Difference between public and private blockchain

Consequently, more industries are starting to recognize the possibilities of blockchain and how this nascent technology can streamline operations, supply chain and record keeping. But as blockchain use cases transcend cryptocurrencies, more types of blockchain infrastructure have emerged, each with its own characteristics, leading to confusion among those new to the crypto world. So how many types of blockchain are there and how do they compare with one another? News explainer on private, public and permissioned blockchains.

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Content:

• Public, Private, Permissioned Blockchains Compared
• Public and Private Blockchain: What’s the Difference?
• What Are Public and Private Keys?
• What is the Difference Between Public, Permissioned and Private Blockchains?
• Public, Private and Hybrid Blockchain Explained
• Private, Public, and Consortium Blockchains - What's the Difference?

WATCH RELATED VIDEO: Public Blockchain vs Private Blockchain for the Enterprise

Public, Private, Permissioned Blockchains Compared

A blockchain is a ledger of transactions, in a digital format, which is distributed across the network of computer systems, creating a block. Each block in the chain contains a number of transactions, and every time a new transaction occurs, such transaction is added to the ledger. These transactions are recorded with an unalterable cryptographic signature, called Hash.

Blockchain is a decentralised database managed by multiple participants and hence it is also referred to as Distributed Ledger Technology. Blockchain technology is a way of creating a shared database which can record and track transactions; is not centralised and is very transparent.

Once data is fed in the database, it is very difficult to be removed and hence the proponents of this technology strongly believe that this will make it resilient to fraud. This indicated that if a hacker wanted to hack into the system or corrupt the flow of the blocks, they would have to change every Block in the chain, throughout the distributed verticals of the system.

Other than the blockchain being decentralized and immutable, they are secure, anonymous, and programmable; and can be tracked to real time. All the individuals in the chain agree to the verification of the transaction, therefore, the blockchain is unanimous in nature. Blockchain is applicable to almost any industry and therefore its regulation is of utmost importance; and yet, there is a lack of directives and guidelines in this regard, which gives rise to many remarkable questions.

Some of the issues are mentioned below:. Indian IT law or for that matter, any existing privacy laws across the globe, fail to bring within its fold, the privacy of blockchain users. One of the essential features of this technology is being identified by other individuals of how the transaction has taken place and who were its participants.

Such participants can be identified by IP addresses, digital identifiers, and their public keys. Therefore, privacy to sensitive information as mentioned in Section 43A, would not cover in its ambit, the transactions made via blockchain or the identifiers of its participants.

With different kinds of blockchains, there are different issues associated with them. With private blockchain, since there may be a centralised controlling unit, they can be targeted under the Information Technology Reasonable security practices and procedures and sensitive personal data or information Rules, However, a public blockchain is a completely decentralized ledger, and therefore, the existing data protection standards may not suffice.

Now that the technology is being recognised across all sectors and high-end transactions are entered into through this technology, cybersecurity is of utmost importance. Transactions to this technology are irreversible, and this is an essential feature of blockchains. If a person with intentions of committing fraud enters into a transaction; it is extremely difficult for regulatory authorities, officers, courts, etc.

As opposed to normal ledgers, where one can approach the RBI, banks, tribunals, and courts; transactions on the blockchain are not reversible by a central authority, and bringing justice to the victim is extremely difficult. Even if the wrongdoer is identified, the execution of the judgment gets tricky. This brings me to my next issue, pseudonymity.

The identifiers like IP addresses can locate from where the transaction has taken place but it does not define who has entered into such a transaction. The real identity is not linked and therefore it gets difficult for the regulators to hold participants responsible. Enforcing law becomes difficult. Tax and contractual obligation, issues relating to terrorist funding, money laundering, jurisdiction, etc. As has been mentioned above and throughout this article, blockchain is a decentralised system and it is difficult to locate the individual.

There is no common setup where data is stored; it is not easy to point in one single direction as to where the data might have been leaked. There are a few countries, which have set up a framework in regards to internet law; say, storing of localised data, on how the data flows, and what data is restricted. Similar regulation with respect to the blockchain is required; this is possible only in harmony with international law from this perspective. Until then, the data may be stored in any part of the world, and thus, the question of jurisdiction shall always arise.

Blockchain is the formation and execution of contracts smart contracts ; here, in the digital space, the software dictates the obligation, which when fulfilled, executes the transaction. Since there are many issues as stated above, such as pseudonymity, lack of regulation, jurisdictional issues; it is necessary to consider how the execution of transactions through blockchain is brought into the ambit of contacts.

Can these be treated as contracts like our traditional ones or is its enforceability the same? Can these contracts be hacked or remain confidential? Understanding the software programming is now essential for lawyers and it is recommended that there should be one language in which these digital, smart contracts are governed; this would give parties a chance to resolve disputes under their traditional mechanisms. Further, new laws relating to contracts must be legislated to administrate blockchain-driven contracts.

As a result, the DAO becomes a company that runs by itself, without a centralized governing body. It is difficult to bring them to questioning under any jurisdiction and law. However, with the recognition of the Association of Persons, there is significant gravity put upon these individuals that form themselves into a DAO.

These are a few grey areas in adopting blockchain technology in a full swing. Yes, blockchain is a revolutionary technology but we need in place, proper laws to govern it. Most of these changes were recognised with the adoption of the Internet and we slowly but eventually are coming to a standpoint where we can regulate the internet.

Similar efforts are required in the regulation of blockchain. Many experts have recognised that to have a breakthrough in respect of blockchain technology, we need to give people incentives, in the form of tokens or cryptocurrency. There are different uses to this technology and therefore, there are different types of blockchains.

Majorly, there are two types of blockchain,. Users need permission to have access to a private blockchain. They work based on permissions and controls, which restrict participation in the network. Only the entities participating in a transaction will have knowledge about it and the other third parties or stakeholders will not be able to access it. A notable example of private blockchain is the Hyperledger Fabric. The access mechanism could vary; the existing participants could decide future entrants, a regulatory authority could issue licenses for participation, or an association could make future decisions.

A public blockchain is permissionless. Anyone can participate within the blockchain and join the network. The system is decentralized and does not have any entity which supervises or controls the network.

Data on a public blockchain is secure as it is not possible to modify or alter data once they are validated. Examples of public blockchain are Ethereum and Bitcoin. A public blockchain has a substantial amount of computational power which is necessary to maintain a distributed ledger at a large scale. To achieve a consensus, each node in a network must solve a resource-intensive, complex problem proof of work to ensure all are in sync.

As much as we see openness as an advantage, it is just another shortcoming of the public blockchain, which implies little to no privacy for transactions. Both private and public blockchain function in an immutable manner, where the records can be added but cannot be altered or deleted. Both these types are distributed and decentralised and engage in a more peer-to-peer format. Validity of record is established; the participants individually and mutually agree and reach a consensus.

It prevents tampering with the records. Both these types of blockchains are similar in many ways; while the main point of difference is the access to the blockchain. In a private blockchain, only a particular organisation has authority over the network. Thus, only selected members have access to the network.

On the other hand, in a public blockchain system, anyone can join; there are no restrictions when it comes to participation. Any individual can see the ledger, read, write and take part in the consensus process.

In a private blockchain, it is decided beforehand as to who can join the consensus and who are not eligible. On the other hand, in a public blockchain, participants are free to participate, avail benefits from the system; there are no restrictions in joining the consensus process. Only authorised participants can access and take part in the transaction process. Therefore, speed always remains the same. Since there are too many users requesting multiple transactions, the platform takes time to process each request and hence, the speed of the network is slow.

The costs of a private blockchain platform are minimal. The cost does not drastically vary on the number of requests made; it remains fairly constant, precise, and low. Public blockchain platforms generally have a higher transaction cost as compared to the private blockchain platforms. In reality, there are a vast number of nodes on the platform, which slows down the performance. And as a result, it takes a lot of time to respond to the requests. Thus, prices rise drastically. In a private blockchain, only a single organisation can read and write a particular ledger.

Depending on the constitutionality of the ledger, they can even delete a block. As the name suggests, this blockchain is public, which means, it is open for access and anyone can read and write on the ledger. But this kind of ledger cannot be amended or altered once finalised. Since there are limited nodes that have permission and access to the ledger, a private blockchain is almost always efficient. Public blockchain platforms deal with scalability issues, they slow down since there are many participants accessing the ledger in real-time; therefore, public blockchain is less efficient compared to private blockchain platforms.

As stated above, in certain circumstances, blocks can be deleted from the ledger. Thus, Private Blockchain is immutable partially. We already know that once a block gets on the chain, there is no chance the block can be amended, let alone, be deleted.

This means that a public blockchain network is fully immutable. There are not many participants on the network, the access is limited and therefore there are higher chances of reaching a consensus faster and in an efficient manner. Unlike a public blockchain which is a decentralised system where consensus-building could take time, in a private blockchain, a network is more centralized and therefore the decision-making is much faster.

Further, since in a private blockchain setup, a network consensus can be reached much faster than a public blockchain, it consumes significantly less amount of energy and material resources. In a private blockchain, there is no constant alarm or confidence issue. The records cannot be independently verified as the integrity of the network relies on the credibility of the authorized participants and therefore, responsibility can be easily identified.

In a private blockchain setup, each participant is known and has credentials to have been granted access and be a part of the network. Therefore there are no chances of any contrary impact.

Public and Private Blockchain: What’s the Difference?

When Bitcoin was launched, it laid the foundations for an industry revolving around the technology that underpins the protocol: blockchain. Eager innovators have now discovered the potential of the tech, and are exploring its applications in every conceivable industry. To carry on with our spreadsheet analogy, the document itself would be held by many parties. Each runs specialized software on their device, which connects with other devices running the software so that all participants are in possession of an up-to-date database.

What Are Public and Private Keys?

Since the beginning of blockchain technology, people debated about public vs private blockchain. Basically, public and private blockchain play a huge role in the companies looking for the perfect blockchain type for their solutions. But how? However, many people still confuse them these days. A public blockchain network is a blockchain network where anyone can join whenever they want. Basically, there are no restrictions when it comes to participation. More so, anyone can see the ledger and take part in the consensus process. Thus, if you want a fully decentralized network system, then public blockchain is the way to go. However, it can get a bit problematic when you try to incorporate a public blockchain network with the enterprise blockchain process.

What is the Difference Between Public, Permissioned and Private Blockchains?

Blockchains come in many different shapes and sizes. Depending on the application, one type of blockchain may work better than the other. The key difference between public and private blockchains is the level of permission users have when interacting with the blockchain. It may be the case that anyone should have access to a blockchain, which in that case a public blockchain would work well. Public blockchains are the most well-known since virtually all cryptocurrencies are public blockchains.

Public, Private and Hybrid Blockchain Explained

Blockchain, the underlying technology behind cryptocurrencies like Bitcoin, is quickly gaining popularity in the digital space. More and more companies are recognizing its revolutionary potential and are choosing to adopt this new technology for their daily operations, making blockchain less of a buzzword and more of a forward-thinking mantra. A community of users controls how this information is edited and updated, and all blocks are chained together chronologically. While more organizations are becoming aware of the applications for blockchain in the enterprise, there is less familiarity with the differences between public and private blockchains. Before we touch on the differences, it is important to understand the similarities between public and private blockchains. Both of them:.

Private, Public, and Consortium Blockchains - What's the Difference?

Over the past several years, blockchains have evolved in a variety of flavors depending upon their build and configuration. The content stored on the blocks of the blockchain as well as the activities performed by the various participants on the blockchain networks can be controlled depending upon how the blockchain is configured and how it is expected to fulfill the desired business purpose. Broadly speaking, public and private blockchains are the two most common varieties. They are used heavily among the various cryptocurrency networks and the private enterprises. A third category, permissioned blockchains, has also gained traction. Let's take a look at the key differences between the public, private, and permissioned blockchain networks. If one desires to create a completely open blockchain, similar to Bitcoin , which enables anyone and everyone to join and contribute to the network, they can go for a public blockchain. In a public blockchain, anyone is free to join and participate in the core activities of the blockchain network.

Blockchain technology has taken the world by storm over the last few years. It has given businesses a new way of handling data and doing so securely. There is no doubt that in the next decade we will see blockchain continue to impact business operations.

This middle ground is that of consortium blockchain, which is part private, part public. In a consortium blockchain, some pre-defined nodes are entrusted to handle the consensus process that involves authorizing the transactions via consensus. Other nodes of the chain may be allowed to assume the role of creating or reviewing transactions. The roles that are allocated to different nodes is dependent on the individual consortium blockchain. Blockchain technology made its debut with the concept of a public blockchain. Knowing that public blockchain is not the only blockchain option available now, businesses are readily experimenting with private and consortium blockchains.

If you submit a video entry, you will have the chance to earn 20 points. Those points can be exchanged for a voucher that can be used for MDPI journal. Blockchain is an open-source technology that excludes the traditional third parties by relying on collective verification, thus offering a great alternative in terms of costs, traceability, security, and speed. When two financial entities such as banks receive a request to transfer money from one account to another, they have to update the balances of their respective customers. This costly and time-consuming coordination and synchronization exercise can be simplified on a blockchain by using a single ledger of transactions reflecting a single version of records instead of two different databases. Blockchain technology offers a myriad of value through a frictionless process of immutable and transparent records and through converting assets into digital tokens i.

In this article Blockchain Private vs Public Blockchains, we talk about the different types of blockchain, private and public. Public blockchain network is a permissionless network, anyone can join the network anytime without any restrictions. Anyone can access the full ledger and participate in the data or transactional consensus process.