Consortium Blockchain

November 21, 2023 - Around 2 mins mins to read

Understanding Consortium Blockchain

A consortium blockchain refers to a type of blockchain that is specifically created and utilized by a group of corporations. These corporations opt for consortium blockchains when they want to take advantage of the benefits offered by distributed ledgers in terms of exchanging value and information. However, they find public, permissionless blockchains unsuitable for their specific needs.

Consortium blockchains can be considered as a middle ground between public and private blockchains. Public blockchains, such as Bitcoin (BTC) and Ethereum (ETH), are the original and most widely used types. They operate in a decentralized manner, allowing anyone to access their networks and become an equal participant if they choose to do so.

On the other hand, private blockchains are designed exclusively for use within a specific organization. They are not accessible to external entities and are managed in a centralized manner by the organization itself.

Consortium blockchains, also known as collective blockchains, bridge the gap between these two types. They are collaboratively designed by groups of companies that wish to utilize a decentralized network that remains inaccessible to entities outside of the consortium.

Compared to private blockchains, consortium blockchains offer a certain level of decentralization. This is because all companies within the network are independent and can collaborate as equals, without any single node having the power to dominate others.

At the same time, consortium blockchains restrict access from entities outside of the consortium. This ensures the safeguarding of sensitive corporate data and reduces the burden on the network caused by a large number of nodes that might have otherwise participated in it.