Blockchain, primarily, works as network systems. Blockchains help companies in tracking and managing assets and carry out complex interactions in large corporate ecosystems. Moreover, blockchain technology has, nowadays, been around because organizations have changed radically in the last few decades.
These days, companies still depend upon point-to-point communication, such as spreadsheets, in managing their shared operations. Blockchain promises to associate companies with one another, facilitating the sharing of both business logic and factual data across business ecosystems. The entire process is secure, transparent and structured. That’s where public blockchains come in. Before we delve deeper into the importance of public blockchain, let’s discuss the differences between public and private blockchain.
Difference Between Public And Private Blockchain
Creating a tamper-proof public ledger is one of the primary goals of blockchain to secure transactions. Various kinds of blockchain networks have evolved over the last few years, and so the concept of private and public blockchains has come into existence. Often confused together, both differ in the type of participation and their application.
Public vs. Private blockchain
Private and public blockchains are both decentralized P2P networks where both of them maintain a copy of a shared ledger that keeps transactions signed digitally. It is a tamper-proof technology that cannot be altered or modified. For any change and alteration, a new entry or block has to be created. It ensures the complete immutability of the ledger, which is not subjected to corruption even if some malicious participants exist on the blockchain.
Public and private blockchain vary according to the type of participants within their networks and the way they carry out the consensus protocol.
What is Public blockchain?
As the name suggests, public blockchain refers to an open network that permits anyone to enter. Such a network is based upon various participants for its progress and, therefore, encourages increased public participation by following a mobilization mechanism. Bitcoin is the best example of a public blockchain, where participants (miners within the network) are awarded BTC tokens.
Public blockchain also comes with a drawback. In a blockchain network, every block carries the data of multiple transactions on the network. Creating a new block gives a reward, known as miners fee. Where there are a lot of participants on the network in a public blockchain, maintaining the scarcity of reward tokens becomes necessary. It is essential to regulate who gets the freedom to create the next block. To accomplish this, every participant within the network needs to solve a complicated cryptographic problem, also known as “proof of work.” Participants able to solve the problem get the freedom to create the next block, and vice versa. But, there is a downside to this. The cryptographic problems happen to be pretty resource-intensive and demand a specific amount of computational skill to solve quickly.
While having a disadvantage, public blockchains come with a ton of benefits as well. Distribution and decentralization are considered as the significant advantages of public blockchains. Most importantly, the transparency of public blockchains makes them stand out as it keeps them very secure. Since anyone can audit it, fraud detection on the network becomes easier.
It follows the principle of security-via-openness, which is a well-known concept in the open-source world, and this approach is additionally popular among many within the community of digital currency.
What is Private Blockchain?
Unlike public blockchains, participation in private blockchains needs an invitation. The network starter additionally validates it, or a set of rules can also validate it. This is why private blockchains are also known as permissioned networks. It puts a limitation on users allowed to join the network. Enterprises can use a private blockchain to safeguard the security and privacy of their data.
Private blockchains can additionally limit participant activity. In simple words – only individual participants can carry out certain transactions and not others, despite being on the same network. It can be considered as an added layer of privacy.
The rules and regulations of participation can be set up by existing participants or a consortium or regulatory authority. Each participant within the network contributes to maintaining the network in a decentralized system.
Private blockchains are intended to cater to business requirements. Only organizations participating in a specific transaction know about it. Other organizations cannot access it. As such a system is lighter, it gives rise to transactional outputs. This, in terms of magnitude, is higher than public blockchains.
But, private blockchains also come with some disadvantages apart from the benefits. Lack of security and trust are some of the most significant shortcomings of private blockchains. The security depends much on the credibility of legitimate nodes. Moreover, they are accountable for validating and checking authentic transactions. Thus, external players need to trust private blockchain networks without any control over its verification. With fewer nodes, it is a lot easier for an unreliable user to gain authority over the network. It is much more susceptible to data manipulation and hacking.
The Age Of Private Blockchain Comes To A Halt
While sparking the technology revolution, transaction privacy was not supported by the early versions of the public blockchain. To mitigate that, private blockchains, centrally-controlled, were advanced, allowing secrecy in transaction information by choosing a central authority to validate transactions. It enabled organizations to delve deeper into the blockchain world without the worry of the confidential data breaches. The constraints of this system are specific: if blockchain’s decentralized nature is its principal value proposition, developing a centralized variant might not be of lasting significance.
Benefits of public blockchains
- Open Read and Write: Any user can participate by offering transactions to the blockchain, like Bitcoin; activities can be observed on the blockchain network.
- Tamper-proof: When something is recorded on a public blockchain network, it cannot be altered.
- Ledger Is Distributed: The database does not follow the client-server approach. All nodes within the blockchain take part in the transaction authentication.
- Secure: Public blockchains help prevent fraudulent transaction confirmations, among additional potentially malicious activities.
With that being stated, public Blockchains are beneficial for situations where safeguarding the identity of users adds value or happens to be essential to the solution, plus they are valuable platforms for such solutions where all users need to be treated equally.
Solving security and privacy concerns
Keeping the scalability aside, before companies adopt public blockchains, the issue of privacy and data security remains predominant. Luckily, security and privacy solutions on public blockchains are presently advancing to a level where companies can use them with confidence.
The latest creation of public blockchain solutions is enabling companies to utilise public blockchains while keeping complete data privacy. Businesses can trade over public blockchains without the fear of putting any personal or company data on the blockchain at all. Instead, blockchains are utilised to pass mathematical proofs and status updates, and sensitive information is always kept behind company firewalls.
How Can HashCash Help?
HashCash, being the leading service provider of blockchain consulting, provides the following advantages:
- Strategy Assessment: By adopting the services of HashCash, you can build an avenue for specialists to evaluate your purposes and estimate the applicability and impact of blockchain on your company. It helps you plan and give priority to the best strategy for your growth.
- Swift Prototyping and Practical Training: HashCash organizes technology leadership training and workshops to advance the experience of your team. By creating an avenue to work side-by-side with specialists for rapid development, HashCash helps you stand out in no time.
- A Dedicated Team: For people or businesses looking to advance in developing blockchain solutions, it is essential to form a dedicated team. HashCash can bring a devoted team of developers together to serve the essentials of your project from inception to conclusion.
As security and privacy solutions on public blockchains rise to unprecedented levels, the level of adoption should also rise accordingly. With all indications pointing to public blockchains in the long run, you can develop a private blockchain now, or you can skip to the final episode of the story and move straight to the public. The choice is simple.