What Is a Consortium Blockchain?

Consortium blockchains are created and used by groups of corporations when they want to enjoy the advantages in exchanging value and information offered by a distributed ledger but find public, permissionless blockchains inadequate for any reason.

Consortium blockchains can be considered an intermediate step between public and private blockchains.

Public blockchains are the original and most widespread kind: the largest cryptocurrencies, such as Bitcoin (BTC) and Ethereum (ETH), belong to this type. They have a permissionless, decentralized nature: anyone can access their networks and become an equal-rights participant if they chose to do so.

Private blockchains, on the other hand, are designed by corporations to be used exclusively within their own organization. They do not allow any outside agents access to their networks and are managed in a centralized manner.

Consortium blockchains occupy the middle ground between these two types. They are designed collectively by groups of companies that want to use a common decentralized network that no entity outside of the consortium can gain access to.

Consortium blockchains enjoy a certain degree of decentralization over private blockchains, as all companies in the network are independent and can collaborate as equals, with no single node being able to force its will on others.

At the same time, they restrict access from outside of the consortium, protecting sensitive corporate data and reducing the load placed on the network by large numbers of nodes that otherwise might have decided to participate in it.