A consortium blockchain is a permissioned ledger where information can only be shared with a small group of members. A few select nodes also govern the federated ledger.
There are different types of blockchains in existence. The most prominent ones are public blockchains, the most notable of which is the most famous, Bitcoin. Public blockchains have open-source code and are accessible to anyone with an internet connection. On the other hand, private chains generally serve specific enterprises and are under the control of particular individuals or organizations.
Now, picture a hybrid of the two systems. That is what a consortium blockchain entails. It is similar to a private chain in that there is a limited number of individuals or organizations with access. Nonetheless, it has a similarity to the public chains in that it aims to replicate the cooperation effects of the latter type of chain. Therefore, consortium chains can achieve cooperation within a more limited range. Such solutions are excellent for organizations intending to revamp accountability, workflow, and transparency. Consortium chains intend to realize the cooperation and transparency of the blockchain without the consensus-building challenges of public chains.
The Difference with a Private Blockchain
The consortium blockchain differs from a private one because the former offers decentralization which is absent in private ledgers. This allowance means any member of the multiple organizations can join the blockchain and access information since the decision on how the consortium operates is determined by connected nodes.
The idea of a consortium blockchain was to allow enterprises to quickly collaborate without spending too much on transaction fees while also keeping information private.
What Are the Key Features of a Consortium Blockchain?
The consortium blockchain offers elements of decentralization while remaining private. This ledger is designed to foster collaboration and takes advantage of features that are realized from the blockchain setup. These include faster transaction processing speeds boosting user experience, higher scalability since the number of validating nodes is controlled, and low transaction costs, which will be maintained at certain levels regardless of the number of connecting users sourced from multiple collaborating organizations. Consortium blockchains are also differentiated by low energy consumption. For economic reasons, the consensus algorithm adopted is permanently aligned for energy efficiency, which keeps operational costs down. More importantly, consortium blockchains are known for being relatively secure without risks of majority attacks or DDoS attacks since participating organizations have a high degree of transparency.
What Are The Advantages Of A Consortium Chain?
A consortium blockchain offers the best of both worlds. It allows an organization to control its blockchain without making it a complete monopoly effectively. Members of the organization can still participate in decision-making and have a picture of the organization’s operations.
Accordingly, the blockchain offers scalability and efficiency to decision-making. There is little risk that the blockchain could struggle with data management for a specific organization. Validation is only by recognized members of a small network of nodes. This restriction prevents external attempts to take over the blockchain, unlike public blockchains where everyone can participate. In general, it allows blockchain community members to participate effectively and efficiently without the drawbacks associated with public blockchains.