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What is a Consortium Blockchain?

  • Vrinda Mathur
  • Jan 26, 2022
What is a Consortium Blockchain? title banner

Blockchain technology is the latest development of the 21st century. Bitcoins and cryptocurrency are our new mediums of exchange in the trade market. Blockchain basically refers to a network that provides ledger and smart contact (chainsystem) to its applications. 


Blockchain technology refers to decentralized ledger technology that records any digital asset or transactions without involving any third party in the procedure. The key aspect on which a business functions is information, the faster and more accurate the information is the better it is. 


Blockchain serves as the best medium in doing so it's quicker, authentic and is shared through an immutable ledger that can be accessed only by permissioned network members. This technology enables cryptocurrencies (digital currencies secured by cryptography) like Bitcoin to work easily. 



What is Consortium Blockchain?


Consortium blockchain is a subtype of blockchain technology. These are networks that are composed of present nodes and have access controls. This type of network has fewer nodes as compared to public blockchain, but it is more secure and scalable in nature. It also leads to reduction of the load on the network and allows more security. Although it is less transparent than a public chain, it still has some risks. 


It is a type of network with fewer known participants. It uses a voting based system to ensure low latency and excellent speed. Each node is allowed to write the transaction but cannot add a block by itself. On the other hand each block added by another node needs to be verified before adding it to the network. This allows greater exposure and innovation. 


A consortium blockchain is a type of semi-decentralized network in which members are not granted to a single entity. Instead it is granted to a group of individuals or ‘nodes’. It offers network security that public chains don't. It also provides significant degrees of control, faster processing and makes it more efficient and secure in many ways. 


Hybrid blockchain is said to be a hybrid of private and public blockchain. Under this chain consortium network has multiple members and each one is independently controlled. 


Similarly the number of members is limited, and thus it's difficult for a single entity to manipulate the system. A group's influence is reflected on the size of the system. For this system consortium blockchain is the best suited for companies aiming for growth and profit maximization. 



Pros and Cons of Consortium Blockchain




  • The consortium blockchain is completely controlled by a single party, but it is immune to monopoly. This control allows each member to define their own rules, revise or cancel erroneous transactions, modify balances, and take other measures to foster beneficial cooperation for firms with a common goal provided all members agree.


  • Validation is carried out by known and recognised members of a small network of nodes, removing the threat of a 51 percent assault. Rule breakers are easily detected and lose more than they gain from their dishonesty.


  • Since the information from authenticated blocks is not disclosed to the public, but is admissible to consortium members, the consortium has a higher level of privacy. Clients of the platform gain a higher level of trust and confidence as a result.


  • When compared to public blockchains, there are no transaction fees in a consortium environment.




  • The consortium blockchain may be vulnerable to nefarious players due to its centralized form. When there are only a few people involved, we can conclude that one or more of them is corrupt.


  • Launching a new consortium blockchain is a delicate process: all members must approve the protocol for communication. Since an enterprise is less flexible than an SME, establishing a common network between several enterprises is very slow.


  • Upgrading the protocol in such a situation is also difficult: there may be more organisations than at the start, and regulating takes time.


  • We still need to evaluate the work of the consortia listed below; the model's effectiveness has yet to be established.


  • Enterprises frequently fight collaboration, which simply hinders the field's development.



Characteristics of Consortium Blockchain


Characteristics of consortium blockchain are listed below:- 

Characteristics of Consortium Blockchain are :-1. Partially decentralized 2. More controllable 3. Privacy of data 4. Faster transaction speed

Characteristics of Consortium Blockchain

  1. Partially decentralized


Consortium blockchain are owned and have access by only the members of the consortium unlike in the public blockchain networks. It is easier to reach consensus as the number of nodes is very limited in the consortium chain. It works as a partially decentralized system that helps in maintaining the secrecy of data. 


  1. More controllable


Under the public blockchain systems once the data has been inserted, it will not be tampered or changed which mainly stems from the fact that the number of nodes in public blockchain is huge. 


For instance, there are too many nodes of Bitcoins, and it's nearly impossible to tamper or change the blocked data, on the other hand in consortium blockchain the data can be modified as long as the majority of all institutions reach a consensus. 


  1. Privacy of data


The privacy of data is maintained under consortium blockchain as the access is only with the users in the consortium. This helps in ensuring that the data is stored untampered and safely with access to only a limited known number of people, helps in maintaining privacy of the data. 


  1. Faster transactional speed


As lesser nodes are involved in comparison with public and private blockchain networks the transactions are performed at a much faster speed. Thus it is easy to reach consensus and transaction is naturally much faster. 


Applications of Consortium Blockchain


By now it’s become clear what we mean by consortium blockchain. There are some industries wherein consortium blockchain approach fits perfectly they are :-


  • Finance and banking


This once relates to insurance and trading of assets, also involved with KYC.  Banks come together and form a group that collects and stores a database where necessary information about all the creditors is available. 


When such information is required by the banks in order to identify and access these distributed ledgers are referred. 


  • Logistics


Consortium is an optimal solution for creating a network for all supply chain participants. It is useful for tracking of products and identifying its way of provenance and ways of supplying these products. 


  • Healthcare and Insurance


Every time you visit a hospital you claim for an insurance payment. As the hospitals and insurance companies are required to store a massive amount of data and files. Hospitals and insurance companies may join consortiums in order to speed up the paperwork and transactions. 


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In conclusion, the consortium blockchain appears to strike the correct mix between private and public configurations, resulting in increased privacy and adequate decentralisation. 


Collaboration with partners on a blockchain platform allows them to address common challenges collaboratively, lowering operational costs and saving time. Consortia have several advantages, including increased transaction speed and scalability, as well as retained privacy and automation.


The consortium blockchain can optimize and increase communications and operational flow between the parties if you want to reap the maximum economic benefits for your business while partnering with other firms. Any entity can utilize an open-source platform that is appropriate for the industry and goals to construct it. 


Finance and banking, supply chain and logistics, insurance, and healthcare were chosen as the top industries for this in the use cases. Although one can define his own rules and circumstances, consulting with skilled blockchain developers is always a smart idea.

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