Author Topic: Public vs Private Blockchains: What’s the Difference?  (Read 257 times)

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Offline ccedk_pro

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Public vs Private Blockchains: What’s the Difference?
« on: February 10, 2019, 04:59:51 pm »

Public and private blockchains differ more in how they’re used than how they’re built. The underlying similarity is that they’re blockchains: distributed, encrypted ledgers, monitored and verified by their users. In other words, they’re both networks that share an immutable record of transactions.

The real difference on a technical level is who has access to them.

Private blockchains
Private blockchains can be accessed only by those who have permission, and the network administrators can edit transaction records. Hyperledger and Ripple are private blockchains.

The confidentiality problem
Blockchains come with an inbuilt confidentiality problem. The audit log of transactions is available to all users. Solutions to this problem that make blockchain suitable for businesses (which don’t want uninvited users to have access to all their business data) include hybrid, private and consortium blockchains as well as various methods of building decentralized applications with inbuilt permissioning on public chains.

Why would you choose a public blockchain?
Public blockchains are the default choice. They deliver two key benefits over private blockchains:

1. Autonomy
A public blockchain exists separately from the entities that use it and participate in its governance. This means that, for instance, there’s no-one who can change the rules of the blockchain, alter or reverse transactions, or otherwise interfere.

Thus, a public blockchain can be truly ‘trustless’: users don’t have to trust other participants, because they interact in a manner mediated by the rules of the blockchain; and they don’t have to trust the blockchain’s administrators, because in a traditional sense, there are none.

2. Accessibility
Public blockchains are accessible to anyone with a computer and an internet connection. Some general purpose blockchains allow the implementation of smart contracts on the pre-existing blockchain, meaning users can achieve business goals on an extant network. And the newest generation of blockchains for general computing are deliberately designed to permit the construction of smart contracts and ‘Decentralized applications’ or Dapps directly on the blockchain.

The blockchain applications market is unravelling along a segmentation of activity that is spread along two sets of variables: private vs. public blockchains, and new vs. existing business models.
William Mougayar


Why would you choose a private blockchain?
Private blockchains are usually built to order for business or organizational use. For their users, they deliver:

1. Control
Private blockchains are controlled by a consortium of privileged users who can issue or deny permissions, alter rules, revert transactions and modify balances.

Obviously, this is totally opposite to what a public blockchain gives its users. But it allows a centralized organization to replicate its organizational structure on the blockchain, which is vital in cases where the organization will be held responsible for the validity of that information. For instance, a government land registry could benefit from the security and auditability of a blockchain, but it can’t relinquish its ultimate authority over the records.

2. Trusted known validators
In some public blockchain structures, the validators aren’t known, and in PoW blockchains dependent on mining, 51% attacks are a constant danger.

51% attacks occur when over half of a blockchain’s validators collude, outside the blockchain, to sign blocks they know contain false information. They represent the main known security threat to PoW blockchains, because miners could theoretically collude in this way.

While there has never been a 51% attack on the BitCoin blockchain, there have been 51% attacks on other PoW blockchains. In one, hackers made off with $18 million after an attack on the BitCoin Gold blockchain, in which they altered the blockchain’s own records so that they could spend the same money twice, known as a ‘double spend.’

In a private blockchain the validators are known. As long as they’re accountable using structures outside the blockchain, this makes the blockchain more secure against these types of attacks.

3. Lower operational costs
Transactions are cheaper in terms of computing and electrical power. They only need to be validated by a few nodes, which can be configured to do this efficiently. By comparison public blockchains have many more nodes, requiring far greater computational redundancy: every node is basically doing the same work, which is the key to blockchain’s security but also the reason why blockchains can be expensive to run.

Public blockchains tend to express their relatively higher operational costs as relatively high transaction fees for their users. BitCoin’s hit an average $52 per transaction at their highest, and while that’s an outlier, average transaction fees for public blockchains can be a problem: Ethereum’s transaction fees have actually been higher than BitCoin’s in the past.

But these transaction fees reflect the higher costs of operating these high-redundancy, high-node-count blockchains. Even if what you’re sending is a file, a message or an action that triggers a smart contract, rather than currency, you’ll find operational costs are higher on a standard PoW public blockchain.

On a private blockchain transaction fees and electrical costs can be kept to a minimum, though it should be noted that some public blockchains built on other consensus algorithms can also be considerably cheaper to run.

4. Predictable technical performance
Nodes are the entities in a blockchain that take part in creating a new block. On a private blockchain, nodes can be very well-connected and it’s possible to ensure all of them are running as intended, something that can’t be done on a public blockchain.

Partly this is because private blockchains typically operate nodes on dedicated hardware, whereas a public blockchain involves many consumer-level laptops and desktop computers. This is another advantage of private blockchains: hardware requirements can be known in advance because user numbers are pre-determined, so high performance can be baked in.

If anything goes wrong, it’s also possible to step in via an administrator account and fix a private blockchain manually.

5. Privacy
Private blockchains that limit user access, and manage user privileges centrally, offer better privacy. This should be of limited concern to most users, since blockchain already offers massively improved security and privacy.

However, a private blockchain eliminates identity privacy concerns. On a public blockchain, usernames are visible to other users. On a private blockchain, the same is true but users are permissioned, meaning user names can be real names and reflect organizational roles without any privacy issues.


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Offline Sensonic

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Re: Public vs Private Blockchains: What’s the Difference?
« Reply #1 on: April 03, 2019, 04:43:41 am »
I want to know more about this. It will make me get more and more back.

Offline sajin

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Re: Public vs Private Blockchains: What’s the Difference?
« Reply #2 on: April 09, 2019, 10:55:39 am »
Before pointing out the differences between public and private blockchain let us discuss the similarities about them. Both private and public blockchain are decentralized peer to peer networks where there is no central authority like a bank or broker who has the supreme power to authorize the transactions. The verified blocks cannot be deleted or modified which makes them immutable.

Public blockchain
This type of blockchain is completely open. This means that anyone can join the network to send, receive and participate in any transactions around the globe. Each node has as much transaction and power as any other which makes them not only decentralized but also fully distributed. This model is followed in bitcoin and ethereum.

Private blockchain
Private or permissioned blockchain imposes restrictions upon the members who can join the network and what are the types of transactions in which they can participate. In order to gain access to a private blockchain network, one must be invited and then validated by either the network starter or should be strictly adhered to rules put forward by network starter regarding membership. Once the invitation is accepted the new member can contribute to the maintenance of the blockchain in a customary manner.  Hyperledger work on this principle.


While talking about the security public blockchain are more secure and trusted than private blockchain. Private blockchain can be used if you want to know the identity of entities who join the network. The choice of adopting public or private blockchain depends on the business needs of the organisation.

To know more about public and private blockchain visit: 
https://medium.com/datadriveninvestor/the-impact-of-enterprise-blockchain-in-the-trading-sector-and-its-future-in-2019-ca3aa0dbf966

To understand the blockchain technology from the basics visit:
https://www.epixelmlmsoftware.com/blogs/how-blockchain-works-advanced-guide


Offline Michelle Jones

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Re: Public vs Private Blockchains: What’s the Difference?
« Reply #3 on: April 10, 2019, 03:49:59 am »
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