What is Consortium Blockchains and What Purpose do They Serve?

A consortium blockchain is a relatively new approach for businesses to use Satoshi’s blockchain technology. If public blockchain is open to everyone and private blockchain is generally used by a single company, consortium blockchain is a mix of the two, but it is closer to the private form of a distributed ledger.

The basic concept is to scale the effect of collaboration to meet the problems of a certain industry. This develops a beneficial network that includes not just business partners but also competitors. This is supported by Deloitte’s study, which found that 74% of companies are involved in or interested in joining a blockchain consortium with competitors.

Instead of starting from scratch, entrants might join a consortium and join the existing structure and shared data. At the same time, by working together to solve shared challenges, businesses may save money and time on development. Finally, coordination of activities and sharing of knowledge helps to minimize duplication by allowing various topics to share duties rather than duplicate labor.

Consensus

Standard Proof-of-Work and Proof-of-Stake consensus algorithms are well-suited to public platforms since they are intended for trustless contexts. They do, however, come with a speed penalty, probabilistic finality, and 51 percent-type assaults.

In a consortium blockchain, there are fewer known members. It guarantees minimal latency and excellent performance because it is frequently a voting-based system. Every node can write and read transactions, but no one node may add a block. Every node (or supermajority) must confirm that block to do so. The block cannot be inserted if this rule is not met.

Consortia Blockchain’s Benefits, Risks, and Costs

What are the advantages of a consortium blockchain now that we’ve covered the fundamentals?

Pros:

The consortium blockchain is completely controlled by a single organization, yet it is immune to monopoly. This control allows each member to set their own rules, amend or cancel erroneous transactions, modify balances, and take other measures to encourage productive collaboration for firms with a shared goal provided all members agree.

Validation is carried out by known and identifiable members of a small network of nodes, removing the threat of a 51 percent assault. Rule breakers are instantly discovered and lose more than they gain from their dishonesty. Furthermore, other known threats, such as DDoS, “man in the middle” assaults, and SQL injection, are irrelevant to the consortium blockchain.

Because the information from confirmed blocks is not accessible to the public but is acceptable to consortium members, the consortium has a higher level of privacy. Clients of the platform gain a higher degree of trust and confidence as a result.

Cons:

The consortium blockchain may be vulnerable to malevolent players due to its centralized nature. When there are just a few people involved, we may infer that one or more of them is corrupt. However, a shared infrastructure is intended to be more secure than a single company’s (a single point of failure).

Wrapping up

The consortium blockchain appears to strike the proper mix between private and public configurations, resulting in increased privacy and enough decentralization. Collaboration with partners on a blockchain platform allows them to tackle common challenges collaboratively, lowering operating costs and saving time. Consortia provide several advantages, including increased transaction speed and scalability, as well as guarded privacy and automation. Cryptocurrency certification consortium is a high-demand blockchain class these days.

The consortium blockchain can optimize and enhance communications and operational flow between the parties if you want to get the greatest economic benefits for your business while collaborating with other businesses. Any organization can utilize an open-source platform that is appropriate for the industry and aims to develop it. Finance and banking, supply chain and logistics, insurance, and healthcare were recognized as the top sectors for this in the use cases. Although one can create his own criteria and circumstances, consulting with a crypto advisor is always a smart idea.