The blockchain technology has elicited wide interest across several sectors all over the world as it possesses the potential to solve major challenges in various sectors. Part of the reason for this is the fact that the technology allows for increased levels of details with regards to both financial as well as non-financial transactions.
The technology also reduces the chances of manipulation of information or misinformation being spread across the network. This is due to the fact that it is a distributed ledger technology meaning that it is not under the control of any one particular authority or entity. Every entity or participant thus has an equal opportunity of sharing or generating copies. While this is viewed as a strength by some there are also those who see it as a big weakness citing that this makes it vulnerable to hackings.
That should not be a cause of worry since there are three different ways in which blockchain technology can be utilized ? private, public as well as hybrid. A lot has been written and talked about private and public blockchain but there is very little on hybrid blockchain.
What is a hybrid blockchain?
A hybrid blockchain’s technology borrows features that both the public and private blockchain possess. With the hybrid blockchain members of a certain dominant entity or network have the power to decide which transactions are public as well as the ones that should remain private.
This ensures that while transactions can be kept private they can still be verified using an immutable record when they are put on the public blockchain. When they are on a public blockchain, each and every transaction will be approved by the network and this makes them secure and trustworthy. It is therefore unnecessary to have a central governing entity or intermediaries who are charged with the responsibility of offering supervision. Thus any change that is undertaken with regards to a transaction still has to undergo an approval process and this ensures that no single actor has the power to meddle with the entries.
The public state of a hybrid blockchain offers everyone who is a member of a network equal rights for viewing, modifying and appending their consent with regards to a transaction. The identity of the parties who are transacting is thus never disclosed to all the participants of a network and this has proved to be unacceptable to financial bodies and other highly regulated entities since they must comply with Know Your Customer requirements. On the other hand a network?s public state offers unrestricted visibility and this is not in line with data confidentiality obligations for individuals as well as organizations.
With the hybrid blockchain the public state?s anonymity balances out its private state and this greatly appeals to financial institutions. Despite being immutable, transparent, secure and decentralized just like the public analogue, the rights of viewing, modifying and appending or approving transactions are restricted. Thus in situations where network members are not comfortable with the viewing of transaction data without their consent, they can limit the rights.
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