The concept of blockchain has been a rather difficult subject to most people. And you have probably heard an array of characteristics ranging from immutability to transparency. While they might have told you that the purest form of blockchain advocate for transparency, there are private blockchains that don’t exactly subscribe to this decree. This piece explores public and private blockchains and the differences that emanates between the two.
Public blockchains are permission-less. But as for private blockchain, the opposite is true. Private Blockchains depend on read and access permissions regarding the network. There are a number of blockchain types, each with unique underlying characteristics that impact its functionality and performance.
Public Blockchain Essentials
Public blockchains function on an open ledger rule. This is where anybody can read or write on the platform. It is normal for the open ledger platforms to apply incentives to implement gamification mechanism to boost participation. Bitcoin is one example of a public blockchain.
People interested in the distributable property of blockchain favor public blockchain as opposed to private. Most blockchain enthusiasts believe that when the public blockchain is implemented, data is shared in a fairer peer to peer manner.
In addition to its ideological benefits, public blockchain ledgers are extremely secure. The fact that they are transparent and can be edited by anyone at any given time makes it easier to identify fraud than in any other form of blockchain.
But in as much as they are a favorite, public blockchains have their shortcomings. The amount of computing power required for each node to complete the authorization of a transaction is tremendous. This computation power translates to time, environment and financial expenses. And as more participants join the network, the problem persists.
What Is Private Blockchain?
When it comes to private blockchains, only specific entities can actively contribute. The developer additionally has the ability to set the extent to which the constituents can contribute to the network. The private blockchain is, in essence, a closed network and only offers the network participants the shared ledger benefits without distribution. Hyperledger is one example of a private blockchain.
Corporates and enterprises prefer private blockchains. Private blockchain participants need to be vetted by the network members or at least be known to them. The fact that private blockchains have limited nodes means there is a lesser computation power and therefore, they facilitate the handling of greater throughput. Furthermore, private blockchains also allow certain elements within each transaction to be hidden. Elements like transaction value and sensitive personal data remain hidden.
Like their public counterparts, private blockchain is not perfect. They are neither necessarily an answer to public blockchain problems either. A user on a private blockchain is at the mercy of the administrator- a problem that Satoshi aimed at eradicating from the very beginning. Unprofessional admins or even colluding entities may manipulate the ledger.
The Consortium Blockchain
Consortium blockchain are a hybrid between public and private blockchains. It could work in a number of ways. It can also be custom designed to fit specific circumstances. Its benefits and drawback depend on the element of private or public blockchain that participants choose to adopt.