Blockchain technology has evolved significantly since its inception, branching out into various forms tailored for different use cases. As cryptocurrency trading becomes increasingly regulated and accepted—such as in Hong Kong—public awareness and adoption of blockchain solutions are rising. But beyond Bitcoin and Ethereum, there’s a diverse ecosystem of blockchain types, each designed to address specific challenges like scalability, speed, privacy, and customization.
In this guide, we’ll explore six major types of blockchains, including public, private, consortium, application-specific chains, Layer 2 solutions, and sidechains. We’ll also highlight key projects in each category and explain how they contribute to the broader decentralized landscape.
Public Blockchains: Open, Transparent, and Decentralized
Imagine a global, tamper-proof ledger that anyone can access and participate in. That’s the essence of public blockchains—fully decentralized networks where transactions are transparent, immutable, and verified by distributed consensus.
Public blockchains emerged with Bitcoin in 2009, introducing a trustless system for peer-to-peer value transfer. Then in 2015, Ethereum expanded the vision by introducing smart contracts—self-executing code that powers decentralized applications (dApps), non-fungible tokens (NFTs), and automated financial protocols.
Notable Projects:
- Bitcoin: The original cryptocurrency network, used globally for payments and asset transfers. Secured by a vast network of miners using Proof-of-Work.
- Ethereum: A platform for building dApps and issuing digital assets. Supports complex logic through smart contracts and remains the foundation for much of the DeFi and Web3 ecosystems.
Public chains offer maximum decentralization but face limitations in transaction speed and cost—especially during peak usage. This led to the development of scaling solutions like Layer 2s and sidechains.
👉 Discover how scalable blockchain networks are transforming digital finance today.
Layer 2 Blockchains: Scaling the Mainnet
While public blockchains provide security and transparency, they often suffer from slow transaction speeds and high fees. Layer 2 blockchains solve this by operating on top of a main chain (like Ethereum or Bitcoin), processing transactions off-chain before settling them back on the base layer.
Think of Layer 2 as an express lane on a congested highway—handling bulk traffic efficiently while still inheriting the security of the underlying network.
The concept gained traction around 2015 when Ethereum began experiencing network congestion. Since then, Layer 2 solutions have become critical to improving user experience and enabling mass adoption.
Notable Projects:
- Polygon Network (formerly Matic Network): Launched in 2017 by an Indian development team, Polygon uses Plasma sidechain technology to batch transactions off Ethereum, significantly boosting throughput and reducing costs.
- Lightning Network: Built on Bitcoin, this payment protocol enables near-instant, low-cost micropayments. First proposed in 2015 by Joseph Poon and Thaddeus Dryja, it's now one of the most promising scaling solutions for BTC.
Layer 2 solutions are essential for making blockchain usable in real-time applications like gaming, remittances, and everyday payments.
Sidechains: Independent Parallel Networks
Sidechains emerged around 2014 as standalone blockchains running parallel to a main chain, connected via a two-way bridge that allows assets and data to move between them. Unlike Layer 2s, sidechains have their own consensus mechanisms and governance rules, offering greater flexibility for experimentation and customization.
They’re ideal for specialized applications where developers need control over network parameters without affecting the security or stability of the primary chain.
Notable Projects:
- Rootstock (RSK): A sidechain linked to Bitcoin that brings smart contract functionality to BTC holders. It uses merge mining with Bitcoin for enhanced security.
- Liquid Network: Developed by Blockstream, this sidechain focuses on fast settlement between exchanges and institutions, enabling confidential trading and tokenized assets.
Sidechains trade some degree of decentralization for performance and innovation—making them perfect for enterprise-grade financial tools and cross-chain interoperability.
👉 Explore how interoperable blockchain networks are unlocking new digital opportunities.
Private Blockchains: Permissioned and Controlled
Unlike public blockchains, private blockchains are restricted networks where participation requires permission. Think of them as secure, internal databases managed by a single organization or a closed group.
Enterprises use private chains to improve data integrity, streamline operations, and enhance transparency within controlled environments—without exposing sensitive information publicly.
These networks gained popularity as corporations began exploring blockchain for supply chain tracking, healthcare records, and internal auditing.
Notable Project:
- Hyperledger Fabric: An open-source project hosted by the Linux Foundation and widely adopted by companies like IBM and JPMorgan Chase. It supports modular architecture, allowing businesses to customize components like consensus and membership services.
Private blockchains prioritize efficiency and compliance over decentralization—ideal for regulated industries requiring auditability and access control.
Consortium Blockchains: Shared Control Among Trusted Parties
Falling between public and private models, consortium blockchains are jointly managed by a group of pre-approved organizations. This hybrid model offers shared governance while maintaining limited transparency—perfect for collaborative ecosystems like banking alliances or trade networks.
First conceptualized around 2015, consortium chains balance decentralization with operational control, making them suitable for industry-specific collaborations.
Notable Project:
- BSN (Blockchain-based Service Network): A China-led initiative aimed at standardizing blockchain infrastructure across sectors. BSN provides a unified framework for deploying both public and private chain applications in regulated environments.
These networks empower institutions to innovate collectively while adhering to legal and regulatory standards.
Application-Specific Blockchains: Built for Purpose
Also known as dedicated blockchains, these are custom-built networks designed for a particular use case or industry. Unlike general-purpose platforms like Ethereum, they optimize performance, security, and functionality for specific tasks—such as supply chain tracking or financial settlements.
Because they don’t need to support every possible application, they achieve higher efficiency and lower overhead.
Notable Projects:
- VeChain: Focuses on supply chain management and product authenticity verification. Used by global brands like Walmart China and BMW to track goods from production to delivery.
- Corda: Developed by R3, this blockchain is tailored for financial institutions. It emphasizes privacy and legal enforceability, making it ideal for interbank transactions and insurance claims processing.
Application-specific chains represent the future of enterprise blockchain adoption—where customization meets scalability.
Frequently Asked Questions (FAQ)
Q: What’s the difference between Layer 2 and sidechains?
A: While both aim to scale blockchains, Layer 2 solutions rely on the main chain for security (e.g., via rollups), whereas sidechains operate independently with their own validators and consensus rules—offering more freedom but less inherent security.
Q: Can I transfer assets between a main chain and a sidechain?
A: Yes—through two-way bridges. These allow users to lock assets on the main chain and mint equivalent tokens on the sidechain (and vice versa), enabling cross-chain interoperability.
Q: Are private blockchains truly “blockchain” if they’re not decentralized?
A: Technically yes—they maintain core features like immutability and cryptographic security. However, they sacrifice decentralization for control, making them better described as “distributed ledgers” rather than fully decentralized systems.
Q: Why do we need so many types of blockchains?
A: Different problems require different solutions. Public chains prioritize openness; private ones focus on control; Layer 2s enhance speed; sidechains enable innovation; consortium chains foster collaboration; and application-specific chains deliver optimized performance.
Q: Is Ethereum a Layer 1 or Layer 2?
A: Ethereum is a Layer 1 blockchain—the foundational network upon which Layer 2 solutions (like Polygon or Arbitrum) are built to scale its capabilities.
Blockchain is not one-size-fits-all. From open public ledgers to tightly controlled private networks, each type serves distinct needs in today’s digital economy. Understanding these differences helps developers, enterprises, and investors choose the right infrastructure for their goals.
Whether you're building a dApp, securing supply chains, or launching a token, selecting the appropriate blockchain type is crucial for long-term success.
👉 See how next-generation blockchain platforms are powering innovation across industries.