Exploring the utility and scalability of different types of blockchains

Different types of blockchains - Exploring scalability and utility

Blockchain technology and its versatile use cases across various industries are well-known and often discussed. However, because some of the most popular blockchains do not scale, alternatives have emerged that specialise in certain aspects of blockchain.

In this article, we present the different types of blockchain. Next we get to the bottom of the narrative of whether different types of blockchains are useful and sustainable.


  • There are different types of networks that identify themselves as blockchains: public, private, hybrid, and consortium.

  • Public blockchains are open to anyone and use mechanisms like proof-of-work or proof-of-stake for consensus.

  • Private blockchains are accessible only to select participants and offer more control and privacy.

  • Hybrid blockchains combine public and private features based on specific requirements.

  • Although many identify as blockchains, beyond name many fail at the core characteristics of blockchain.

  • Of those that do match the criteria of what a blockchain is, utility is still few and far between, and scalability even scarcer.

  • Bitcoin's protocol is designed to support a variety of interaction types beyond monetary transactions, including smart contracts, or self-executing transactions.

  • Bitcoin can be used to create public records for various types of transactions.

  • Bitcoin also allows us to attribute value to data down to sub-cent prices, and make it tradable accordingly.

  • Privacy is inherent to Bitcoin as identity is firewalled through pseudonyms. Increased privacy can be achieved through encryption and selective data storage. As more data is stored on the blockchain over time, scaling actually enhances privacy.

  • Private blockchains have little advantage over traditional data storage solutions regarding security.

  • BTC's scalability has been limited by block size and the lack of a scaling solution.

  • Bitcoin SV offers scalability by allowing for a larger number of transactions without significantly increasing costs and energy consumption.

The Different Types of Blockchains in Overview

In general, there are private and public blockchains, while hybrid blockchains try to combine different aspects of private and public blockchains for specific use cases. A special subcategory of hybrid blockchains is consortium blockchains, that are used within a group of organisations and enterprises.

Public blockchains are open to anyone and operate in a decentralised manner. They use mechanisms like proof-of-work or proof-of-stake to achieve consensus. They are commonly used to enable secure transactions, decentralised applications, and smart contracts. However, there are serious misunderstandings around public blockchains that we will explain in more detail in the next section of this article.

Private blockchains, like private networks, are accessible only to select participants and are controlled by a central party. They are used in industries like supply chain management, healthcare, and finance to facilitate secure data sharing and trust among known participants. Advantages include permissioned access to records, faster transaction speeds and greater control.

Hybrid blockchains combine public and private features based on specific requirements. They allow the customisation of privacy and accessibility levels. Advantages include tailored solutions and flexibility.

Consortium blockchains are operated by a group of organisations and strike a balance between decentralisation and privacy. They find applications in industries where multiple organisations collaborate, providing secure data exchange between trusted entities. Advantages include efficiency, shared governance and customisable privacy.

Bitcoin SV blockchain - a tool of versatile utility

A common belief is that Bitcoin was mainly meant for monetary transactions. A superficial study of the white paper: Bitcoin: A Peer-to-Peer Electronic Cash System might lead to this conclusion. However, Satoshi Nakamoto pointed to the versatile utility of the Bitcoin protocol already in 2010:

‘The design supports a tremendous variety of possible transaction types that I designed years ago. Escrow transactions, bonded contracts, third-party arbitration, multi-party signature, etc. If Bitcoin catches on in a big way, these are things we’ll want to explore in the future, but they all had to be designed at the beginning to make sure they would be possible later.’

As an electronic cash system, Bitcoin is not meant to solely facilitate monetary transactions but to support data transactions in general. Rather than a currency system for obscure and illegal transactions, Bitcoin is a network protocol that allows the creation of public records for any kind of transactions. As it creates public records, it is not inherently suited for untraceable, censorship-resistant transactions.

Bitcoin is much more suitable for law-abiding and regulated transactions, which - if necessary - can also be arbitrated by authorities. However, this does not mean that Bitcoin is not suited for businesses and services that require user or customer data to be private.

Privacy on blockchain

Using the blockchain as an infrastructure for services or applications does not mean all data has to be stored on-chain or that this data cannot be encrypted when stored on-chain. The ideal handling of data varies from use case to use-case. Blockchain-as-a-solution service providers help architect solutions for every specific use case. It is even possible to build a private, permissioned ledger on top of the public blockchain, as Bitcoin SV scales.

Therefore, the common belief that private, permissioned blockchains are necessary to allow for privacy, is incorrect. Instead, enterprises that build on a private, permissioned blockchain deprive themselves of the advantages of a public blockchain. One of which is its security through its public, immutable records.

As more data is stored on the blockchain over time, scaling actually enhances privacy. With an overwhelming amount of information, it becomes difficult to sift through all the data, but access to relevant private keys can still prove certain facts.

Blockchain security

A public blockchain like the Bitcoin SV blockchain is more secure than private blockchains due to its distributed consensus mechanism, public transparency, scalability, economic incentives, and trustless auditability, making it resilient against attacks and manipulation.

In contrast, a private blockchain has few more advantages over traditional data storage solutions like cloud storage or any databases. The lack of security is caused by the lack of immutability through Bitcoin’s robust consensus mechanism and its public auditability, as the nodes of a private blockchain can be attack vectors just like the infrastructure of any other private storage solution.

Blockchain scalability

Scalability should be the starting point for the search for the right blockchain for any application beyond a hobby. By limiting the block size of Bitcoin and focussing on second-layer scaling solutions, BTC developers deprived Bitcoin of its inherent scalability.

Bitcoin SV, on the other hand, has already lifted all artificial limits on block size encouraging miners to adapt their own limits to market forces.

Micha Sprick, Editor
Micha Sprick