Blockchain, fundamentally, is a shared database. The data or information stored in it possesses characteristics such as being “unforgeable,” “traceable,” “transparent,” and “collectively maintained.” Blockchains can generally be divided into three categories based on their openness: public chains, consortium chains, and private chains.

A public chain is a type of blockchain where any individual or group in the world can send transactions, and these transactions can receive valid confirmation from the blockchain. Anyone can participate in its consensus process. Public chains were the first blockchains and are the most widely applied. Bitcoin is the most representative example of a public chain.

A consortium chain is a blockchain where the process of creating each block is decided collectively by multiple pre-selected nodes within a specific group (these pre-selected nodes participate in the consensus process). Other nodes can partake in transactions but do not engage in the accounting process (essentially, it’s still custodial accounting, but in a distributed manner. The number of pre-selected nodes and how the accountant for each block is chosen become the main risk points for the blockchain). Anybody can conduct limited queries through the blockchain’s open APIs. Most blockchains used among banks and other financial institutions are in the form of consortium chains.

A private chain refers to a blockchain where the ledger technology is used solely for accounting purposes by an entity, which could be a company or an individual. This entity has exclusive write access to the blockchain. This type of chain doesn’t differ significantly from other distributed storage solutions. The application products of private chains are still in the exploratory phase.