What is Consortium Blockchain
Generally, private blockchains are considered an excellent solution for individual organizations working on a decentralized network. However, in the case where multiple organizations are involved, there is a need for sharing a platform for cross–technology solutions. This is where Consortium Blockchain is considered the best fit as its advanced features make it an exceptional network.
What is a Consortium Blockchain?
The Consortium Blockchain which is also termed as “Federated Blockchain” is a group of multiple financial institutions with each of them boarded on private blockchain. The consortium blockchain allows pre – a selected set of nodes to facilitate the consensus process. The nodes from multiple organizations or enterprises are assigned to govern the network with immense privacy. This collaboration allows sharing of information through the platform while maintaining scalability, accountability, and seamless workflow.
Furthermore, this type of blockchain network focuses on reducing the network load when the controlled number of nodes that contribute to the network participants in the process. Thus, all these participants combine together to make the network lightweight and secure. The primary aim of the consortium blockchain is to help institutions in finding solutions to challenging problems. Today, CORDA and Quorum are the two popular examples of Consortium Blockchains.
Features of Consortium Blockchain
Since the consortium blockchain helps transfer data to the blockchain participants, therefore it is considered the best alternative for facilitating collaboration between the organizations. Some of the essential characteristics of Consortium Blockchain are as follows –
Suitable for Complex Regulatory Processes
The consortium blockchain is specifically designed for multiple companies to streamline their complex regulatory processes. Since the nodes here work under the rules of the network, therefore helps to build a team environment which in turn improves efficiency.
Facilitates Faster Transaction
Consortium blockchain owns few participants which makes nodes less competitive for transaction verification. As a result, makes the controlled user groups reach a consensus fast and thus facilitate faster transactions. Consortium blockchain owns few participants. That’s why nodes from different organizations produce less competition for transaction verification. Controlled user groups also help to reach a consensus fast. All these factors contribute well to faster transactions.
Improves Data Secrecy
Besides reducing the network load and underpinning data privacy private blockchain databases are exposed to a limited group of people. Thus, the system leverages security and ensures data originality in the blocks. It is only through the consent of some nodes that information within the network can be changed.
Eliminates the Risk of Illegal Acts
The Federated blockchain has few known members which reduces the risk of criminal or unethical activities significantly. This creates an environment of checks and balances making the platform a safer option for enterprise processes. Usually, the private blockchain is more prone to dreadful issues which are termed the 51% Act. However, in consortium blockchain remains unaffected by such issues due to proper authentication of transactions.
Consumes Low Energy
The Federated blockchain is specially designed to address users’ needs therefore they are designed to consume less energy for consensus, document validation, and transaction verification. Usually, data mining processes consume intensive energy and this is where federated blockchain offer solutions as they use less complex algorithms thus lessening energy consumption and transactional costs.
The consortium chain has controlled nodes for validating the transaction which improves network efficiency and lowers the probability of slow network output. Thus, through consortium blockchain users faces scalability issues at a minimized level. Alongside, such blockchain also elevates better User Experience with its time-saving feature.
Use Cases of Consortium Blockchain
The consortium blockchain is dynamic in nature and promotes innovation in the industry. Some of the industries where consortium blockchains are of great importance are as follows.
- Logistics: Eases Supply chain management by putting all participants on one network.
- Finance & Banking: Facilitates KYC processes, implements cross-sector transaction, and ensure database management through one network.
- Health & Insurance: To speed up the process, and facilitate the money and information exchange for hospitals, insurance companies, etc.
Public Blockchain v/s Consortium Blockchain v/s Private Blockchain
|Point of Distinction
|Time of Transaction
|Elevate slow transaction
|Fast and light transaction
|Fast and light transaction
|Control & Authority
|No authority controls this network
|Partially decentralized and partially centralized
|Centralized control and regulation ecosystem
|Data tempering is impossible due to decentralized nature
|Nodes from multiple organization can change data through voting system
|Users can read or write the data through consensus agreement
|Resources & Costs
|Use fewer resources to setting up platform
|Consensus algorithms uses less resources
|Cost–effective alternative and less power–consumption
Hyperledger, Corda, Quorum, Ripple. Ethermint and Multichain are some of the popular open–source consortium solutions built using the set rules in the network. Multiple private organizations make use of this blockchain network for reducing operational costs and time. Alongside this, it facilitates speedy transactions for various industries and businesses.