Public And Private Blockchain Technology: Meaning, Uses, And Benefits
Virtually all sectors of the economy are now embracing blockchain which comprises public and private Blockchain technology, due to its potential positive impact. This article is to help you to have a better understanding of public and private blockchain technology. This is very important, especially now that these terminologies are constantly misrepresented in the media.
The blockchain architecture has provided us with two very distinct blockchains working principle. It is based on this working principle that we have the public blockchain and private blockchain technology or permissionless blockchain or permission blockchain. Before applying blockchain in various use cases to solve industrial needs, it is very vital that you know about the blockchain because it comes in different types. The public and private blockchain is merely talking about who can write data onto that blockchain or onto that ledger.
Public Blockchain Network
This is a permissionless blockchain that allows anyone to participate without placing any form of restrictions. The public blockchain network is decentralized and secure which means that the data cannot be changed once it has been validated on the blockchain. As long as you are connected to the public or permissionless blockchain network, you can input transactions and data. The public blockchain can also be seen as an open source blockchain network.
Some of the examples of public blockchain include Bitcoin and Ethereum blockchain. They are designed to protect a user’s identity; hence anonymity is the foundation of this platform.
Benefits Of The Public Blockchain Network
Below are some of the benefits of permissionless blockchain platforms:
- It is open to read and write which means that virtually anyone can be part of it by merely submitting transactions to the blockchain. This can be seen with the Bitcoin and Ethereum transactions.
- The ledger is distributed and all the nodes in the blockchain take part in the transaction validation.
- It is immutable. This means that once data is inputted on the ledger, it cannot be altered or changed.
- The platform is secure due to mining. For instance, Bitcoin having a majority of network power could potentially promote massive double spending as well as the ability to prevent transaction confirmations and other potentially malicious acts.
Private Blockchain Network
Unlike the public or/ permissionless blockchain network, the private or permission blockchain have access controls that restrict those that can join the network. It is more of a centralized system that restricts or limits access to specific users. This permission or closed blockchain network possess one or multiple entities that control the network. This has made the permission blockchain network to rely on third-parties for the transaction to take place. Avery good example of the private blockchain is the hyperledger.
The private blockchain functions by understanding the identity of a user. By following the user’s identity, the network can determine what role they can play. This role determines the type of information the user should or shouldn’t have access. The private blockchain networks rely on the fact that the identity of the users is known.
Benefits Of Permissioned Or Private Blockchain Platform
Below are some of the benefits that come with the private blockchain platform:
- This platform lowers transaction time (faster transaction). This is because of the lesser number of nodes that participate in the ledger.
- The private blockchain has better scalability as it allows users to add nodes and services on demand.
- It is enterprise permissioned because enterprise controls the resources and access to the blockchain.
- By having control of the blockchain infrastructure, the permissioned blockchain gives enterprises compliance supports by allowing them to create compliance requirements.
- The consensus is more efficient due to the lesser number of nodes.
There is a need for you to know that public and private blockchain platforms are not competing with each other. Each of them has specific functions, so it is all about knowing what you want. For example, the permissionless blockchain platforms are better for scenarios where the user wants to stay anonymous. For solutions where all users need to be treated equally, the public blockchain platform comes in handy.
You can see that the majority of the public blockchains are used to support cryptocurrency due to the importance of anonymity to users. You or any other person should be able to own and trade Bitcoin without any form of prejudice.
When we come to the corporate world, we see a different use case scenario and private blockchain platforms are adopted. In the corporate or business environment, anonymity is not valued, but privacy is. It is for this particular reason that enterprises and companies are embracing the permissiooned blockchain platform.
The corporate enterprises want to determine who sees what information and under what conditions and circumstances. Therefore, for supplier-vendor relationships, the private blockchain working principle can be employed.
It is quite evident that the public blockchain tends to favor Business to Consumer (B2C) scenarios whereas the permissioned blockchain like the hyperledger is for Business to Business (B2B) case scenarios, supply, and value chain relationships.
The misconception that public and private blockchain platforms are competitors should be avoided. Specific real-world solutions require components of both the public and private blockchain networks. To make it more understandable for you, always see both the public and private blockchain networks from the perspective of identity management.
In the private blockchain, you know with certainty the identity of all the participants while in the public blockchain platform anonymity is the watchword. You can see vividly that both of these public and private blockchain platforms serve different purposes. There are also lots of real-world use cases that have integrated both the public and private blockchain components seamlessly.