This article discusses some of the well-known blockchains available besides Bitcoin and Ethereum and mentions that new blockchains are going live every day. It explains the difference between public and private blockchains and highlights the importance of central permission for private networks. The article also mentions smart contracts and their vast potential and points out that Ethereum is the biggest smart contract market. Lastly, it discusses the different consensus mechanisms that control the verification and addition of blocks of transactions to the blockchain and highlights the complexity of these mechanisms.
Exploring Different Blockchains and their Features
As the world of cryptocurrency continues to evolve, more and more blockchains are coming into existence to meet diverse needs. Here are some noteworthy blockchains that are gaining popularity:
What are public blockchains?
Public blockchains are open to everyone and allow anyone to participate. They are decentralised and do not require permission or authorisation to access. Bitcoin and Ethereum are examples of popular public blockchains.
What are private blockchains?
Private blockchains are operated by specific businesses or industry associations, and access is granted permission. They are centralised, and the level of access and control is limited.
Smart contracts are one of the most significant advantages of blockchain technology. These computer programs run on blockchains and allow for secure, decentralised, and self-executing transactions. Ethereum has revolutionised smart contract development, and it still holds the dominant market position for smart contracts.
The validation and addition of blocks of transactions to the blockchain are controlled by various consensus protocols. The consensus mechanism is the backbone of blockchain design and can be highly complex. Proof of work (PoW), Proof of Stake (PoS), Delegated Proof of Stake (DPoS), and Byzantine Fault Tolerance (BFT) are some of the popular consensus mechanisms in use today.
What is Proof of Work (PoW)?
PoW is a consensus mechanism used by the Bitcoin blockchain. Miners on the Bitcoin network compete to solve complex mathematical problems, and the first one to arrive at the correct solution is rewarded with cryptocurrency.
What is Proof of Stake (PoS)?
PoS is another consensus mechanism, where validators are chosen based on the amount of cryptocurrency they hold. Validators will earn rewards for creating new blocks if they are behaving correctly.
What is Delegated Proof of Stake (DPoS)?
DPoS aims to be more efficient than PoS. Voting by cryptocurrency holders is used to allocate block-producing nodes instead of being chosen based solely on the amount of cryptocurrency held.
What is Byzantine Fault Tolerance (BFT)?
BFT consensus protocols aim to provide guaranteed finality, meaning that once a block is added to the blockchain, it will not be reversed. It is a popular mechanism used in private blockchains.
The growth of blockchain technology shows no signs of slowing down. Keeping up-to-date with the advancements and learning the different use cases of each blockchain will help investors and businesses make strategic decisions. The blockchain industry is still in its early stages, making it an exciting space to watch.