There is currently a fairly large number of various blockchain systems. For example, you can view the top 100 blockchains here. By looking at these systems, you can get a rough idea as to the diversity of this ecosystem. Incidentally, all systems appearing in that ranking have their own features and numerous differences. For example, not all of them use Proof of Work approaches. Some of them try to stand out from among the others by focusing on a specific problem (which is yet another topic for a separate article).
Nonetheless, all of those systems use two important and quite different approaches to using this technology. Public blockchain
A public blockchain is a system fully open to any user. Any user can connect to the network, view the history of transaction and even participate in mining. We have already discussed the operating principles of a public blockchain, and it is in this type of blockchain in particular that economic incentives for users are so important. Bitcoin is the best-known example of a public blockchain. Permissioned blockchain
It is a class of blockchain systems in which only participants authorized by a certain centralized operator (or operators) can participate. For example, this can be an implementation of a protocol for performing transactions between certain subsystems or between companies. In this case, the principal value of the distributed network architecture is the ability to reduce or entirely remove the load from centralized services. Economic incentives embedded in a public blockchain are used on a limited scale or not used at all. For example, a miner generates blocks not because it receives a reward directly but because it is a dedicated server within a company, which was allocated specifically for serving the local blockchain system.
As a result, a permission blockchain system loses many of the economic mechanisms that served as protection against spam, duplication, and similar threats. However, some threats become irrelevant or significantly mitigated in some real-life applications of permissioned blockchains. Let me give you a few examples:
- In the Etherium blockchain, any transaction requires spending "gas" (an internal term representing "coins"); in this way the network protects itself against flooding and unmotivated participants. In the case of a permissioned blockchain, this charge may be canceled, but this does not result in flooding because only authorized and responsible participants join the system.
- In a public blockchain, miners perform mining in exchange for a fee and in this way keep the network secure. In a permissioned blockchain where exchanges happen between two parties, simply dedicated servers can act as miners on both sides, and it's enough to make sure that the computing power of one side does not exceed 51%. Of if the parties trust each other, a large number of miners becomes unnecessary altogether. Incidentally, in such systems PoW is often replaced by Proof of Authority, which is also a topic for future articles.