Archive December 2019

What are the main differences between public and private blockchain?

blockchain

New opportunities for the use of blockchains are discovered each week, envisioning a brighter and brighter future.

Blockchain Technology is not just limited to cryptocurrency development and is spreading more and more in different areas.

With the great diversity of uses foreseen, two fundamentally different blockchain models emerged: Private and Public.

In this article, I will distinguish the main differences for each modality.

Contextualizing blockchain

It is impossible for a single, global blockchain system to address all sectors, as each sector has specific needs.

Because of this diversity of uses, different blockchains have been created to meet demand, each with a unique set of protocols, although the pillars of the system remain the same.

These various networks fall into two categories:

  • Public Blockchain - Open Access
  • Private Blockchain - Authorized Access

Let's explore the implications involved in each type and, in this process, identify the difference between them.

Public Blockchain 

The blockchain community regards the public model as the embodiment of the initial concept of technology, as had been thought by Satoshi Nakamoto.

This model is quite simple as no authorization is required to participate in this blockchain network and contribute to its maintenance.

Since anyone can join the network, it is more decentralized compared to private blockchains.

However, a consequence of this greater decentralization is that blockchains without permission are slower than the private model.

It is important to note that the one who authenticates the transaction data kept in the public blockchains is the public itself.

Since there are no intermediaries to regulate what happens on this network, the system relies on public validation to reach a consensus on which transactions are legitimate. Bitcoin is an example of blockchain without permission.

Private Blockchain

Private blockchains are the opposite end of the previous model. Initially, the purpose of this technology was to provide a transparent, free and decentralized system.

However, these blockchains require authorization to collaborate on the system. Consequently, the centralization of control of this system occurs.

This is because the owner of a private blockchain can control the system organization, issuing software updates, overseeing everything that happens on the network.

When it comes to validating data on private blockchains, only a few approved members perform this task on behalf of the entire network.

Importantly, the owner of such a blockchain can also decide who views this information. An example of a permitted blockchain is Ripple.

In conclusion, private systems tend to be more scalable and faster, but are more centralized.

Public systems are open for everyone to participate and are therefore more decentralized. However, this implies lower transaction speed and lower scalability.