101 Blockchains
101 Blockchains

Beginner’s Guide: What is a Private Blockchain?


When we are talking about the blockchain technology, we always hear one thing in every single article – it’s decentralized. We at times think it’s a major movement against the money-hungry corporations. But is it though? Maybe you are not familiar with the term – private blockchain.

It’s time you dig a bit deeper into the world. We all have heard the name of Satoshi Nakamoto. He is the mysterious figure behind the cryptocurrency world. No one is sure if Satoshi is a boy, a girl or an organization. Though we the common people always credit Satoshi for creating Bitcoin, his greatest ever innovation is the blockchain.

Blockchain can simply be identified as a single digital ledger where all the transactions within a cryptocurrency ecosystem are recorded. Here the system keeps all the transaction in a chronological order and open for public eyes.

But not all the blockchains are the same. There are public blockchains and the private blockchains. However, both are decentralized, still, they have a fundamental difference.

So, let’s talk about the private blockchain here. You can also get more information about the public blockchains here.

What is the definition of Private Blockchain?

Private blockchains are developed and maintained by a private organization who has the authority over the mining process and consensus algorithm. The private organization decides who can join the network and have the access download the nodes.

Yeah, it doesn’t sound so decentralized now! No one can read, write or audit the blockchain anytime. Moreover, the governing organization can override the blockchain command or delete whenever they please!

Rather than calling it a public ledger, you should call it a “distributed ledger” which is shared with its chosen users.

Yes, the ledger is still cryptographic and no one can keep an eye on your money. So, the basic purpose is still the same.

Ripple is a great example of such blockchains which got quite the attention in recent months. Ripple is currently holding the third title among the blockchains having approximately $24 Billion in market capital.


Some Notable Characteristics

  • Only selected individuals or entities have right to view the nodes of the network.
  • Mining opportunity is not public. Some cryptocurrencies are even pre-mined!
  • Review and auditing rights are reserved for selected persons only.
  • Decentralized and allows P2P transactions.
  • They are mostly immutable.


Why Private Blockchain?

The blockchain technology is simply out of the world. Maybe Satoshi Nakamoto is an alien!!! The technology shows potential to change the very world as we know it. The traditional financial system may crumble as it fixes all the flaws in it.

Understanding the limitless potential of the system, many corporate giants took a keen interest in the tech. Companies like Microsoft, IBM, Alibaba and so on have been actively investing in the technology. Neo the dark horse of 2017 crypto-race is supported by both Alibaba and Microsoft. Even the Chinese central bank and the Chinese government are backing it up.

So, what does it mean? Do you fear that the evil (!) corporates will destroy the integrity of the whole concept of the decentralized currency?

Well, no actually. In fact, a lot of the flaws of the public blockchains get resolved.


  1. Not a Power Killer!

We all know, mining bitcoins takes an unimaginable amount of processing power. Thus, it consumes a great amount of power. As the private blockchains provide pre-mined coins, we can call it energy efficient compared to the public.


  1. Less Volatile

You will find lots of videos on YouTube, saying that Bitcoins are risky business. Well, it actually is! No one can predict if the price will skyrocket or bite the dust. Owning organizations regulate the private blockchains on a daily basis and that’s why it’s less volatile.


  1. Work Together for Betterment

A lot of these private ones allow users to work side by side with the banks and financial agencies. This makes the technology more practical and usable. Why should you quarrel if you can be friends with the system?

The Final Idea

So? Did you get the basic understanding of the private blockchains? Although the idea derails from the basic ideology of the cryptocurrency, it is still more practical. Its less volatile nature makes it more desirable for common users who want use the platform for daily activities like paying utility bills and more.

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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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