Difference Between Hybrid and Federated Blockchains

Blockchain technology has changed the way we manage and capture data by offering decentralized solutions across industries. However, blockchains come in different types, each tailored to specific needs and functionalities. This guide will help you understand the differences between hybrid And federated blockchains just like the previous one was about public versus private issuesso you can determine which one best suits your requirements.

1- A quick reminder of what a Blockchain is

A blockchain is a digital ledger that records transactions and data securely, transparently and decentralized. Its origins date back to the 1980s, but rose to prominence with the launch of Bitcoin by pseudonymous creator Satoshi Nakamoto. Blockchain technology improves on traditional ledger systems by enabling secure and efficient data processing without the need for intermediaries.

2- Types of Blockchains

Blockchains can be categorized based on their usage and control mechanisms:

• Public
• Private
• Hybrid
• Federal

Hybrid blockchains:

A hybrid blockchain combines features of both public and private blockchains. It allows certain parts of the blockchain to be accessible to the public, while other parts remain private and restricted. This combination provides flexibility, allowing organizations to control access to specific data while still benefiting from the transparency and decentralization of public blockchains.

• Main features:
  • Controlled access: Organizations can determine which data is public and which remains private.
  • Decentralization & Centralization: Although parts of the network are decentralized, other parts can be controlled by specific entities.
  • Flexibility in usage scenarios: Useful in industries where some data must be confidential, while other data can be transparent (e.g. healthcare or finance).
• Advantages:
  • Enhanced privacy with the ability to publicly verify data when necessary.
  • Scalable and efficient thanks to fewer public nodes.
• Challenges:
  • Balancing public and private aspects can be complex.
  • Less transparency compared to fully public blockchains.

Federated blockchains:

A federated blockchain, also called a consortium blockchain, is a type of private blockchain where control is shared by a group of organizations rather than a single entity. In this model, only selected participants (organizations or nodes) are authorized to validate transactions and maintain the ledger.

• Main features:
  • Allowed Network: Only specific, pre-approved participants can access the blockchain and participate in consensus.
  • Collaborative control: Multiple entities share control of the network rather than a single authority.
  • Efficient and safe: Offers higher efficiency and safety for certain usage scenarios as it is not completely open.
• Advantages:
  • Greater scalability compared to public blockchains because fewer participants handle validation.
  • Increased privacy and control over network access.
• Challenges:
  • Centralization risks because control is limited to a few participants.
  • Trust must be established between all entities involved in managing the network.

3- Usage scenarios of hybrid and federated blockchains

• Hybrid blockchains: Often used in industries such as supply chain management or real estate, where some data must remain confidential while other data can be shared openly.
• Federated blockchains: Common in industries that require collaboration between multiple organizations, such as banking, insurance or government services.

4- Difference between hybrid and federated blockchains

Both hybrid and federated blockchains offer unique benefits and challenges. Hybrid blockchains excel at balancing privacy and transparency, while federated blockchains offer collaborative control and efficiency. Your choice between these will depend on your specific needs, whether you require flexible access control or shared management across multiple organizations.