Public Vs Private Blockchain: How Do They Differ?

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Since the beginning of blockchain technology, people debated about public vs private blockchain. In an enterprise environment, it’s actually really important to know the big differences between these two. Basically, public and private blockchain play a huge role in the companies looking for the perfect blockchain type for their solutions.

But how? Well, if you can’t identify how these differ and select the wrong platform, then your solution won’t work. However, many people still confuse them these days.

That’s why to help you out, I’m going to focus on public vs private blockchain today. After knowing their similarities and differences, you can easily pick the one that’s suited for your needs.

So, let’s start!

public vs private blockchain

What Is Public Blockchain?

A public blockchain network is a blockchain network where anyone can join whenever they want. Basically, there are no restrictions when it comes to participation. More so, anyone can see the ledger and take part in the consensus process.

For example, Ethereum is a public blockchain platform.

Thus, if you want a fully decentralized network system, then public blockchain is the way to go. However, it can get a bit problematic when you try to incorporate a public blockchain network with the enterprise blockchain process.

I’ll recommend checking out our enterprise blockchain certification course to understand the concept better.

Anyhow, the public blockchain network was the first-ever blockchain type in the revolution. As a matter of fact, it was Bitcoin that laid the foundation of blockchain technologies.

Once people started to see the underlying technological benefits, they started to develop other variations of blockchain to get rid of all the issues.

The best part about public blockchain companies is that they make sure that all the participants have equal rights no matter what.

People can join in and participate in consensus, transact with their peers as they please.

Public blockchain companies make sure that this technology offers the highest level of security. More so, it’s something that you won’t see in a private blockchain.

Everyone can see the ledger as well, thus maintaining transparency at all times.

However, public blockchain does come with its fair share of flaws as well. In reality, these platforms are slower than usual. Furthermore, because of the anonymous nature, it can attract malicious people using the platform for illegal activities.

Let’s check out the best features of public blockchain in this public blockchain vs private blockchain guide.

 

Public Blockchain: Best Features

High Security

Public blockchain companies always design every single platform in a way that offers full security. In reality, every single day, enterprises and organizations deal with online hacks. It’s becoming a big hindrance as the time is going by.

Furthermore, it causes billions and billions of dollar losses every year.

But with all the security protocols of a public blockchain, they can easily stop all the hacking issues they face. More so, they can finally ensure true value or better data quality for any project.

The security protocols may vary based on the platform, but I can safely say that public blockchains are more or less robust.

 

Open Environment

As you already know, the public blockchain is open for all, just like its name. So, no matter where you reside, you can log into these platforms. You would only need a good internet connection and a computer.

So, you will always enjoy all the benefits that come from blockchain technology. More so, you can use it to transact in a safe environment. Also, you can make money from mining as well. However, not all public platforms offer mining features.

We have covered this topic more thoroughly in our courses. Make sure to check all the courses out as well!

Let’s check out the next feature in this public blockchain vs private blockchain guide.

 

Anonymous Nature

This is actually one of the best features of public blockchains that most of the users love. Basically, here every one is anonymous. Actually, you won’t use your real name, or real identity hear. Everything would stay hidden, and no one can track you based on that.

As it’s a public domain, this feature is mainly for the safety of one’s possessions. However, people did use it for illegal reasons as well. Many criminals tend to use bitcoin to pay for illegal activities on the dark web.

But don’t judge it base don it’s bad past. People can use any new technology for bad and good purposes. Thus, it shouldn’t reflect on public blockchain technology in any way.

 

No Regulations

In reality, public blockchain doesn’t have any regulations that the nodes have to follow. So, there is no limit to how one can use this platform for their betterment. However, the main issue is that enterprises can’t work in a non-regulated environment.

Why? Well, it’s because, without regulations, it’s hard to follow all of the needs a project may need. Thus, I would recommend using public networks on consumer platforms. It means that you shouldn’t use it as an internal networking system and use it as an external one.

Let’s check out the next feature in this public blockchain vs private blockchain guide.

 

Why Use This?

Full Transparency

Well, nothing can compare to a fully transparent platform to anything else. Basically, the public blockchain companies tend to design the platforms so that it’s fully transparent to anyone on the ledger.

It means that you can see the ledger anytime you want. So, there is no scope for any corruption or any discrepancies. Anyhow, everyone has to maintain the ledger and participate in consensus.

This is something that you find in private blockchain platforms.

 

True Decentralization

In a public blockchain, you’ll get true decentralization. This is something that is quite absent in private blockchain networks. As everyone has a copy of the ledger, it creates a distributed nature as well.

Basically, in this type of blockchain, there isn’t a centralized entity. Thus, the responsibility of maintaining the network is solely on the nodes. With help from a consensus algorithm, they are updating the ledger, and it promotes fairness as well.

Furthermore, both of these features make sure that there is always a decentralized environment in the system.

Anyhow, let’s check out the next one in this public blockchain vs private blockchain guide.

 

Full User Empowerment

Typically, in any network user has to follow a lot of rules and regulations. In many cases, the rules might not even be a fair one. But not in public blockchain networks. Here, all of the users are empowered as there is no central authority to look over their every move.

Also, these platforms are open to the public, so no corporation can stop you from downloading the nodes and joining the consensus.

This is something that you won’t see in private blockchain platforms. More so, if you check private blockchain, you’ll see that the users can’t enjoy full freedom.

 

Immutability

The public blockchain network is fully immutable. But what does that mean? Well, it means that once a block gets on the chain, there is no way to change it or delete it. So, it makes sure that no one can just alter a certain block can get benefits from others.

In reality, every single organization deals with alteration issues. Either that happens offline or online. The best part is that the hash functions work as a security protocol.

Therefore, when a person tries to change the blocks, he/she will create a different chain separating from the original chain. Thus, canceling out their changes.

Anyhow, let’s check out private blockchain next in this public blockchain vs private blockchain guide.

 

What is Private Blockchain?

Let’s see what a private blockchain is before we move on to the full comparison. A private blockchain is a special type of blockchain technology where only a single organization has authority over the network. So, it means that it’s not open for the public people to join in.

In reality, all the private blockchain solutions will have some form of authorization scheme to identity, which is entering the platform. Basically, private blockchain solutions develop these platforms for the internal networking system of a company.

Thus, you would need trust to use this platform. Without trust among the nodes, this network model won’t work. Thus, only employees within an enterprise can get access to it.

You might think, how is this decentralized then? Well, it’s not technically, anyway. A private blockchain isn’t fully decentralized like public blockchain platforms. It’s more of a partially decentralized situation.

However, in private blockchain platforms, you’ll get regulations that other platforms don’t have. So, all the nodes have to abide by certain rules to ensure the proper flow of a company.

There’s a lot of controversies with private blockchain platforms as well. Basically, people believe that the governing authorities can override a transaction if they deem it fit. But it’s highly unlikely.

Also, as enterprises need privacy, private blockchain seems a perfect fit in this case. Without proper privacy, their competitions can enter the platforms and leaks valuable information to the press.

This, in the long term, can influence the brand value greatly. So, in certain cases, companies need privacy greatly.

Anyway, let’s check out lucrative features of private blockchain in this private vs public blockchain guide.

 

Private Blockchain: Best Features

Full Privacy

Unlike public blockchain platforms, private blockchain solutions tend to focus on privacy concerns. So, if you are looking for a technology that can offer the highest level of privacy for your enterprise, then this is perfect for it.

It may seem a bit over the edge, but that is the truth. Enterprises always deal with security ad privacy issues. More so, they also deal with such sensitive information on a daily basis. If even one of them gets leaked, it can mean a massive loss for the company.

That’s why it’s necessary for a company to use a network that can secure this information. And this is where private blockchains come into play.

 

High Efficiency

Even though public blockchain came first, they tend to lack inefficiency. Why? Well, it’s because they introduce everyone to the network. As a result, when more people try to use the features, it takes up a lot of resources that the platforms can’t back up.

Thus, it slows down rapidly. On the other hand, private blockchain only allows a handful of people in the network. In many cases, they even have certain tasks to complete. So, there is no way they can take up extra resources and slow down the platform.

To do this, private blockchains use eco-friendly consensus protocols to reach an agreement.

Let’s check out the next feature in this private vs public blockchain comparison guide.

 

Stability

Private blockchain solutions are stable, and you will get the peace of mind you want from it. Basically, in every blockchain platform, you have to pay a certain fee in order to complete a transaction. But, in public platforms, the fee can increase to a great extent due to the pressure of nodes requesting transactions.

When there are too many transaction requests, it takes time to complete them. More so, as time increases, the fee increases drastically. But not in private blockchain platforms. As only a handful of people can request for transactions, there isn’t any form of delays.

Thus, the fee remains the same.

 

Empowering Enterprises

Private blockchain solutions work to empower the enterprises as a whole rather than individual employees. In reality, companies do need great technology to back up their processes. More so, these solutions are mainly for internal systems of an enterprise.

As they’re highly capable of backing up the companies and offer security, it’s necessary that you start implementing your own blockchain solutions based on this.

We did cover a much broader spectrum in how blockchain is influencing enterprises in our courses. So, make sure to check all the courses out as well.

 

Why Use This?

Saves Money

In reality, private blockchain saves a lot of money. Maintaining a private blockchain is rather simple compared to public blockchains. Private blockchain platforms take up only a few resources. But on the other hand, public blockchain takes up a lot to support the enormous crowd on the platforms. Thus, in the long run, it saves a lot of money.

But it’s doesn’t mean that it’s hugely cheap or something.

Anyhow, let’s see the next one in this private vs public blockchain guide.

 

Low Fees

In private blockchain platforms, the transaction fees are extremely low. Unlike public blockchain platforms, the transaction fee does not increase based on the number of requests. So, no matter how many people request for a transaction, the fees will always stay low and accurate.

Thus, there isn’t any hidden cost at all.

 

Regulations

If you are looking for the perfect technology for your enterprise company, then private blockchain might be the right pick. Why? Well, in enterprises, you have to follow a lot of rules and regulations. And if you don’t follow them accordingly, there are certain consequences.

In a private blockchain, the theory is quite similar. In reality, it allows you to outline all the rules, and your employees have to follow it.

Let’s check out the next point in this private vs public blockchain comparison guide.

 

No Illegal Activity

As you already know, private blockchain platforms have authentication processes before you can log into the network. What this process does is filter any intruders trying to get into the system.

I’ve already told you that public blockchain solutions have a bitter past with connection to criminal activities. Obviously, in an enterprise environment, it’s not something that you would want.

Thus, only verified individuals get an entry into the system, getting rid of all illegal activities.

Let’s see the main comparison now in this private vs public blockchain guide.

 

Public Vs Private Blockchain: The Ultimate Comparison

Access

In a private blockchain, only a single organization has authority over the network. So, it means that it’s not open for the public people to join in.

In reality, all the private blockchain solutions will have some form of authorization scheme to identity, who is entering the platform. Thus, only selected members have access to the network.

On the other hand, in a public blockchain network, anyone can join whenever they want. Basically, there are no restrictions when it comes to participation. More so, anyone can see the ledger and take part in the consensus process.

Let’s see the next comparison point in this private blockchain vs public blockchain guide.

 

Authority

In a public blockchain, you’ll get true decentralization. This is something that is quite absent in private blockchain networks. As everyone has a copy of the ledger, it creates a distributed nature as well.

On the other hand, private blockchain does have a big authority looking over the system.

You might think, how is this decentralized then? Well, it’s not technically, anyway. A private blockchain isn’t fully decentralized like public blockchain platforms. It’s more of a partially decentralized situation.

This is where public and private blockchain seems to differ in a smaller way. Even though private blockchains may be partially decentralized, it still works best for the enterprise environment.

 

Transaction Speed

For private blockchain vs public blockchain comparison, we can take a look at their transaction speeds. In reality, until a certain point, both platforms can perform quite the same. But after that certain point, the transaction speed varies drastically.

Usually, in a public blockchain, anyone can request for a transaction. So, when there are too many requests on the network, the network relatively slows down with the transaction speed. It can take a lot of time to even process a transaction then.

But not in private blockchain platforms. Here, only a handful of nodes can participate in the transaction process. So, speed always remains the same.

 

Consensus

In a public blockchain, nodes have no restrictions in joining the consensus process. As a result, everyone is free to participate and get the benefits of the platform.

On the other hand, private blockchain decides from beforehand who can join the consensus and who can’t. As a result, many nodes won’t really participate in the process at all.

Let’s check out the next comparison point in this private blockchain vs public blockchain guide.

 

Transaction Cost

Public blockchain platforms tend to have a higher transaction cost compared to private blockchain platforms. In reality, the enormous number of nodes on the platforms allows down the performance. And as a result, it takes a lot of time to process the requests. Thus, prices rise drastically.

On the other hand, in private blockchain platforms, the transaction fees are extremely low. Unlike public blockchain platforms, the transaction fee does not increase based on the number of requests. So, no matter how many people request for a transaction, the fees will always stay low and accurate.

Anyhow, check out the next point in this public vs private blockchain guide.

 

Data Handling

Let’s see the data handling of these two technologies for the sake of private blockchain vs public blockchain comparison. In a public blockchain, anyone can read and write on the ledger. But you can’t alter it once it gets on the ledger.

But in a private blockchain, only the single organization can read and write on the ledger. More so, only a handful of nodes can write on the ledger. In some cases, they can even delete a block as well.

It’s more of a similar situation for both public and private blockchain.

 

Immutability

The public blockchain network is fully immutable. But what does that mean? Well, it means that once a block gets on the chain, there is no way to change it or delete it. So, it makes sure that no one can just alter a certain block can get benefits from others.

On the other hand, private blockchains are partially immutable. In certain cases, authorities can delete a certain block if they seem it fit.

This is where private blockchain vs public blockchain comparison differ the most.

 

Efficiency

This is the last point of the public vs private blockchain guide. In reality, public blockchain is less efficient compared to private blockchain platforms. How? Well, public blockchain platforms deal with scalability issues, and they slow down when there are too many nodes on the platform.

On the other hand, private blockchain only has a handful of nodes on the platform. So, they always remain efficient no matter what.

 

Public Vs Private Blockchain: The Comparison Table

Public Blockchain

Private Blockchain

Access

Anyone

Single Organization

Authority

Decentralized

Partially decentralized

Transaction Speed

Slow

Fast

Consensus

Permissionless

Permissioned

Transaction Cost

High

Low

Data Handling

Read and Write access for anyone

Read and Write access for a single organization

Immutability

Full

Partial

Efficiency

Low

High

 

In the End

We’ve reached the ending point in the public vs private blockchain comparison guide. As you can see, there are a lot of differences in both of the technologies. In reality, both public and private blockchain is actually suitable for enterprises environment if you can take the features you want.

But in the end, the decision is entirely up to you. Hopefully, this guide will help you out in choosing the perfect one for your business.

But if you want to get into more details, then make sure to check out our enterprise blockchain certification course for sure.


About Author

An engineer, a gadget-freak, and a perfection fanatic – the ideal combination of a tech-nerd! This Enterprise Blockchain Analyst seems to have an unfathomable interest in blockchains, which makes him perfect for sharing his new discoveries on 101 Blockchains.

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