What is Consortium Blockchain?

Consortium Blockchain

A set of blockchain systems, each controlled by a different agency, that has joined forces to share information to enhance current processes, integrity, and accountability is “consortium blockchain.”

Blockchain technology is the holding of records/knowledge in a chain of virtual blocks connected to each other because of hash algorithms, increasing the confidentiality of the system in each block. The most well-known application of distributed ledger technology is in cryptocurrencies, which function as a fully decentralized ledger of transactions. Fundamentally, there are three distinct types of blockchain technology: consortium, private, and public.

They use Private blockchains by individual businesses to facilitate commercial use by establishing corporation software applications with them, while public blockchains are publicly accessible to anybody with broadband internet. A consortium blockchain is in the middle of the public and private cryptocurrency spectrum since it includes the blockchains of numerous businesses rather than just one. Nevertheless, unlike a publicly distributed ledger, it continues to exist with a limited number of users.

In this article, we will discuss the following:

  • Overview of Consortium Blockchain
  • Developing a Consortium Blockchain
  • Advantages and Disadvantages of Consortium Blockchain
  • Characteristics of Consortium Blockchain
  • Applications of Consortium Blockchain

Overview of Consortium Blockchain

Anybody with a connection to the internet can browse public or open blockchains. Private blockchains assist a firm with business case determination and organizational software solutions. The consortium blockchain, primarily a private shared database, is a mix of the first two blockchains.

A consortium blockchain’s primary goal is to increase cooperation to tackle an industry’s ongoing difficulties. Groups can use consortia blockchain with shared objectives to restructure efficiency, transparency, and responsibility. According to the Deloitte analysis, 74% of firms choose blockchain consortiums. Numerous blockchain networks are promoting themselves as the foundation for different organizational solutions.

Instead of beginning from scratch, consortium blockchain allows the brand-new kid on the block to join the set of instructions and share information. With the aid of this technology, businesses may work together to find answers while reducing manufacturing costs and time. Federated blockchains are another name for consortium blockchains.

Developing a Consortium Blockchain

Several private blockchains from various organizations are combined to form a consortium blockchain. Each blockchain acts as a node on the chain and an investor in the partnership. It is only possible for them to quit or join the system with the consent of the stakeholders. The data is exchanged and redistributed by organizations within the consortium, even though each entity runs its own node or blockchain. By doing this, solutions that cut across organizations and technologies can enhance their current processes, traceability, and transparency, tackling the issues and difficulties that individual blockchains face.

Typically, businesses with compatible technologies and shared goals can successfully collaborate to create a consortium blockchain.


Creating a consortium blockchain aims to make it easier for a collection of compatible blockchains to work together. As a result, everyone can better handle their unique problems and create solutions that the complete consortium can use. Keys may be designed more quickly with common resources by leveraging the existing mechanisms in each blockchain. Through financial planning of scale, lesser development costs are necessary for this approach.

Organizations that use consortium blockchain technology gain the following advantages:


The consortium blockchain has a known and authenticated number of contributors. They undertake authentication, which lowers the possibility of data threats. Nodes that go against the established protocols are promptly detected and punished. The consortium blockchain makes additional vulnerabilities like SQL injection, DDoS, and “man in the between” unimportant.


It manages the blockchain by a specific community of genuine individuals rather than a single corporation. Upon authorization from each stakeholder, this control assists in establishing guidelines, amending accounts, editing or canceling an error in a deal, and promoting complete cooperation for businesses with similar objectives.


The public is not permitted to view the data on genuine blocks. However, the information is rapidly accessible to consortium members, providing top-notch security. Moreover, for platform users, it instills a significant amount of trust and trust.


Contrary to other blockchains, the consortium blockchain does not impose operation or service charges.


The governance model states that a relatively small number of nodes frequently makes a contract. In addition, because it is less challenging to reach, this kind of consensus is more common. These factors immediately impact operational outputs, resulting in quick processes and enhanced scalability.


Other blockchains with multiple validators experience problems with synchronization and shared consensus. However, they eliminate such issues due to the small number of players in consortium blockchain.

Energy Requirement

Unnecessary data mining leads to energy usage only for routine tasks. Additionally, the Concrete evidence type agreement uses less energy.


Although consortium blockchain has several advantages over other blockchains, many features work against it.

Network Structure

The consortium blockchain is at risk from malicious players because of its centralized network structure. The small number of participants raises the possibility that one or more may be dishonest. The architecture of a road system ensures more security than a single enterprise.


Blockchain consortium technology lacks some effectiveness.


The consortium blockchain lacks a uniform infrastructure component. Professional standards are needed by private blockchains and offer products like R3’s Corda, JP Morgan’s Quorum, and Hyperledger.

Delicate Launching Process

Setting up a uniform network connecting numerous businesses is difficult since there is less versatility. Moreover, it must introduce a new blockchain carefully because all members must agree to the regulations.

Lack of Cooperation

The inability of the members to work together and come to a consensus occasionally slows down growth.


Improving the protocols can be challenging when there are more participants than at the start.

Characteristics of Consortium Blockchain

Following are some critical components:

  • Unlike public blockchain networks, consortium blockchains are controlled by and accessible only to consortium participants. There are far fewer nodes in the consortium chain, so agreeing is simpler. It functions as a somewhat decentralized system that aids in protecting data privacy.
  • Because of the enormous number of nodes in a public blockchain, once it enters data, it cannot be altered or updated under the global blockchain systems. For instance, because there are so many Bitcoin nodes, it is virtually hard to modify the block data. In contrast, a consortium blockchain can change data as long as most organizations agree.
  • The consortium blockchain maintains data privacy since only consortium members can access it. So this helps to safeguard the confidentiality of data by ensuring that it is stored securely, without tampering, and with just a tiny known number of persons having access.
  • In contrast to public and private blockchain networks, and carry out transactions much more quicker because fewer nodes are involved. As a result, consensus and transactions proceed significantly more rapidly.
  • Although the consortium blockchain is entirely under one company’s control, it is monopoly resistant. If all participants agree, this control enables each member to establish their own rules, correct or reverse incorrect transactions, adjust amounts, and take other steps to promote fruitful collaboration for businesses with a similar objective.
  • Known and trusted members of a smaller network of nodes do validation, eliminating the possibility of a 51 percent attack. Rule violators are quickly discovered and suffer more significant consequences than benefits from their dishonesty.
  • The consortium enjoys a higher level of privacy because data from validated blocks are not made available to the general public but permitted to consortium members. As a response, platform users’ level of trust and reliability increases.


What we mean by consortium blockchain should now be evident. Some sectors match this concept excellently, including the following:

Banking and Finance

This one has to do with asset transactions and insurance, which also has to do with KYC. Banks band together to create a database containing all the necessary details about all the creditors. The banks resort to these distributed ledgers when they need this information to recognize and obtain them.


A consortium is the best method for forming a network for all suppliers and customers. It helps trace things, determine their source, and figure out how to supply them.


You submit an insurance claim for each hospital visit. Because they must keep a significant amount of information and files, hospitals, and insurance firms, to expedite paperwork and interactions, hospitals and insurance providers may join consortiums.


In conclusion, it seems that the consortium blockchain achieves a good balance between private and public setups, resulting in greater privacy and sufficient decentralization. Blockchain technology is known to those who are familiar with cryptocurrencies like Bitcoin. It is a specific variation of a computerized ledger of transactions that is distributed and mirrored across the blockchain network architecture. Despite being in the expansion phase, this technology shows tremendous digital transaction advancements.

On a blockchain platform, parties can work together to solve problems together, cutting down on operational expenses and gaining efficiency. In addition, consortia have some benefits, such as faster and more scalable transactions, privacy preservation, and mechanization. For example, suppose you want to maximize the financial analysis gains for your company while collaborating with other businesses. In that case, the consortium blockchain can optimize and boost interactions and logistical flow between the parties. Any organization can create it using an open system suited for the goals and business.

The top industries for this use case were finance and banking, logistics and supply chain reinsurance, and healthcare. Although one can set their own rules and conditions, it is always a good idea to confer with experienced blockchain engineers.

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