If you kept up with our posts here in Cryptona, then you should have no problem understanding what a Blockchain or a bitcoin is. However, did you know that there are public and private Blockchains?
Similarities between the two Blockchain technologies.
Blockchain tech has evolved since its conception. Though, there is still a lot of confusion amongst the general public regarding private and public Blockchains. Well, they are quite similar.
Both Blockchains are decentralized on function on P2P networks. Each network participant stores a copy of the digital ledger. Upholding authenticity.
Both private and public chains operate on a consensus-based protocol.
Both are immutable and cannot be altered. So, what are the differences?
Public Blockchains and their users.
The biggest difference between the two Blockchains relates to the individuals that are allowed to take part in the network and upholding the shared ledger.
Public networks operate openly and anybody can participate. But, there’s usually some incentive involved for network participants. For example, bitcoin miners get rewarded for upholding and participating in the public Bitcoin Blockchain.
However, a massive amount of computing power is required for a public Blockchain to operate. The more network participants there are, the greater the need for computational power. Every network participant in a public Blockchain must solve complicated cryptographic math problems, or, proof of work. This is done in order to ensure that all of the information on the Blockchain is authentic.
Additionally, public Blockchains are not exactly known for their transaction privacy. All information is out in the open. So, security concerns might come to the minds of users.
Private Blockchain and enterprises
Private Blockchains operate on a sort of invitation basis. New participants are usually invited by the person who started the network. It’s not uncommon for businesses to set up their own private Blockchain. In this case, a permissed network must be set up.
Private networks put restrictions on who is allowed to participate and which kinds of transactions are okay. So, potential private Blockchain participants need to obtain permission before they join.
Generally, the controlling body of a private digital ledger hands out licenses or gives permission to users that can participate. Keep in mind that private Blockchains are still decentralized. Each new user that joins the network will play a vital role in upholding that decentralization.
Private Blockchains are generally used in business-to-business cases, in order to leverage a business operations transparent and trustless foundation.
Hyperledger is a good example of a private Blockchain. Specifically designed to help companies with enterprise solutions. Aimed at handling supply chain issues, financial practices, and even facilitating healthcare exchanges. As well as greater scalability.
However, only the individuals that are participating in the private Blockchain will have access to its information.
Private Blockchains can accelerate business practices if used properly. More and more organizations will start to use permission Blockchains to provide solutions that directly influence an enterprise.