Difference between public and private blockchain

Blockchain technology is forming the backbone of the cryptocurrency industry and is rapidly being adopted by other traditional industries as its usefulness becomes apparent.

The development of cryptocurrencies leads to interest in blockchain technology AFP

But not all blockchains work the same way because they have different features, with some public and some private. So what is the difference between public and private blockchain?

What is Blockchain?

Blockchain is an immutable ledger of data blocks distributed among many nodes or devices in a network. This allows data to be decentralized, with no one authoritative to hold all the information in the network or grant permissions on the network. Blockchain enthusiasts praise the technology for increasing its level of privacy and transparency.

Blockchain technology is best known for its use in world electronic money. In addition, it is also used by companies like Microsoft and Amazon. Now let’s talk about the difference and usage of public and private blockchain.

Public Blockchain

Is the blockchain that can be used by anyone. Chief Bitcoin and Ethereum both use the public blockchain, alongside other cryptocurrencies like Algorand, Monero, and Tezos. As for the public blockchain, anyone can view the data stored on the blockchain to ensure the transparency provided by this type of technology.

Bitcoin is a cryptocurrency using a public blockchain AFP

However, no one in the network can change this data. The public blockchain is immutable, meaning that once the data is there, it cannot be deleted.

The public blockchain is completely decentralized, so no single group or authorized individual controls the entire network. This is why so many people prefer public blockchain, as big tech companies use centralized systems and often mishandle user data.

Private Blockchain private

A blockchain used by organizations that want to store their data more securely, while ensuring that it is not accessible to anyone. A private blockchain is only accessible to authorized parties. This permission is granted by the blockchain’s authority or network administrator – which is not the case with public blockchains.

Private blockchains are used less in the electronics industry and more towards networks business more internal. IBM is one of the big companies creating private blockchains for customers. The company also develops permissioned blockchain, which combines public and private. Blockchain licensing involves limited user capabilities and access to data for those who verify their identity first.

Private blockchains are not fully centralized as there is one party who has control over the ledger and who accesses it. The ledger itself is also not completely immutable as it sits on a public blockchain. While the public blockchain has a coin or token, the private blockchain does not need them due to the lower number of nodes. This results in a private blockchain that doesn’t require as much computing power to function as a public blockchain, so they are generally more eco-friendly.

But like the public blockchain, the true identity of the nodes on a private blockchain is always known by the authority. An individual needs an identity to gain access to the network, so by the time they begin verifying transactions or viewing the ledger, their identity is already known to the network.

IBM Creates Private Blockchain For enterprise this AFP

Since private blockchains are not fully decentralized, they lose ground when it comes to security. This is because an individual has the ability to change the block data which could distort the system to work in their favor.

Because anyone can access the public blockchain, cybercriminals can join the network for malicious purposes without permission. This is less common on private blockchains since the blockchain construction and network overview are managed by a single authority.

Similarities between two technologies

Public and private blockchains have several things in common. Firstly, both require individual nodes to reach consensus in order to verify blocks. However, while the private blockchain has a lower node count, more nodes are still required to keep the data secure.

In addition, every node on the public and private blockchain has access to the entire network ledger. These elements form the backbone of blockchain technology, so it is not surprising that they are present in both types of blockchain.

The role of two technologies

Although the majority of blockchains are known to be public, this does not mean that private blockchains are not so important. Both of these blockchains can be of great benefit in different situations, with their features providing users with different perks and downsides.

In any case, it looks like blockchain technology usage is on the rise and we could see it displacing more traditional technologies in the near future.