Blockchain Networks Overview

A blockchain network is made up of network participants, which are computers or nodes where the ledger is stored, updated, and maintained. Every node in the network stores a copy of the blockchain shared ledger and continuously synchronizes with other nodes across the blockchain network. The network’s goal as a whole is to provide consensus and ensure the consistency and validity of each copy of the shared ledger across blockchain nodes, and validate each new block appended to the ledger.

Blockchain networks include consensus algorithms or protocols that define how nodes communicate and interact with each other. Each node synchronizes its copy of the shared ledger as consensus is achieved, according to the specific consensus protocol of that network, which is determined by the particular blockchain platform used to implement the network. This consensus ensures the validity and consistency of each copy of the distributed ledger running on each node of the blockchain network. [1]

Networks can be permissionless or permissioned. A permissionless network is open to the public and anyone can join. Permissioned networks are private and require pre-verification and authorization of participating parties. Groups of organizations that participate in permissioned blockchain networks are often referred to as consortiums.

Peer-to-Peer Network

The “distributed” in DLT refers to the idea that it uses a peer-to-peer (P2P) network structure.

Compared to a central server, nodes on a P2P network are connected directly to each other rather than to a central server. There are no intermediaries, such as a bank or clearinghouse, to process the transaction.



This data distribution model is a defining characteristic of blockchain technology: centralized authorities do not communicate updates to records. Instead, each node executes peer-to-peer communication to achieve consensus among the nodes and trigger updates in the form of blocks appended to the shared ledger.

Permissioned or Private Networks

With peer-to-peer networks, since there is no central control, trust between nodes becomes an issue. One solution that is widely used in healthcare blockchain applications is the use of a permissioned or private network, where only well-known and trusted organizations are allowed to participate, and only their blockchain nodes are allowed to join the network. In permissioned networks, participation is controlled by an authority who provides a membership service for user authentication and identity management.

Permissionless or Public Networks

Permissionless or public networks allow anyone to participate, and members are anonymous. The Ethereum network is a well-known example of a permissionless network.

In a public network, members are anonymous and anyone can join, so trust is established in the data, which nodes agree upon through consensus algorithms. Trustless systems simply trust the authenticity of the data, but do not need to share data beyond the transactions on the blockchain.