516
views

Looking at Public Blockchains vs. Private Blockchains

Blockchain – The End of Centralization?

Blockchain is a distributed, decentralized public ledger, which is a continuously growing list of records stored in the form of blocks. These blocks in a blockchain are connected through cryptography, which keeps the transactions’ confidentiality intact. A blockchain is a time-stamped series of immutable (tamper-proof) records of data, which is not managed by a central authority but managed by a computer cluster.

On a blockchain, every data shared on this network is visible to all participants, and every one of them is accountable for their actions. A blockchain perfectly defines a democratized system.

For all of its automation, security, and binding trust capabilities in a decentralized manner, some people predict this is the end of Centralized platforms as we knew it. Although that might not necessarily be true, centralized platforms face competition, something they haven’t faced for millennia.

The Debate of Our Times

A Public Blockchain (also called Permissionless blockchains) does not require anyone’s permission to participate in the network. Anyone can join the network and read, write, or participate within the blockchain. A public blockchain is decentralized and does not have a single entity that controls the network.

On the other side of the spectrum are Private Blockchains. A private blockchain is a permissioned blockchain. Private blockchains work based on access controls, which restrict the people who can participate in the network. One or more entities control the network, which leads to reliance on third-parties to transact. A Private Blockchain might sound like an Oxymoron, but it means more than that.

It is difficult to argue which one is better, as both have their niche use cases and preferred market. Thus, let us deeply analyze each area and let you make that decision for yourself.

Public Blockchains Vs. Private Blockchains

A public blockchain is permissionless. Data on a public blockchain is secure, as it is not possible to modify or alter data once they have been validated on the blockchain. Bitcoin and Ethereum are well-known examples of public blockchain.

Only the entities participating in a transaction will know about it in a private blockchain, whereas the others will not access it. Hyperledger Fabric of Linux Foundation is a perfect example of a private blockchain.

Sl. No. Public Blockchains Private Blockchains
1 Ownership There is no ownership structure in a public blockchain. It is open to all, and ownership is distributed among all its members. A Private Blockchains’ ownership status depends on the stake divided by the team that initiated the network.
2 Network Influence No single person or group can have any significant influence over the network. The Network is influenced by the major stakeholders who take care of day-to-day activities.
3 Decision Making A democratic decision-making process is followed. Inputs from all members are considered while making any changes. The stakeholders of the network are involved in the decision-making process. No inputs are taken from the users of the network
4 Efficiency Public blockchain losses in efficiency what it gains in decentralization. Since the network is distributed among nodes globally, the efficiency of the project is drastically reduced. Due to its relatively centralized nature, the efficiency of a Private network is incredibly high. Applications that need fast transactions speed and bandwidth can depend on a Private blockchain network.
5 Security A public network is more secure, owing to its decentralization and active participation. Due to the higher number of nodes in the network, it is nearly impossible for ‘bad actors’ to attack the system and gain control over the consensus network. A private blockchain is more prone to hacks, risks, and data breaches/ manipulation. It is easy for bad actors to endanger the entire network. A Private blockchain is susceptible to all attacks that a Centralized entity might be exposed to. Hostile takeovers, third-party manipulation, undue influence, hacks, majority attacks are just some of the possible security flaws.
6 Scalability A public blockchain cannot compete with a private blockchain in terms of scalability issues as it is slow and can process transactions only at a slow pace. As only a few nodes need to manage data in a private blockchain, transactions can be supported and processed at a much higher pace. A Private blockchain, on the other hand, is highly scalable. As it only requires a few nodes to function, it can be easily scaled to include as many participants are needed.
7 Perceived Use Cases Any person/group who identifies with the decentralization of a public network, security, and openness would be a public blockchain user.

One can find a use case for a public blockchain in any place where there is a need for openness and transparency and no need for a third party or intermediary. E.g., money transfer, governance, third-party reliant businesses, etc.

Private Blockchains has a relative niche market. Private blockchains are a lucrative option for parties that need to reply to other parties while not allowing outside influence.

 

Any area where secrecy is of utmost importance can do well with private blockchain infrastructure.

8 Major Players Bitcoin, Ethereum, Litecoin, Monero Hyperledger Fabric, Corda R3, Ethereum Enterprise Alliance

Conclusion

As you may now know, blockchain technology is a highly complex and profound field, which consists of numerous concepts and different types of blockchains. It is important to understand these concepts. Being aware of the features that differentiate public blockchains from private blockchains is necessary and advantageous to elevate your understanding to the next level. Understanding the types of blockchain networks is as important and essential as knowing what a blockchain is and how it applies to cryptocurrency.

Bitcoin live price
Btc
Bitcoin
$29.024
price
0.4325%
price change
BUY NOW

And so, the usage of Public and Private blockchains depends on the subject of implementation. If you want to use blockchain in a system that needs more decentralization and transparency, then the Permissionless blockchain is the best. On the other side, if you want only a handful of people to have full access to the data, then the Permissioned blockchain is the best.

Stay up to date with our latest articles

More posts

What is Tornado Cash, and How Does It Work?

Decentralized and non-custodial, Tornado Cash is an Ethereum-based solution for privacy and anonymity. Severing the on-chain link between those who send and receive coins enhances transaction anonymity.  This guide will provide our readers with more insight into Tornado Cash. We will start with a general introduction and move deeper into how Tornado Cash works. We will also add a list of pros and cons to this system for the reader's benefit. Understanding Tornado Cash Decentralized protocols such as Tornado Cash…

What Is the Blockchain Scalability Trilemma?

In the context of decentralization, security, and scalability, the Blockchain Trilemma refers to the generally held notion that decentralized networks can only deliver two of the three benefits at any given moment. In this article, we more closely into the matter, assessing all the most relevant aspects of the blockchain scalability trilemma. The Trilemma Vitalik Buterin invented the term "blockchain trilemma," which refers to a conundrum that blockchain engineers face while balancing three competing demands at once: decentralization, security, and…

Do Smart Contracts Represent Legal Contracts?

When industry players use the term "smart contracts," they may mean different things. Words matter, as any contract lawyer will be able to explain. Is the word “contract” a technical overstatement, or does it trigger actual legal bindings? The industry needs to agree on the consistency of its terminology. What exactly is a smart contract? Does it have any legal implications? When attorneys and technologists use this terminology, do they understand each other? Our article will provide a short analysis,…

How Do Crypto Anti-Dumping Policies Work?

Scammers utilize social media platforms to impersonate celebrities or acquaintances to persuade victims to make fake investments. The rise of cryptocurrencies and the lack of regulations gave new tools to these criminals. We'll look at how the market is attempting to safeguard investors today. Crypto commentators frequently emphasize anti-dumping regulations as a deterrent to online fraudsters. What Are Pump and Dump Operations? Before dwelling on the concept of anti-dumping policies, we need to understand what is a “pump and dump”…

Understanding Layer 3 Blockchains

Scalability has become an even more pressing issue as the crypto sector experiences increased customer demand. Many of us have come across terms like “layer one” and “layer two” protocols in the blockchain world. Blockchains must be very secure due to the lack of a centralized authority. They must also be incredibly scalable to cope with growing users and transactions. Today we will learn more about layer three solutions, a technology aiming to provide scalability while maintaining top-notch security. A…

Venezuela – How Does the Petro Crypto Work?

Venezuelan President Nicolas Maduro suggested the creation of a national cryptocurrency in 2017. Officials claim that the country's oil, gas, and mineral riches back its value. However, as of today, Petro seems to fail fulfilling its purpose of rescuing the national economy. Some foreign observers believe the Petro digital currency is a trick to circumvent international restrictions. These sanctions prevent Venezuela from borrowing cash on global markets. This article will provide an analysis of the creation of this national cryptocurrency.…

Understanding Advanced Smart Contracts

The clever use of smart contracts has contributed significantly to the exploding popularity of blockchain technology. Initially proposed by computer scientist Nick Szabo, a smart contract is a collection of instructions executing automatically. This technology aims to make the contract execution as automated as possible. Many know how basic smart contracts work, but it is rare to find a guide on their advanced versions. After a basic overview, we will analyze two typical cases of advanced smart contracts. The article…

Layer 2 Blockchain Projects – A Guide for Beginners

One of the critical difficulties confronting the blockchain community is the matter of scalability. While the technology has proven its high potential over the years, several aspects limit its applicability to a large scale. The scalability problem has been on our minds since humankind came up with the first technological inventions. We'll expand on that in this post, looking at the particular case of Layer 2 blockchains. Layer 2 (L2) blockchain definition The "Layer 2 blockchain technology" concept is gaining…

A Beginners’ Guide to Permissioned Blockchains

It has been a few years since the topic of blockchain technology invaded the market for the first time. Today, people are gradually learning to see a blockchain and a cryptocurrency as two distinct concepts. The technological and financial culture is growing, and, as a result, the industry is attracting more developers and users. Among the many consequences of this trend, we find the appearance of new tools. Today we will talk about one of the many new applications of…

Hyperledger Fabric – What Is It and How Does It Work?

The cryptocurrency world continues to see new developer ideas enter the market. Today, we will simplify a technical aspect: the Hyperledger Fabric technology. Any reader interested in learning about the most complex aspects of the topic can refer to the official documentation. This article will analyze the main elements of this system, also highlighting important criticisms in the sector. Understanding Hyperledger Fabric Let's start, first of all, by understanding the origin of the instrument name: Hyperledger is an open-source distributed…