What is Blockchain Consortium: Definition, Key Features, and Advantages?

Bittime - Currently, there are different types of blockchain networks that are used for various purposes. One is the Blockchain Consortium or Blockchain Consortium. What is the Blockchain Consortium? Check out the meaning and advantages in this article.

Compared to public or private blockchains, this model offers a balance between transparency and control. This makes it an ideal solution for industries that require collaboration without loss of control. 

So, what is the Blockchain Consortium? How does it work and what are its advantages? This article will discuss it in full.

What is the Blockchain Consortium?

Source: ResearchGate

Blockchain Consortium is a type of blockchain network that is semi-private, operated by a group of organizations, and managed collectively. In contrast to public blockchains which can be accessed by anyone, Blockchain Consortium limits access to only entities that have obtained permission. 

This model allows various companies or institutions to share data securely, increase operational efficiency, and ensure transparency in transactions without having to hand over full control to just one party.

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How Does the Blockchain Consortium Work?

Consortium Blockchain works by combining the features of private and public blockchains. Here are some basic principles of how it works:

• Network Permissioned: Only certain entities can join and participate in the network.

• Decentralized Consensus: Transaction validation is performed by pre-defined nodes, not by individuals or a single company.

• Data Sharing According to Needs: Some organizations may have their own communication channels to exchange information that only certain members can access.

• Custom Consensus Uses: Blockchain Consortium generally uses Proof of Authority (PoA) or Practical Byzantine Fault Tolerance (PBFT) algorithms which are more resource efficient than Proof of Work (PoW).

Blockchain Consortium Key Features

Source: ScienceDirect

There are several key features in the Blockchain Consortium. You can find out below:

1. Data Privacy: Only network members have access to certain data, increasing the security of sensitive information.

2. Transaction Efficiency: With a limited number of nodes, transactions can be processed faster than on public blockchains.

3. Clear Regulations and Rules: Each member must follow agreed protocols to ensure smooth operations.

4. Minimal Risk of Cyber ​​Crime: With verified members, the risk of illegal activity is drastically reduced.

5. Security from 51% Attacks: Because no one party controls the majority of the network, the risk of a 51% attack can be avoided.

Blockchain Consortium Advantages

This type of blockchain has several advantages that are worth noting. The following are the advantages:

• High Security: With limited access, the risk of cyberattacks is lower than with public blockchains.

• Operational Efficiency: Faster transaction processing and lower fees due to fewer nodes.

• Limited Transparency: Data remains transparent between members, but not open to the public, making it ideal for industries that require a balance between transparency and privacy.

• Better Collaboration: Organizations that are members of a consortium can share data more safely and efficiently.

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Industries Leveraging Blockchain Consortium

This blockchain network can be used in various fields. The following is the explanation:

1. Financial Sector: Banks use the Blockchain Consortium to speed up cross-border transactions and increase payment security.

2. Health Industry: Used to securely share medical data between hospitals and insurance companies.

3. Supply Chain Management: Make it easier to track goods from production to distribution with greater transparency.

4. Insurance: Enables automatic claims processing and reduces the risk of fraud.

Blockchain Consortium Examples

Source: Visa

Currently, there are many blockchain consortiums in the world. The following are four of them:

1. R3 String: Used in the financial sector to speed up interbank transactions.

2. Energy Web Foundation: Encouraging the use of blockchain in the energy industry.

3. B3i (Blockchain Insurance Initiative): Helping insurance companies increase efficiency and transparency.

4. IBM Food Trust: Ensure transparency in the food supply chain.

Blockchain Protocol To Build Blockchain Consortium

There are several blockchains that can be used to build a blockchain consortium. Below are some examples:

1. Ethereum: Supports smart contracts that can be used in various industries.

2. Hyperledger Fabric: Modular solutions for business and enterprise needs.

3. Corda R3: Focus on financial transactions with a high level of privacy.

Advantages and Disadvantages of Blockchain Consortium

Like other technologies, this blockchain network also has advantages and disadvantages. Anything? Check out the brief explanation below:

Advantage:

• There is no monopoly because it is jointly managed by several organizations.
• Security is higher as only trusted entities can participate.
• Reduces transaction costs because there is no need for validation by a third party.

Disadvantages:

• The manufacturing process is more difficult because it requires agreement from several companies.
• Potential conflicts of interest between members that could hinder innovation.
• Network updates require the approval of all members, which can slow down development.

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Conclusion

Blockchain Consortium is the ideal solution for the industry. In particular, companies that want to adopt blockchain technology without having to completely rely on public or private networks. 

With its several advantages, this model is suitable for the financial, healthcare, logistics and many other industries. Despite some challenges, the Blockchain Consortium can become the foundation for the digital ecosystem of the future.

FAQ

1. What is the Blockchain Consortium? 

Blockchain Consortium is a blockchain network managed by a group of organizations with limited access and mutually agreed rules.

2. How is the Blockchain Consortium different from public and private blockchains? 

Public blockchains are open to everyone, while private blockchains can only be accessed by one entity. Blockchain Consortium is in the middle, where access is limited to consortium members only.

3. What is a concrete example of using Blockchain Consortium? 

Examples are R3 Corda in the financial sector and IBM Food Trust in the food supply chain.

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Reference 

GG, What is Consortium Blockchain?, accessed March 6, 2025.

Kaleido, Consortium Blockchain: What You Need to Know, accessed March 6, 2025.

ScienceDirect,Consortium Blockchain, accessed March 6, 2025.

Author: Y