November 18, 2022 - 22 min read
There are four main types of blockchains; public blockchains, private blockchains, hybrid blockchains, and consortium blockchains. Consortium blockchains, also referred to as federated blockchains, have pre-selected participants with equal power and privileges. Consortium blockchains are often used by a group of companies or institutions operating in a similar industry to share data, increase supply chain efficiencies, or achieve other, similar goals.
In this article, we’ll compare consortium blockchains to other types of blockchains, review the importance of consortium blockchains, discuss how they work, and review some of the best-known consortium blockchains in a variety of major industries.
Below, we compare public blockchains, private blockchains, hybrid blockchains, and consortium blockchains:
Ethereum is the world’s largest public general-purpose blockchain for smart contracts, NFTs, and DeFi.
Public blockchains are the best-known and largest blockchains in the world today. Public blockchains are the most decentralized form of blockchain, as there is not one central actor which can determine how the blockchain develops.
Data from public blockchains is fully accessible to the public via blockchain explorers. Anyone can participate in the blockchain, and, in most public blockchains, anyone can operate a node, though they often have to purchase computing equipment (for proof-of-work chains) or stake a certain amount of crypto (for proof-of-stake chains).
Common examples of public blockchains include Bitcoin, Etheruem, Solana, Cardano, Binance Smart Chain (now BNB Smart Chain), Monero, Bitcoin, and Bitcoin Cash. While public blockchains are the most decentralized type of blockchain, they vary significantly in terms of decentralization. For example, Ethereum, perhaps the most decentralized public blockchain, has an estimated 300,000 independent node operators around the world. On the other end of the spectrum, Binance’s BNB Smart Chain has only 21 validating nodes, most of which are controlled by Binance, making it extremely centralized.
Nearly all public blockchains have a native cryptocurrency, which encourages fair behavior among blockchain participants. In general the more valuable a cryptocurrency becomes, the stronger the incentive participants have to fare well. In addition, many blockchains have instituted consequences for bad behavior. For instance, Ethereum node operators, which are required to stake 64 ETH to operate a node, can see their stake “slashed” or taken away, if they engage in bad behavior.
Right now, high energy consumption is a major issue for proof-of-work blockchains, like Bitcoin, which is estimated to consume a staggering 0.5% of the world’s energy consumption due to energy-intensive mining. However, proof-of-stake blockchains are becoming more popular, and Etheruem recently migrated to a proof-of-stake consensus mechanism, which is estimated to have reduced the blockchain’s energy consumption by 99.95%.
Amazon Web Services is a global leader in private blockchain infrastructure for enterprises.
Unlike a public blockchain, a private blockchain allows only permitted participants to operate nodes. Private blockchains generally include one or more centralized entities that control the network and determine how the network develops over time. Private blockchains offer none of the decentralization benefits or the public information availability of public blockchains, but they are generally designed for private uses inside companies, institutions, or small groups of companies are institutions, with one institution or company acting as the controlling entity.
Private blockchains are, as one might imagine, completely private, and can offer extremely high transaction speeds (partially due to the fewer nodes involved), and have little to no transaction fees. Unlike public blockchains, private blockchains do not need a native token. Unfortunately, due to the fewer nodes involved and intense centralization, private blockchains may be more vulnerable to hacking, data breaches, and other manipulations than their public counterparts.
Private blockchains are often developed by tech companies for use by secondary clients. IBM is currently one of the largest private blockchain providers in the industry today. In fact, 81 of the world’s top public companies by market cap are using or developing blockchain technology in some fashion. Some of the most prominent companies with live blockchain networks are Amazon, Microsoft, Walmart, PayPal, Samsung, Alibaba, Tencent, Nvidia, and J.P. Morgan. Most of these blockchains are private, permissioned, blockchains mainly intended for internal use, or use with a limited number of partners or suppliers. Some, of course, are hybrid or consortium blockchains, which we’ll get to in the next two sections.
IBM Food Trust is a major food supply chain-focused blockchain platform that allows for the creation of private, consortium, and hybrid blockchains.
Hybrid blockchains are designed as a mix between public and private blockchains, in the hopes of getting the benefits of both systems while reducing potential disadvantages. Many hybrid blockchains operate using a dual system of private, permission-based node operators and a second system of public node operators.
Hybrid blockchains can make some data publicly accessible while keeping other data private. Ideally, well-designed hybrid blockchains, like many public blockchains, are resistant to 51% attacks and other types of hacking, partially due to the higher number of node operators when compared to purely private blockchains. Like private blockchains, hybrid blockchains have no or extremely low transaction fees. Hybrid blockchains may be fully centralized, with one or two entities exerting complete control, or may be semi-decentralized, with more entities having a higher degree of control. However, they are still quite centralized when compared to public blockchains or even consortium blockchains.
Hyperledger is a popular platform for creating consortium blockchains for groups of private enterprises and institutions.
A consortium blockchain, sometimes referred to as a federated blockchain, operates somewhat like a hybrid blockchain, but with several key differences. Unlike hybrid blockchains, consortium blockchains do not allow public node operators, making them somewhat similar to private blockchains.
However, unlike hybrid and private blockchains, which are mostly or fully centralized, consortium blockchains provide each participant, or node, with equal power. This puts each member, which is usually a private company or organization, on equal footing, which can create more trust between participants and limits a centralized blockchain operator from manipulating or removing essential information from the blockchain. However, this means that consortium blockchains can generally only be used for smaller groups of institutions, where identification of parties is easier.
Like private and hybrid blockchains, consortium blockchains are fast and have extremely low or no transaction fees. Since they are private and permissioned, they are also ideal for regulated industries, such as finance or healthcare, which need to share sensitive data without the risk of outsiders or criminals gaining access. Another benefit of consortium blockchains is the fact that multiple parties can share in the financial cost and risk of the blockchain, so if it doesn’t quite work out, the financial burden of failure won’t rest on one company alone.
It should be noted that, unlike completely private blockchains, to succeed, consortium blockchains generally need a critical mass of members, otherwise, they won’t really be able to facilitate the sharing of important information between various organizations in a specific industry. In addition, successful blockchain consortiums must stay up-to-date on blockchain security technology, industry trends, and ever-changing regulatory standards in order to remain relevant and useful for the long term.
Just like other kinds of blockchains, consortium blockchains have their own benefits and drawbacks. In general, consortium blockchains have many of the same benefits and risks of traditional private or hybrid blockchains, however, as previously mentioned, these blockchains come with additionally decentralization because of the equal voting power of each member, which increases cross-enterprise trust and prevents a centralized entity from changing the rules of the blockchain or tampering with data.
Some of the pros and cons of consortium blockchains include:
When it comes to consortium blockchains, enterprises and institutions have very specific expectations of organizational benefits and are looking for very specific qualities in consortium blockchain ecosystems.
According to a major global survey by Deloitte, organizations are expecting benefits from consortium blockchains to include:
In addition, organizations are looking for qualities including:
Industries that decide to use consortium blockchains are generally the same industries that use private and hybrid blockchains. In some cases, a company or organization will use each of these types of blockchains for different purposes and to achieve different goals. Some of the top industries currently utilizing consortium blockchain technology include:
The traditional finance and banking industry deals with massive amounts of sensitive data, which often needs to be shared between a variety of organizations for a wide scope of purposes, including the buying and selling of assets like stocks, bonds, and securities, bank to bank loans, risk management efforts, and anti-money laundering (AML) efforts, just to name a few.
Banks, brokerages, asset managers, and other financial institutions use consortium blockchains for these purposes and more, with a particular focus on KYC (know your customer) efforts to avoid money laundering or international sanctions, as well as focusing on tracking corporate and personal credit scores and other organizational data.
The healthcare and insurance industries currently face a wide variety of challenges when it comes to data, including both institutional and financial information. However, perhaps the biggest challenge involves consumer data, which needs to be kept extremely secure due to ethical and regulatory restrictions, but also needs to be shared with relevant parties, including the required information sharing that occurs between pharmaceutical companies, hospitals, pharmacies, insurance companies, and other industry suppliers and distributors.
Security is increasingly a major concern, particularly because healthcare industry hacking has reached an unprecedented level in recent years. For instance, one stolen healthcare record costs the industry an average of $429 dollars, with the average data breach costing an organization $9.3 million in 2021, up from $7.13 in 2021. Breaches can not only cost companies in regulatory fines, but erode consumer trust and increase the potential for healthcare scams and other illegal activities.
Blockchain tech, and particularly consortium blockchains, can help secure consumer and organizational data, while facilitating that necessary sharing between various parties. The immutable nature of blockchains also means that historical healthcare data is recorded permanently and can be securely accessed when necessary. Blockchains may also be able to cut down on the use of traditional paperwork and medical data systems, which can be both inefficient and insecure. In addition, blockchain can help improve medical supply chains, as we’ll discuss later in this article.
Global supply chains are often incredibly inefficient, and it can be incredibly difficult to track both finished items and raw products to their original source, which can lead to quality control, counterfeiting, safety, and potential legal issues.
Consortium blockchains can facilitate data sharing between multiple entities, and when used by many or all participants in a specific supply chain, this data sharing can speed up deliveries and help companies better calculate their required production and delivery needs. Consortium blockchains can also help firms develop more efficient ways to assemble and transport goods, which can save time and significantly reduce energy costs.
The fashion industry suffers from counterfeit like no other, with some reports suggesting that the global market for counterfeit fashion items, including clothing, watches, jewelry, pursues, shoes, and other accessories, is around $450 billion per year. Since many fake items look almost identical to real items, preventing counterfeiting and determining if items are genuine has been increasingly difficult, even with computer databases, barcodes, RFID tags, and other relatively modern technologies. However, blockchain could help change this.
Blockchain databases, especially consortium blockchains shared by multiple brands, can help track fashion items from the raw materials to their final product, just as the general logistics industry is now doing with general (mostly non-fashion-related) products. In addition to preventing outright counterfeiting, blockchain tech can make sure all raw materials used to manufacture fashion items, such as cotton, leather, metal, or plastic, are produced in an ethical and environmentally sound manner. This may involve inviting (or even requiring) a wide variety of suppliers and subcontractors to also participate in the blockchain’s governance or infrastructure.
The largest consortium blockchain in the fashion industry is currently the Aura Blockchain Consortium, created in April 2021 by LVMH, Prada Group, and Cartier, which we’ll examine later in this article.
The food and beverage business deals with some of the trickiest supply chain and quality control issues of almost any industry in the world today. Unlike industries like fashion, where a counterfeit item can generally only lead to financial losses, supply chain or counterfeiting issues in the food industry can lead to contaminated products, which can lead to serious illness or even death.
From early to mid-2022, the CDC reported significant outbreaks of Hepatitis A in strawberries, Listeria in ice cream, Salmonella in peanut butter, and Norovirus in raw oysters– and that’s just in the United States. And, in 2021, major concerns emerged over heavy metals and other potentially deadly contaminants in baby food across several major brands, including industry leader Gerber. These are only a few examples of the thousands of food-related disease outbreaks that occur across the world each year.
Fortunately, blockchain supply chain tracking– particularly when utilized by a blockchain consortium of suppliers and distributors, can also help improve safety and reduce counterfeiting in the food industry. This is mainly because contaminated products can now be immediately tracked back to their source with a high level of accuracy, which allows companies and government health and safety institutions to contain outbreaks faster than ever before. And, just like fashion and other industries, blockchain supply chain tech can also make sure that food and food components are produced ethically and in environmentally friendly ways.
Now that we’ve reviewed some of the industries where consortium blockchains can have a major impact, we’ll discuss some of the largest and best-known consortium blockchains (including general infrastructure and specific blockchains) currently operating today.
Hyperledger is a major project consisting of open-source blockchains and related tools, founded in December 2015 by the Linux Foundation. The project has garnered major support from tech industry giants, including Intel and IBM. According to Hyperleger:
“Hyperledger Foundation hosts a number of enterprise-grade blockchain software projects. The projects are conceived and built by the developer community for vendors, end user organizations, service providers, start-ups, academics and others to use to build and deploy blockchain networks or commercial solutions.”
In essence, Hyperledger provides the tools for independent groups of organizations to create their own private, permissioned blockchains, with a major focus on the creation of consortium blockchains. Their best known project is Hyperledger Fabric, a modular blockchain infrastructure that allows for full smart contract functionality and support for the Ethereum Virtual Machine (EVM). Hyperledger Fabric is the basis for IBM’s popular blockchain platform, which Walmart and IBM used to build the IBM Food Trust, Walmart’s main food tracking blockchain, in 2018.
Other major companies currently using Hyperledger to create private and consortium blockchains include Amazon, FedEx, Visa, BNY Mellon, Huawei, Oracle, and Aetna. In addition to these major firms, the overall Hyperledger project includes 120,000 contributing organizations and more than 15,000 engineers.
The R3 consortium is a group of financial institutions currently developing a project called Corda, a blockchain-based solution intended to improve secure data sharing among financial institutions in an effort to upgrade the worldwide infrastructure for the financial services industry.
The Corda consortium blockchain is significantly different from other blockchains, as it conceals a significant amount of private data from most participants and mainly focuses on specific data sharing between two or more firms utilizing the blockchain. Due to this, consensus (and transaction validation) is achieved between individual nodes rather than the network as a whole, though there are both supervisory and regulatory observer nodes designed to ensure the integrity of the blockchain.
Unlike other blockchains, the Corda blockchain also uses multiple consensus mechanisms for maximum flexibility. Due to the need for the blockchain to create real-world legal enforceability, Corda also records a specific link between smart contracts and real-world legal documents.
Some of the best-known companies currently using the Corda blockchain infrastructure include Morgan Stanley, BNP Paribas, MetLife, HSBC, and China Merchants Bank.
Quorum is a private blockchain first developed in 2016 by J.P. Morgan, which soft-forked the Ethereum blockchain in order to create a new blockchain more suitable for enterprise clients. This provides significantly greater flexibility than some other private and consortium blockchain solutions, as developers can work in Solidity, the most common blockchain programming language. The blockchain also allows entities to create their own Ethereum-compatible tokens and coins.
Just like Corda, Quorum allows for highly confidential transactions between network participants, a high level of transaction speed, and is a permissioned blockchain that only allows select members to participate. In August 2020, J.P. Morgan sold Quorum to blockchain firm ConsenSys.
ConsenSys has built multiple enterprise apps available for those using the Quorum blockchain infrastructure, including a private transaction manager and an app that allows companies to easily create digital payment systems. Instead of proof-of-work or proof-of-stake, consensus on the Quorum blockchain can be achieved with proof-of-authority (PoA), RAFT consensus, which automatically and randomly elects leader and follower nodes for transaction validation, and Istanbul BFT, a new leader-based consensus method inspired by PoA.
Some of the best-known companies currently using Corda to create private and consortium blockchains include Microsoft, HSBC, Novartis, LVMH, HSBC, Cargill, and Ant Group.
One of the largest specific blockchains created using Quorum’s infrastructure is Alastria, a Spain-based financial services blockchain, which also happens to be the world’s first regulated blockchain ecosystem. Major participants include BBVA, Santander, Telefonica, and several major Spanish universities, including the University of Valencia and the University of Girona.
Ernst and Young and Microsoft are also currently collaborating on a Quorum-based blockchain designed to streamline digital rights management and provide faster tracking of royalties for the Xbox video gaming ecosystem.
The Aura Blockchain Consortium is one of the world’s best-known consortium blockchains, and the most influential blockchain in the fashion and luxury industries. As we mentioned previously, the Aura Blockchain Consortium was created in April 2021 by luxury fashion giants LVMH, Prada Group and Cartier. Other major companies involved in the consortium include Hublot, Hennesy, Bvlgari, Mercedes-Benz, and OTB Group. Aura was created with assistance from Microsoft and ConsenSys and is based on the Ethereum blockchain. The Aura blockchain also uses Microsoft Azure cloud computing services for secure data storage and networking. Their traceability smart contracts are also based on Ethereum’s popular ERC-721 NFT standard.
Aura is designed to help both companies and individual consumers authenticate luxury and fashion products, combating counterfeiting, as well as to provide detailed supply chain information, including information about how raw materials were sourced for each individual product. The Aura blockchain also allows for individual ownership certificates to be transferred to the new owner of a product in order to prove its authenticity. Aura is a true consortium blockchain, where any organization can become a full member with equal rights.
In addition to its general blockchain, Aura recently released a SaaS product that allows brands to easily access the Aura Blockchain directly through APIs, connect them to their own IT systems, generate no-code smart contracts, and immutably store product history, product ownership, and product transfer information.
The MediLedger network is a blockchain consortium specifically designed for the needs of the healthcare industry, with a major focus on improving pharmaceutical supply chains and creating more efficient and safer distribution networks. Some of the largest members include Walmart, Pfizer, Bayer, Amgen, and Gilead. Information recorded and shared on the MediLedger blockchain includes medication pricing contracts, customer identity and eligibility data, which can help reduce and standardize medication prices while reducing costly supplier chargebacks.
Just like traditional blockchains, each participant in the MediLedger blockchain has a copy of the all recorded data and the applicable data enforcement rules. However, similar to the Hyperledger network, sensitive data is only actually available to the necessary parties, and sensitive data is published using zero-knowledge proofs.
Since all members are on equal footing, no one organization can alter the data or the rules. This type of structure provides greater fairness between suppliers and purchasers, and, for example, requires purchasers to send specific and easily-confirmed customer data before submitting a chargeback to a supplier.
Like most private and consortium blockchains, the MediLeger blockchain currently does not have a native token or cryptocurrency. However, unlike most other consortiums, MediLeger is actively exploring the possibility of the blockchain incorporating crypto and DeFi transactions between medical companies in the near future.
IBM Food Trust is the world’s largest food industry blockchain infrastructure, which is designed to connect food growers, retailers, processors, distributors, manufacturers and other stakeholders to improve industry safety, efficiency, and collaboration, with a major focus on food supply chains. IBM Food Trust is built using Hyperledger Fabric. IBM Food Trust is not a single monolithic blockchain, but rather an infrastructure to build multiple consortium blockchains, each which is designed for a single company or group of companies to connect with their own stakeholders, such as suppliers and distributors. IBM Food Trust allows for the creation of both traditional private blockchains and consortium blockchains.
Walmart has been perhaps the best-known company to utilize the IBM Food Trust blockchain, which has, in many cases, allowed it to trace food products to their source in seconds, rather than days. In 2019, Walmart began requiring that certain suppliers use the technology to help Walmart trace food products back to their original sources, making it significantly easier to identify and stop food contamination issues at their source.
In addition to Walmart’s specific blockchain consortium, the company is also a member of a larger consortium also developed using IBM Food Trust technology, which includes members such as Tyson Foods, Nestlé, Dole, McCormick, Unilever, Kroger, Driscoll’s, and Golden State Foods.
Other major companies utilizing the IBM Food Trust blockchain include Albertsons, Carrefour, CHO, and Raw Seafoods. IBM Food Trust itself has also joined SecQuAL, a new eleven-member U.K.-based consortium led by Lloyd Register, which is designed to improve food traceability and reduce food waste.
Health Utility Network is another large blockchain consortium designed for the healthcare industry. The network, which was initially an independent project between companies including The Cleveland Clinic, Anthem, IBM, Aetna, Sentara Healthcare, PNC Financial Services Group, Inc., and Health Care Service Corporation (HCSC), has now been launched as a standalone company, Avaneer Health. The constituent members define Aveneer Health as a “member-based, secure and open network supporting utilities developed for and by the healthcare industry.
Aveneer and its renamed Aveneer Network, much like industry competitor MediLedger, is specifically designed to reduce data exchange costs while retaining a high level of information privacy and security. It’s also hoped that the network can reduce administrative burdens and improve patient experiences.
Energy Web Foundation is one of the largest energy industry blockchain consortium infrastructure providers. It’s designed to build open-source, decentralized systems to facilitate global decarbonization efforts. The foundation’s consortium blockchain infrastructure utilizes the Substrate, Polkadot, and Kusama ecosystem to allow energy industry enterprises and organizations to run either private blockchains or blockchain consortiums with other partners. The Energy Web Foundation has partnered with over 100 companies, including GE, Shell, PG&E, Duke Energy, Siemens, R3, and Volkswagen, as well as major foreign electricity providers like Japan’s Chubu Electric Power and Brazil’s Electrobas.
The foundation is currently working on 50 projects in 21 countries. One example includes the EDGE DER Marketplace, a decentralized energy marketplace in Australia that integrates major electricity companies with individual energy providers, such as homeowners with solar panels, to better balance and distribute electricity.
Marco Polo is a major blockchain consortium specifically focused on trade finance. According to the organization, “Marco Polo Network is one of the world’s fastest-growing digital networks for supply chain transactions and payments.” The blockchain, which is an open platform for trade, payments, and working capital is designed to enable fast transactions for banks and other companies who may need to work with thousands of suppliers simultaneously.
Unlike traditional trade finance contracts, which can take days or weeks to confirm, Marco Polo’s network allows a trade to be confirmed in real time the moment both parties confirm that the terms are correct, allowing work capital to flow significantly faster from banks to both large corporations and small to medium size companies across the world. The blockchain also helps participants identify potential risks as well as align with increasingly important ESG (environmental, social and governance) objectives and requirements which are often mandated by governments and institutional investors.
As of October 2021, the network consisted of approximately 45 banks worldwide. Major participants in the project include BNY Mellon, BNB Paribas, Standard Chartered Bank, Natixis, ING, NatWest, Bangkok Bank, SMBC, Forfaiting Association (ITFA),, OP Financial Group, Commerzbank, and DNB.
The Enterprise Ethereum Alliance (EEA) is “a member-led industry organization whose objective is to drive the use of Enterprise Ethereum and Mainnet Ethereum blockchain technology as an open-standard to empower ALL enterprises.”
While the Ethereum Enterprise Alliance started with a main focus on providing private blockchain solutions to enterprises, they later expanded their focus to include blockchain consortiums. In 2019, in partnership with Microsoft and Intel, the Alliance created a token designed to incentivize firms to participate in EEA-based consortiums. The token, called the Trusted Reward Token, provides a way for enterprises to gain rewards for actively participating in a consortium.
The Trusted Reward Token is only the first token to be developed by Microsoft’s Token Taxonomy Initiative (TTI), a working group intended to develop token standards for enterprise blockchain networks across a variety of blockchains, such as R3, Corda, Hyperledger, and others.
Other founding members of the EEA include ConsenSys, J.P. Morgan, BBVA, Banco Santander, BP, Credit Suisse, ING, UBS, Tendermint, and Wipro.
The Global Shipping Business Network (GSBN) is another important platform used to create private and consortium blockchains.
In addition to the big names mentioned above, some other interesting and influential blockchain consortiums include Global Shipping Business Network, Tradelens, CargoSmart, Energy Blockchain Consortium, and Contour Network. In November 2021, the Global Blockchain Business Council (GBCC) published a list of 100+ recognized blockchain consortiums, a great resource for those who want to learn more about smaller or emerging blockchain consortiums.
Today, companies and institutions across a wide spectrum of industries face significant issues involving information security, counterfeiting, product safety, data sharing, and logistics and supply chain efficiency. From the healthcare and food sectors to the finance and luxury goods industries, the limitations of legacy technology are increasingly apparent, and are clearly insufficient for the needs of a highly-globalized, fast-moving economy increasingly reliant on international trade and highly distributed supply chains.
In this complex environment, consortium blockchains provide a powerful solution for data sharing and supply chain tracking. By striking a balance between highly-centralized private blockchains and public blockchains, where privacy and control is limited, consortium blockchains increase trust by providing members equal voting power, while still keeping information private. Due to these factors, it seems that consortium blockchains are likely to continue to grow in size, scope, and influence as stakeholders in many industries begin to experience the benefits of secure data sharing, improved supply chain efficiency, and lower costs.
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