1.2 The Need for Hybrid Blockchain

• Public Blockchain and Private Blockchain

Blockchain can be broadly classified into two types. The first type is the Private Blockchain, which operates by restricting participation to specific nodes. While this approach may have some security concerns, it offers the advantage of efficient node management. Additionally, entities operating private blockchains can leverage distributed ledger technology without having to disclose data publicly.

In other words, private blockchains offer high TPS (Transactions Per Second), quick consensus achievement, and low energy consumption. However, the presence of a centralized managing entity can weaken the inherent decentralization characteristic of blockchain technology.

The second type is the Public Blockchain, which encompasses most blockchain systems. Public blockchains have the advantage of high security because data tampering is virtually impossible. However, they require voluntary participation from users to operate nodes, and if the value of the blockchain is not recognized, it may face difficulties in maintaining its system operation. In other words, public blockchains provide high levels of security, transparency, and decentralization, but they also face challenges such as slow transaction processing speeds, scalability issues, and significant energy consumption.

Participants in the blockchain network are rewarded based on their contribution to block creation. To achieve this, participants perform Proof of Work (PoW) through the blockchain’s consensus algorithm, a process known as “mining”.

In a public blockchain, anyone can participate in mining by running the core program. On the other hand, private blockchains impose restrictions on mining participation. As a result, private blockchains are often criticized for not achieving full decentralization. However, private blockchains operate in a structure similar to public blockchains in that they run their mainnet through node operations for block creation.

• Limitations of Traditional Blockchains and the Need for Hybrid Blockchain

Traditional blockchain systems have exposed several limitations. In the case of private blockchains, centralized authority management can lead to reduced transparency and trustworthiness, and they are susceptible to security threats from single points of failure. Additionally, the level of decentralization in the blockchain network is expected to be low due to the limited participation of nodes.

On the other hand, public blockchains face challenges with slow transaction processing speeds and low scalability, making practical applications difficult. As the size of the blockchain network increases, the resource consumption required for the consensus process also rises, leading to decreased energy efficiency. Furthermore, the pursuit of complete decentralization often results in inefficiencies in governance.

Hybrid blockchain is emerging as an alternative solution to address these aforementioned issues. By combining the efficiency of private blockchains with the security of public blockchains, the practicality of blockchain technology can be enhanced. Additionally, by gradually expanding node participation and implementing flexible governance models, hybrid blockchains can ensure decentralization and sustainability within the blockchain network.