Private Blockchain Vs Consortium Blockchain

Private blockchain and consortium blockchain may seem similar at times; however, they are a bit different. To help you get rid of all the confusion, I’ll be covering the comparison of private blockchain vs consortium blockchain. So, let’s see how they are similar and different at the same time.

There are different types of blockchain platforms on the market for various purposes. If you know about blockchain even a little bit, you would know that it has three different types – Public, Private, and Consortium/Federated. However, some of you may be confused with private blockchain vs consortium blockchain, as, at times, they may seem similar.

In general, their architecture is similar in many cases; however, each technology’s underlying features are different. More so, each technology is used in different situations to achieve different goals. This guide will help any novice out there struggling to grasp the concept of private and consortium blockchains.

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What is Private Blockchain?

Before we begin, Let’s see what is a private blockchain in the first place. Without knowing about the underlying technology, you can’t possibly understand the difference between the two types of blockchain technologies.

In reality, private blockchains have a single authority or organization to look after the network. But what does it mean? It means that, even though in public blockchain platforms, anyone could get an entry into the platform, here only employees of a single organization would get it.

But it seems like a bit more centralized, doesn’t it? In reality, private blockchain solutions don’t really offer the true decentralization feature of the blockchain. Instead, you’ll get a partially decentralized network with a set of rules and regulations.

These are some of the major features of private blockchain solutions.

In many circumstances, if the governing authority seems fit, then they can also override a transaction. Another great aspect of private blockchain solutions is that you can have private transactions. It means that every user can’t track you or see your private transactions on the ledger.

In reality, this is absolutely necessary, even for us. Why? Well, you definitely don’t want random people to know when you made a transaction or anything.

Mostly it coincides with user rights as well. Also, organizations do deal with extremely sensitive documents, and competitors can steal their brand value if left to the public eye.

That’s why private blockchain solutions have confidentiality written all over it. Anyhow, it also does have other key features of blockchain as well.

So, you won’t feel like the network isn’t being fair to you in any way. For example, Ripple is actually a private blockchain platform for enterprises.

Anyway, let’s check out the features of private blockchain solutions in this private blockchain vs consortium blockchain technology guide.

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Private Blockchain: Best Features of This Tech

Privacy Is the Highest Concern

In private blockchains, you get the extreme privacy of your dreams. It seems a bit exaggerated, but the solutions do get out of their way to give you all the privacy you need. Basically, these solutions are more for enterprise level and not for public use.

And enterprises deal with a lot of sensitive information on a regular basis. A security breach here would mean a terrible loss for the company and the economy as well.

That’s why it’s extremely necessary to have a network that preserves these data. And obviously, private blockchains can easily do that.

Let’s see the next feature in this private blockchain vs consortium blockchain comparison guide.

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Efficient Than Public Blockchains

In reality, public blockchains did come first, and it does offer more transparency to the people. However, public blockchains use highly power-consuming consensus protocols to fuel their system. Furthermore, protocols like proof of Work take up a lot of energy, which is not eco-friendly in any way.

As a result, private blockchains started to rise, and they dumped the power-hungry consensus protocols for good. Usually, these solutions use some kind of voting-based consensus or other forms of algorithms that consume far less energy and are sustainable in the long run. Check out the next feature in this consortium blockchain vs private blockchain comparison guide.

Not Volatile in Any Way

With private blockchains, you’ll get that peace of mind that you can never get with a public blockchain. Typically, there’s a transaction fee in the platform that you have to pay to complete a transaction. In reality, nothing is free.

Although you are paying a transaction fee. It’s still very low compared to traditional banking systems. However, the issues arise in public platforms when there are too many users on the platform. The demand for transactions keeps rising to align with the transaction fee.

But not in private blockchains. As only a selected group of people can enter the platform, there’s no volatility in the network in any way Let’s see the next feature in this consortium blockchain vs private blockchain comparison guide.

Empowering Enterprises

Companies need technology that will empower not only their users but also their organizations as well. With private blockchain, it’s easy to achieve that, as the sole focus is on the enterprises itself. More so, these networks are made to be used as internal networking systems for the companies.

In reality, they are highly capable of giving the people security that the companies need. With so many hacks that go on every day, there’s always a security risk no matter what. But not with blockchain. More so, it does offer the highest level of security so far.

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Why Use This?

Saves Money

Well, the first reason for using a private blockchain would be that it saves a lot of money. How? Compared to its public counterpart, it takes fewer resources to set up a private platform rather than a public one.

However, that doesn’t mean it’s super cheap as well. If you completely want to change the legacy system you are running on at the moment, it would take investments. However, in the long run, it’ll benefit you more and save you the costs.

Let’s see the next benefit in this consortium blockchain vs private blockchain comparison guide.

Low Fees

As you already know, the transaction fees in blockchain are always low. But it can quickly become volatile if you are using a public network as the prices can rise and fall according to the demand. But not in private blockchains.

In private blockchains, there’s no additional cost hidden anywhere. More so, all the transaction fees remain the same, even under a lot of pressure because the platform is designed that way.

Regulations Are Better

You can’t work in an enterprise environment without certain regulations or rules. If there isn’t any, then you can’t stop corruption from being happening. More so, your company’s efficiency would decrease drastically as well.

That’s why, in private blockchains, you are getting a regulated system, where you can outline your company’s policies in the network, and all the members would have to follow them accordingly.

Let’s see the next benefit in this consortium blockchain vs private blockchain comparison guide.

Gets Rid of Criminals

Private blockchains have authentication processes before anyone can get an entry into the system. As a result, only the known members of a company will get entry to it. More so, there’s also level-based access to certain documentation, which acts as a secondary phase of security.

As a result, no criminal can get an entry into your system. Well, especially not without help from the inside. Anyhow, private blockchains make sure that no criminal can just use your network to commit criminal activities in any way.

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What is Consortium Blockchain?

Federated blockchain or consortium blockchain is a blockchain technology where instead of only a single organization, multiple organizations govern the platform. It’s not a public platform but rather a permissioned platform.

More so, it’s quite similar to private blockchains as well.

But how are they different? Well, even though it’s permissioned, meaning that you have to be a member of any organization with access to the ledger, it still would offer you decentralization. How?

It’s easy, really. In a private blockchain, there’s only a single organization on the platform. So, its kind of seems like a centralized entity. However, as in the consortium blockchain example, multiple organizations can actually make decisions on the platform.

So, there’s no way that any organization can get away with any illegal activities. Every other organization on the platform will keep it in check.

Anyhow, the whole concept of consortium blockchain example came to be to help enterprises collaborate with each other. In reality, as there isn’t any single authority over the network, all the companies can come together and work on the issues.

More so, they can contribute to the network and get credits and features equally.

Furthermore, a collaborative environment means more exposure and innovation, as well. And this is best for all the parties in the system.

Let’s check out more about the consortium blockchain example in this guide.

Features of Consortium Blockchain

Faster Speed

Well, first of all, consortium blockchain providers will always try to offer the fastest output compared to public blockchains. Usually, public blockchains tend to become slower due to the excess number of users on the platform.

But not consortium blockchain. In consortium blockchain, you’ll always get a better experience. But how? Well, as the platform is permissioned, not anyone can get access to it. So, there would always be control over how many users are active at the same time in the network.

Thus, scalability issues are not prominent here in any way.

Scalability

You won’t see any type of scalability problems in a consortium blockchain example solution. Why though? In reality, a consortium blockchain will always control the number of nodes for validation purposes. So, you just can’t expect to join the network and just get access to validate the transactions.

More so, there’s always a selected node to maintain these kinds of features of the platform. That’s why you won’t see any issues with slow network outputs or delays in transaction processes.

Low Transaction Costs

Another cool advantage of a consortium blockchain is the low transaction costs. Consortium blockchain providers will always offer platforms in a way that offers low transactions for you. If you are getting a solution from these consortium blockchain providers, then you can outline the transaction fee as well.

In many cases, the public blockchain gets far behind the system as more users come into the network and hog up the processes. As a result, the transaction fee keeps fluctuating at a rapid pace.

However, in consortium blockchain, everything is regulated. So, the transaction fees stay the same no matter how many users are on the network.

Thus, it’s a great choice for enterprises as well because they’ll get cheaper pricing compared to traditional banking schemes.

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Low Energy Consumption

Typically, consortium blockchain uses low-energy consuming consensus protocols to verify all the transactions or documents. More so, consortium blockchain providers also try to design the solutions according to your needs.

In reality, the mining process does take up a lot of computational power. In the long run, the energy bill can become a burden very soon. If public blockchains keep up with it, the energy supply won’t be enough to power all the mining.

On the other hand, federated blockchain tries to keep it on the low side. More so, the algorithms they use have very little complexity and making it less energy consumable.

No-Risk of 51% Attack

This is one of the best features of consortium blockchain platforms. Blockchain does offer a greater level of security, but the 51% attack can be a deadly issue. Usually, in 51% attack would mean that more than 51% of all the users on the platform are from a single organization or company.

So, if they want, they can take up all of the computational power of the system and override any other transaction or even reverse a transaction process.

However, in the federated blockchain, that’s not the case. As you would have to go through proper authorization, you won’t be allowed if you pull something like this. Also, as there are multiple participants from multiple companies pulling it off is a bit tough.

No Criminal Activity

This one is similar to private blockchains. In federated or consortium blockchain, you can’t be anonymous. In reality, anonymity gives rise to criminal activities. But as the federated blockchain needs to have known identities, it’s impossible for criminals to get into the system.

When everyone on the platform knows each other and keeps each one in check, the probability for illegal activity becomes very low. This is why consortium blockchain is extremely safe to use in an enterprise environment.

And you can also use it for security measures as well.

Regulations

Another cool feature of consortium blockchains is the use of regulations. Both private and consortium blockchain is for enterprise companies. Thus, it’s necessary for it to have regulations to keep the business running at a steady pace.

In this type of blockchain platform, all the nodes have to obey the rules of the network. It allows them to work in a team environment and increases efficiency at a greater pace.

So, when you want to jointly work with other companies, consortium blockchains are a great choice.

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Private Blockchain Vs Consortium Blockchain Technology: The Comparison

Private blockchain and consortium blockchain architecture can be similar and different at many points. Let’s see what these are in this private blockchain vs consortium blockchain technology comparison guide.

Access

Private blockchains have a single authority or organization to look after the network. It means that, even though in public blockchain platforms, anyone could get an entry into the platform, only employees of a single organization would get it. In many circumstances, if the governing authority seems fit, then they can also override a transaction.

On the other hand, consortium blockchain has multiple organizations instead of only a single organization to govern the platform. It’s a permissioned platform. Here, multiple organizations can actually make decisions on the platform.

So, no one can get away with any illegal activities. All the organizations on the platform will keep everyone in check.

Authority

In reality, private blockchain solutions don’t really offer the true decentralization feature of the blockchain. Instead, you’ll get a partial decentralized network with a set of rules and regulations. As you only get a single authority looking over the network, it can’t reach true decentralization in any kind of scenario.

On the other hand, consortium blockchains are permissioned, meaning that you have to be a member of any organization with access to the ledger; still, it would offer you decentralization. As here, multiple organizations can actually make decisions on the platform; there a decentralization at every level.

Let’s see the next one in this private blockchain vs consortium blockchain technology comparison guide.

Transaction Speed

Both of the platforms have a faster transaction speed. Usually, public blockchains tend to become slower due to the excess number of users on the platform. The more users get in the system, the more it slows down.

However, both private and consortium blockchain architecture has an authentication process to limit the access of users. Thus, they always make sure to keep the user numbers regulated. And as a result, you will always a fast experience in both of the platforms.

Let’s see the next one in this consortium blockchain vs private blockchain technology comparison guide.

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Consensus Mechanism

Private blockchains use low-power consuming algorithms. Practically, it uses some form of voting or multi-party consensus mechanism. Private blockchain dumped the power-hungry consensus protocols for good. Even though it saves a lot of energy, it’s a bit less secure than power-consuming consensus algorithms such as Proof of Work.

On the other hand, Federated blockchains also don’t use any power-hungry algorithms. Typically, these algorithms aren’t sustainable in the long run for business environments. As a result, they also use multi-part consensus algorithms or some kind of voting scheme to reach an agreement.

So, it seems at this point both types of blockchain are the same.

Cost

Compared to its public counterpart, it takes fewer resources to set up a private platform rather than a public one.

On the other hand, consortium blockchain takes fewer resources to set up as well. There are already so many permissioned platforms available for enterprises such as Hyperledger, Corda R3, Enterprise Ethereum, and many more.

In short, both technologies take less time and resources to set up.

Let’s see the next one in this consortium blockchain vs private blockchain technology comparison guide.

Data Handling

Private blockchains have a single authority, but the core blockchain features are still there. So, it will only allow read and write access to the ledger. It means that once a transaction gets an entry into the ledger, no one can change it. But, in a private blockchain, only a single authority can write or read any entries in the ledger.

On the other hand, the consortium blockchain architecture has the same feature. No one in this kind of platform can also change any entries in the ledger. But here, multiple organizations can write and read transactions on the ledger.

Immutability

This is the last point in this consortium blockchain vs private blockchain technology comparison guide. In reality, immutability works a bit differently in both of these technologies. Unlike public blockchains, both of the platforms can’t offer true immutability.

As organizations are in control of both of the scenarios, there’s a chance that they can override a transaction. It’s somewhat a grey area. However, it’s highly likely. Just because there’s a governing authority doesn’t mean that the network is not trustable.

Obviously, to alter a transaction, members have to reach an agreement as well. So, in both cases, you are getting partial immutability in the network.

Private Blockchain Vs Consortium Blockchain: Comparison Table

	Private Blockchain	Consortium Blockchain
Access	Single Organization	Multiple Organization
Authority	Partially decentralized	Decentralized
Transaction Speed	Fast	Fast
Consensus Mechanism	Voting/multi-party consensus	Voting/multi-party consensus
Cost	Cheap	Cheap
Data Handling	Read and Write for a single organization	Read and Write for multiple organizations
Immutability	Partial	Partial

Ending Note

In the end, both private blockchain and consortium blockchains are highly effective for enterprise companies. As both of the platforms can offer privacy, and security along with fast performance, it’s quite easy to integrate them.

However, you have to remember that implementing any new system does take up resources and time. So, you might be looking at investments in the future. Anyhow, hopefully, now you know what the comparison of consortium blockchain vs private blockchain technology would really look like.

Hopefully, it will help you to make the decision and get the best-suited blockchain technology for your enterprise company. We recommend our free blockchain course for any novices out there who wants to understand the underlying structure of the blockchain.

*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!