By blending the elements of these two kinds, a hybrid blockchain is created. 

 

A revolutionary technology in the domain of blockchain technology, a hybrid blockchain architecture is a mid-point between public and private blockchains. Since we have already understood what public and private blockchains are, it might be easier for us to explore this concept. 

 

Since both, public and private blockchains have some drawbacks, the hybrid blockchain technology clubs the benefits of both these kinds and gives way to the structure it has in today's time. 

 

One of the most popular hybrid blockchains in the contemporary scenario is XinFin. A unique network for Ramco Systems, Xinfin is a hybrid blockchain developed on the grounds of Ethereum (public blockchain) and Quorum (private blockchain).  

 

"The private blockchain is used to generate a hash of transactions which is later verified using the public blockchain."

Using Hybrid Blockchain 

 

How does it work?

 

In essence, a hybrid blockchain has 2 interfaces - a public blockchain that helps to verify data stored in between the ledgers of the private blockchain. 

 

By combining the features of the public blockchain and private blockchain, hybrid blockchain has a set of features that we will be discussing right here. 

 

  1. Data Security

 

The biggest setback of a public blockchain is that it does not offer enough security to the transactions stored in the ledger. On the other hand, this is not a problem with a private blockchain. 

 

Therefore, a hybrid blockchain provides data security in its entirety. Data is stored safely in the nodes and transactions are also kept away from public alterations. 

 

  1. Decentralized Access

 

Another feature of this type of blockchain is that it gives a more decentralized access to the participants. Since there is a big difference in the way public and private blockchain cater to decentralization, a hybrid blockchain leaves scope for decentralization when and where required. 

 

That said, an organization in a hybrid blockchain can keep data inaccessible from the public, but the same can be made public for verification purposes. 

 

  1. Transparent Handling of Transactions

 

The third feature of hybrid blockchain is that it gives a more transparent handling of transactions as compared to private blockchains. 

 

Since there is no access in the case of private blockchains, hybrids perform better in this respect.   

 

"The hybrid blockchain architecture is distinguishable from the fact that they are not open to everyone but still offers blockchain features such as integrity, transparency, and security."

Benefits of Hybrid Blockchain 

 

Benefits of Hybrid Blockchain 

 

After learning the features, it is time to discover the pros of this kind that has so much to offer to the world. In this segment, we will be discussing the benefits of hybrid blockchain. 

 

  1. Flexible Settings

 

One of the biggest benefits of hybrid blockchain is that it has flexible settings. 

 

While there is a strict blockchain infrastructure in other types of blockchains, hybrid blockchain offers a comparatively flexible process of customizing the ledger according to one’s own needs and that of the organization’s. 

 

In a way, one can always alter the level of decentralization, transparency, and security required in the blockchain. 

 

Perhaps the biggest benefit of a hybrid blockchain is its combined set of features that make it equally similar to public and private blockchains. 

 

(Also read: What is Blockchain Mining?)

 

  1. Reduces Transaction costs

 

Another advantage of hybrid blockchain is that it reduces costs in the transaction process. 

 

Since verification in a private cum public blockchain can be difficult to get through, the influential nodes in the blockchain can somehow influence the authority to verify the transaction nodes and thus, make the process more transparent. 

 

This helps in reducing the transaction costs as one does not have to pay other blockchain systems to verify the transaction process. 

 

Neither does a hybrid blockchain require more charges for getting your transaction done, nor does it require any other certifications. 

 

  1. Advanced Data Security

 

Since the middle road between public and private blockchains is hybrid blockchain, there is some key takeaway from this truth. 

 

That is, hybrid blockchains inherit the feature of security from private blockchains while maintaining the transparency from the legacy of public blockchains. 

 

To put it simply, hybrid blockchains offer stricter data security protocols as compared to public blockchains and offer a bit more leniency as compared to private blockchains. 

 

All in all, the advantage of data security is extremely crucial as it allows one to keep their transactions safe and sound without worrying if someone else has the access to it. 

 

What’s more, the identity of the transaction holder is also not revealed in the process which ensures that identities are not leaked until the transaction is carried out between two people in a blockchain. 

 

  1. Verifiable Transactions

 

Another facility cum advantage that hybrid blockchains offer is verifiable transactions feature. Since the security protocols are a bit stricter in this type of blockchain, the verification process is not as easy as that of public blockchain. 

 

Yet, verifiable transactions are still a thing in this scenario as the organization in authority can make the transaction nodes accessible to the public blockchain and perhaps enable verification of transactions. 

 

This is also important in order to check whether the transactions have been altered or not. 

 

(Top reading: Blockchain ETFs)

 

  1. High Speed Operations 

 

Most important of all, hybrid blockchains offer high speed operations as compared to public blockchains and are way much easier to handle as compared to private blockchains. 

 

All in all, hybrid blockchains can be seen as the best of the both worlds, considering that they are a combination of the best features of both the technologies. 

 

To sum up, blockchain technology has evolved a lot in recent times. 

 

While hybrid blockchain technology may seem to be a thing of the present, it is surely the future as well as it goes on to become more and more advanced. 

 

With many more additions in the system, hybrid blockchains are increasingly becoming the most wanted choice among all organizations and corporations dealing with technology on a day-to-day basis.  

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