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Blockchain Semantics Blog Consortium Or Federated Blockchain

Consortium Or Federated Blockchain

By Swati Keswani | April 6, 2018, 7:59 a.m. GMT

Consortium or Federated Blockchain

We have discussed public and private Blockchain networks in the previous article. In this article, we will discuss how is the consortium or federated Blockchain different from the rest.

Consortium and federated Blockchain is one and the same thing with different nomenclatures. Consortium or federated Blockchain is partly private. It differs slightly from a fully private network. Let’s see how Vitalik Buterin defines it:

“So far there has been little emphasis on the distinction between consortium blockchains and fully private blockchains, although it is important: the former provides a hybrid between the ‘low-trust’ provided by public blockchains and the ‘single highly-trusted entity’ model of private blockchains, whereas the latter can be more accurately described as a traditional centralized system with a degree of cryptographic auditability attached.”

The above statement from Vitalik Buterin suggests that a consortium Blockchain draws properties from public and private Blockchain networks. Think of it as a private network which is “slightly public”. In a consortium network, the power does not reside with a single authority. It is operated under the leadership of a group. So, a consortium Blockchain is private for a group of companies or entities.

Unlike Public Blockchain network, Consortium network does not allow any person with the Internet connection to participate in the process of verifying transactions. Consortium Blockchains are faster and provides higher scalability and transaction privacy. Consortium Blockchains are mostly used in the banking sector. The consensus mechanism is maintained by a pre-selected set of nodes. Typically, these nodes would be from all the entities forming the consortium. Even in a private network, the nodes are preselected but all the nodes belong to a single entity or company.

For example, imagine a consortium of 15 financial institutions, each of which represents a node in the network and of which 10 must sign every block in order for a block to be valid. The right to read the Blockchain may or may not be public, or restricted to a set of participants only.

This platform would be great for collaborations at the organization level. This type of Blockchain tries to remove the sole authority which gets robed in the single entity by using private Blockchain network. 

Some of the Examples are:

Public Blockchain: Bitcoin, Litecoin, etc.

Private Blockchain: Bankchain

Consortium Blockchain: r3, EWF.

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