Consortium blockchain is the term used for a private property blockchain where the information of organizations in the same industry is not publicly presented. Consortium blockchains are used by multiple organizations within the same industry to perform activities, transactions, and share information within the network.

Consortium blockchains stand somewhere between public and private blockchains. Public blockchains are decentralized and open to the public, with everyone having equal rights and access to the network. Private blockchains are centralized and used for transactions within the network. Only authorized individuals can access private blockchain networks.

Consortium blockchains cannot be accessed by anyone outside the network and are designed by groups within the network through collective decisions. Nodes within a consortium blockchain network are independent of one another and considered equal members of the network, with joint decisions made among all nodes. The fact that those outside the consortium cannot access the network contributes to the protection of node data.

Consortium Blockchain Use Cases

Health and Insurance

Hospitals and insurance companies have access to a lot of data. They can use a consortium blockchain by forming partnerships to update patient records.

Finance and Banking

Since banks require information such as credit scores and identity verification, they can create a consortium blockchain. Consortium blockchains can store data in the blockchain network by making information accessible to all banks.

Logistics

Consortium blockchains are used to track products and determine the supply stages of these products.

What Are the Benefits of Consortium Blockchain?

The goal of a consortium blockchain network is to simplify collaboration between a group of complementary blockchains. Network participants can individually evaluate the problems or challenges they face and offer solutions that can be applied to the entire consortium. There is no service fee or transaction fee for transactions made within the consortium blockchain. Small institutions can benefit from participating in a consortium blockchain. Consortium blockchains save time, cost, and resources. Consortium blockchains consist of multiple organizations, each with decision-making authority, which minimizes the possibility of corruption. Data within the consortium blockchain is only accessible to participating organizations, and public access is limited.

Partnership among organizations within the consortium blockchain provides many benefits, such as problem-solving and cost savings. Faster transactions and greater scalability are achieved while maintaining privacy on the network.

What Are the Advantages and Disadvantages of Consortium Blockchain?

The Advantages of Consortium Blockchain

• A consortium blockchain allows participants to set their own rules, and control or cancel problematic transactions.
• The validation process in the network is performed by known nodes in the network, eliminating the threat of a 51% attack. Users who ignore the rules and conditions of the network can be easily identified and appropriate actions can be taken.
• Consortium blockchains have a high level of privacy.
• Unlike public blockchains, consortium blockchains do not charge transaction fees.

The Disadvantages of Consortium Blockchain

• Consortium blockchains may be vulnerable to malicious users due to their centralized structure.
• Creating a new consortium blockchain requires all participants to verify the protocol, making it a slow process to establish a common network among several organizations.
• Upgrading consortium blockchains is not easy because it requires the permission of all participants on the network.

What Are the Characteristics of Consortium Blockchain?

Consortium blockchain enables data transfer, existing workflows, and transparency. Some characteristics of consortium blockchains include:

• Rules and regulations
• Reduced transaction costs and fast transaction capabilities
• Data privacy
• Data modification
• Scalability

Formation of the Consortium Blockchain

Consortium blockchain is a network consisting of a combination of private blockchain networks, in which multiple organizations form nodes. These organizations have the ability to join or leave the network only by making a joint decision with other members. While managing their own node or blockchain network, organizations can make the information they find accessible or shareable to network participants. Organizations with common goals can form a consortium blockchain.