Public blockchain is public in nature. When Bitcoin white paper came, it also mentioned blockchain in its public form. It also means that the public blockchain is open to all and anyone can participate in it.
In private blockchain, the parties limit the access of the blockchain to its users. Users need to get access to the network before they can use it. Also, the access can only be taken from the authority who is managing the private blockchain.
The hybrid blockchain is best defined as the blockchain that attempts to use the best part of both private and public blockchain solutions. In an ideal world, a hybrid blockchain will mean controlled access and freedom at the same time.
The hybrid blockchain is distinguishable from the fact that they are not open to everyone, but still offers blockchain features such as integrity, transparency, and security.
As usual, Hybrid blockchain is entirely customizable. The members of the hybrid blockchain can decide who can take participation in the blockchain or which transactions are made public. This brings the best of both worlds and ensures that a company can work with their stakeholders in the best possible way.
Even though transactions are not made public, but they are still verifiable when needed. Every transaction that takes place in the hybrid blockchain can be kept private and always open for verifiability when required. As blockchain is used, its most crucial aspect works here. Immutability. It ensures that each transaction is written once and cannot be changed in due time.
Will it be secure as compared to public or private blockchain? Yes. Even though a set of individuals controls it, they cannot change the immutability and security of the transactions. They can only control which transactions are made public and which are not.
Once a user gets the grant to access the hybrid blockchain, he can fully take participate in the activities of the blockchain itself. However, one thing that is kept a secret is the identity of the users from other participants. This is done to protect the user’s privacy.
When a user transacts with the other user, then only his identity is revealed by the party he is dealing with. To ensure that the above identification process is done correctly, companies and organization carry out KYC(Know Your Customer) to make it work. Especially, financial institutes need to handle it correctly as they cannot allow the transaction to be carried out by a user that is not entirely known to the blockchain.
Even when the hybrid blockchain has limited anonymity for the users who take part in the network, the public anonymity is still maintained. This way no one outside the network can know about the users.
The hybrid network offers all the critical features of a public blockchain such as secure, transparent, immutable and decentralized, but it also restricts the ability to access transactions, view, or change transactions in any way. Also, not everyone can use the network which makes sure that confidential information doesn’t go out of the network.
Benefits of hybrid blockchain
- Works in a closed ecosystem: The number one advantage of hybrid blockchain is its ability to work in a closed ecosystem. That’s means that companies or organization don’t have to worry about getting their information leaked when taking advantage of blockchain technology.
- Protecting from 51% attack: Hybrid blockchain are immune to a 51% attack as hackers cannot have access to the network to carry out the attack.
- Protecting privacy while still communicating with the outer world: Even though private blockchains are best for privacy-related issues, they are limited when it comes to communicating with the outer world. Many companies may want to keep privacy, but also need to configure their blockchain so that they can communicate with all their shareholders including the public.
- Low transaction cost: Another added benefit of using hybrid blockchain is to have a low transaction cost. Transactions are bound to be cheap as it requires few nodes to verify them. The most powerful nodes in the network make it easy to verify the transaction which may take thousands of nodes in public blockchain.