Public Blockchain vs Private Blockchain
Blockchain is a distributed registry that records transactions on the network. There are two main types of blockchain: public and private. Let’s go see why they are being used and what’s the difference between them.
What is the public blockchain?
The public blockchain does not require access authorization – it is open to everyone. Each member of such a network can view transaction history, create intelligent contracts and decentralized applications. Membership in a public blockchain and participation in its processes has no limits.
- You can specify and verify any information recorded.
- Corruption and fraud are not excluded, all information is recorded in the register.
- The more participants confirm transactions, the more secure the chain becomes.
- Participation in blockchain processes is encouraged.
- Public blockchain does not have a private character. It is not at all private – the transaction history is accessible to everyone.
- Validating a transaction takes a long time.
Public blockchain is used for bitcoin transactions: It can be downloaded and used by everyone. Ethereum – is also an open distributed network, which allows members to create intelligent contracts and applications on its basis.
What is a private blockchain?
Private blockchain has certain access restrictions and requires authorization to access it.
To become a member of this blockchain type, you need an invitation. It is approved or rejected by the network creator or by the user-moderator who establishes rules. Existing network members can also confirm or deny access. The control mechanism is variable and depends on the rules.
As far as operations are concerned, only direct participants can access them.
- A personal choice of the consensus algorithm.
- High speed of transaction execution and validation.
- The blockchain scalability problem is solved.
- Compliance with regulations is easier and more efficient.
- Provides companies with internal security.
- Trust becomes more problematic because the information recorded is private.
- Centralized control.
- Cryptocurrency operations and corruption go unnoticed.
- Data can be modified and changes are hidden from unconfirmed users.
- The high possibility of attacks from network members.
Hyperledger Fabric from the Linux Foundation – is an example of the private blockchain, applied in companies and large multinationals.
Private Blockchain also uses the Ripple whose transactions in the network are validated only by authorized participants. For example, Microsoft and MIT have access to it.
What do the two types of blockchain have in common?
Despite the significant difference in the way public and private registers function, there are some common features between them.
- The two blockchains are the decentralized P2P networks.
- The data are synchronized via consensus algorithms.
- Both are resistant compared to other networks.
Private Blokchain is a good solution for companies where confidentiality of information is very important. As a result, companies can also reduce transaction costs and time. At the same time, the private blockchain – is a distributed register, which has already introduced many changes in many industries and has increased the efficiency of their operating processes through free access to the information provided. It is adapted to provide a high level of trust between all participants, as well as to reduce fraud.