Level 1 · Module 1.3

Types of Blockchain

Not all blockchains are equal. A hospital's patient records and a memecoin have nothing in common — but both might live on a blockchain. Understanding the different architectures tells you which tool fits which problem.

⏱ 7 min read 🟢 Beginner 📖 4 sections

01 Public Blockchains

A public blockchain is open to anyone. You can read every transaction, send your own transactions, and run a node — all without anyone's permission. This is the original vision of blockchain: a system that no single entity can own or censor.

EXAMPLES

Bitcoin, Ethereum, Solana, XRP Ledger

ADVANTAGES

Maximum transparency, censorship resistance, no gatekeepers. Anyone with internet access can participate.

TRADE-OFFS

Slower than private chains. All data is publicly visible (though addresses aren't tied to real names by default).

USE CASES

Cryptocurrencies, DeFi, NFTs, decentralised applications — anything where trustlessness is the point.

02 Private Blockchains

A private blockchain looks like a blockchain but behaves more like a traditional database with extra features. Access is restricted to authorised participants, and a central organisation controls membership.

You might wonder: if it's centrally controlled, is it even a real blockchain? It's a fair question. Private blockchains sacrifice the defining property — trustlessness — in exchange for speed, privacy, and regulatory compliance.

EXAMPLES

Hyperledger Fabric (IBM), Corda (used by banks), Quorum (JPMorgan)

ADVANTAGES

Very fast, completely private, easy to comply with regulations, full control.

USE CASES

Corporate supply chain tracking, interbank settlement, medical records, internal auditing.

03 Layer 1 vs Layer 2

This distinction is crucial for understanding how modern blockchains scale. Layer 1 (L1) is the base blockchain — the foundational ledger with its own consensus mechanism and security model. Layer 2 (L2) is a network built on top of an L1 to extend its capabilities without touching the base layer's security.

LAYER 1

The base chain. Bitcoin, Ethereum, Solana are all L1s. They provide the final settlement guarantee and the underlying security. Their throughput is limited by their design.

LAYER 2

Faster, cheaper networks that anchor their security to an L1. Examples: Lightning Network (on Bitcoin), Arbitrum, Optimism, Base (on Ethereum). Transactions happen off-chain, proofs settle on-chain.

SIDECHAIN

A separate blockchain that runs in parallel and connects to an L1 via a bridge. More independent than an L2 — but that also means less security inheritance.

Analogy — Motorway and Side Roads

Layer 1 is like a national motorway — the main artery, extremely secure and trustworthy, but congested and expensive. Layer 2 networks are like fast side roads: they move most of the traffic quickly and cheaply, but every few hours they merge back into the motorway to settle accounts. Security flows upward from the motorway to everything built on top.

04 Choosing the Right Architecture

The architecture you use depends entirely on what you're trying to achieve:

Goal	Best fit	Why
Censorship-resistant currency	Public L1 (Bitcoin)	Max security, max decentralisation
Decentralised app (dApp)	Public L1/L2 (Ethereum, Solana)	Smart contracts + open composability
High-frequency small payments	L2 (Lightning, Base)	Near-zero fees, instant settlement
Enterprise supply chain	Private (Hyperledger)	Privacy, compliance, speed

A public blockchain is not "more serious" than a private one — they are different tools for different problems. Bitcoin solves global trustlessness; Hyperledger solves enterprise efficiency. Context determines the right choice.

← 1.2 Consensus Mechanisms 1.4 Cryptography Basics →