Blockchain technology is generating a lot of excitement in the technology industry. Startups and entrepreneurs love blockchain development services. Blockchain technology is a new hot topic. Many industries are using blockchain technology as a buzzword. This technology is used in banking, finance, and healthcare. This technology is very efficient at creating cryptocurrency. This technology was the catalyst for bitcoin and ethereum. This technology is very popular all over the world.
After the creation of the first cryptocurrency, blockchain technology was made available to the general public. The widespread adoption of blockchain technology has benefited many people through blockchain development services. Blockchain is not just for the development of digital currencies. Blockchain can also be used in large industries. Blockchain benefits many areas, including supply chain management, data analysis, tourism, agriculture, and many more. There are two types: public and private Blockchains. Let's examine the differences between private and public blockchains and their features.
What is Public Blockchain?
A public blockchain is an open-source, permissionless network. Anyone can use this type of Blockchain without restrictions. It can be downloaded on any computer. They can view the history of all blockchain transactions. They can store and send information as well as money. They can also create smart contracts in the Blockchain. Anybody can join the Blockchain, contribute code, or participate in its development. Mining is an option on the public Blockchain that allows users to earn rewards by maintaining it.
The public Blockchain is completely distributed and does not have a central authority. Once the information has been verified in Blockchain, cyber-attackers can't alter or modify it. It protects data and information. It is completely encrypted and stored on all devices that have a copy. The public Blockchain serves more than cryptocurrencies like Bitcoin and ethereum. These are just two examples of public Blockchains. This is a way that many communities can securely and openly share data.
Public blockchains can set their own rules right from the start. You can also make changes later. All users must agree to change or fix bugs to adjust the rules. Public Blockchain is inefficient and slow. Public blockchain companies guarantee the highest level of security. It's also something you won't find in a private Blockchain. Public blockchain examples have their flaws, however. These platforms are slower than normal. It can also attract malicious people to use the platform for illegal activity because of its anonymity.
Public Blockchain: The Best Features
High Security
Public blockchain companies ensure that every platform is designed in a way that provides full security. Online hacking is a problem that enterprises and organizations have to deal with every day. As the years go by, it's becoming more and more problematic. It also causes losses of billions to billions every year. They can stop hacking problems easily with the security protocols built into a public blockchain. They can also ensure that projects have better data quality and true value. While security protocols will vary depending on the platform, public blockchains offer greater or lesser protection.
Open Environment
The public Blockchain, as you know, is available to all. These platforms are accessible from anywhere, regardless of where you live. All you need is an internet connection and a computer. You will continue to enjoy the many benefits of blockchain technology. You can also use it to transact securely. You can also make money mining. Not all public platforms have mining capabilities. Let's look at the next section in this guide on public and private blockchains.
Anonymous Nature
This is one of the most popular features of public blockchains, which many users love. Everyone is anonymous here. You won't be able to identify yourself or use your real name here. You would keep everything secret, and nobody could track you. This feature, which is public domain, is used primarily for safety reasons. It was also used for illegal purposes. Many criminals use bitcoin to fund illegal activities on the dark web. This is one of the downsides of the public Blockchain. However, could you not base your judgment on its past? Any new technology can be used for good and bad purposes. It shouldn't be a reflection on public blockchain technology.
Public Blockchains: Disadvantages
Energy Consumption
A public blockchain has one major drawback: its energy consumption. Consider Bitcoin as an example. Its public blockchain uses a proof of work (PoW) mechanism. The PoW mechanism allows nodes to compete against each other to complete transactions and get a reward. This process can take a lot of time and energy and be very time-consuming. A public blockchain can also have the disadvantage of processing transactions at a slower pace. While more people are involved in the blockchain provides greater security than private blockchains, it also slows down transactions. Due to the many transactions, the network is more prone to scaling issues than private blockchains.
Privacy
A public blockchain has another disadvantage: it lacks complete privacy. Public blockchains allow anyone to view sensitive information. If the identity of an address has been revealed, anonymity can be lost. The majority of current public blockchains can be used for cryptocurrency, which can attract thieves and hackers with malicious intent.
There are No Regulations
Public Blockchain does not have any regulations that nodes must follow. This means there are no restrictions on how this platform can be used for the benefit of others. The main problem is that businesses can't operate in an unregulated environment.
Why? It's because it is difficult to comply with all project requirements without regulations. Therefore, we recommend that you use public networks on consumer platforms. This means you should not use it for internal networking and instead use it externally.
This is Why You Should Use It
True Decentralization
True decentralization is possible in a public blockchain. This is something you won't find in private blockchain networks. Because everyone has a copy, it creates a distributed nature. This type of Blockchain doesn't have a central entity. The responsibility for maintaining the network lies entirely with the nodes. They update the ledger with the help of a consensus algorithm to promote fairness. These features ensure that the system is always decentralized.
Full Transparency
A fully transparent platform is superior to any other. Public blockchain companies design platforms that are transparent to everyone on the ledger. This means you can view the ledger whenever you like. There is no room for corruption or discrepancies. Everyone must maintain the ledger and agree to disagree. This is what you will find on private blockchain platforms.
Immutability
The public blockchain network is completely immutable. What does this mean? It means that once a block is added to the chain, there are no ways to remove or change it. It means that anyone who alters a block cannot benefit from it. Every organization has to deal with alteration issues. It can happen offline or online. The best thing about the hash functions is that they can be used as security protocols. If someone attempts to change the blocks, they will create a new chain that separates from the original. This will cancel out any changes made.
Complete User Empowerment
In most cases, users must follow many rules and regulations to use any network. Many times, the rules may not be fair. Public blockchain networks are different. Because no central authority can oversee their actions, users here are empowered. These platforms are open to everyone, so you can download the nodes and join the consensus. Private blockchain platforms won't allow this. You'll also see that private blockchain users are restricted in their freedom.
What is a Private Blockchain?
Private blockchains may be contrary to public blockchains. Private blockchains can be a permissionless network and allow their owner full control. It limits who can access the network and how they can take part. Participants must be granted permission to modify, read and write on the Blockchain. To protect data and information. Multiple layers of data access are possible with this Blockchain. Private Blockchain provides higher performance, security, privacy, and confidentiality.
Private blockchains can be kept private and confidential. This Blockchain can only be used in specific sectors. This includes the finance and government sectors. One or more entities can control this type of Blockchain. This allows intermediaries and third parties to transact. Only the parties to a transaction have access to it on a private blockchain. It will be private, and only the parties to a transaction can see it. They cannot access it or take part in it. A private Blockchain like Hyperledger Fabric is a great illustration of this.
Corporate sectors can adopt private blockchains. Only certain nodes can share the details of a transaction. For example, several banks can adopt and use a private blockchain. Information about financial transactions is only disclosed to those parties. Media companies Comcast, Disney, and NBC Universal have recognized private blockchains. This type of Blockchain was first used to share data about advertising. A private blockchain is the best choice for companies who want to control their network and give them private access. Private blockchains are capable of processing thousands of transactions in just seconds.
Private Blockchain: Best Features
High Efficiency
Despite being the first to use public Blockchains, they are often inefficient. Why? It's because they bring everyone into the network. Because more people use the features, it consumes a lot of resources that platforms cannot support. It slows down quickly. Private Blockchain, on the other hand, allows only a few people to join the network. They may even be required to perform certain tasks. They cannot take up additional resources or slow down the platform. Private blockchains use eco-friendly consensus protocols to achieve an agreement. Let's look at the next feature of this comparison guide between public and private blockchains.
Complete Privacy
Private blockchain solutions are more focused on privacy than public platforms. This technology is ideal if you're looking for the best level of privacy possible for your business. Although it may seem extreme, this is the truth. Security and privacy are two of the most important issues that enterprises face. They also deal with sensitive information every day. A leak of even one can cause a huge loss to the company. This is why companies must use a network capable of protecting this information. This is where private blockchains are useful.
Empowering Enterprises
Private blockchain solutions empower enterprises and not just employees. Companies need technology to support their processes. These solutions are not only for internal business systems. This is the most important use case for private Blockchain. They can provide security and backup companies, so you must begin implementing your blockchain solutions.
Stability
Private blockchain solutions are stable and will give you the peace of mind you desire. You will need to pay a fee to process a transaction on any blockchain platform. Public platforms can have a higher fee due to increased transaction demand. It takes longer to complete transactions if there are too many requests. The fee rises dramatically as time passes. Private blockchain platforms are different. There are no delays because only a few people can request transactions. The fee is the same.
This is Why You Should Use It
Low Fees
Transaction fees on private blockchain platforms are very low. Unlike public blockchain platforms, transaction fees do not rise with the number of requests. No matter how many transactions are requested, transaction fees will remain low and exact. There is no hidden cost.
You can Save Money
Private Blockchain can save a lot of money. It is much easier to maintain a private blockchain than a public one. Private blockchain platforms use very few resources. Public Blockchain, on the other side, takes up much more resources to support its large crowd. It saves money in the long term. However, it doesn't necessarily mean it's extremely expensive or some other thing.
No Illegal Activity
Private blockchain platforms require authentication before you can log in to the network. This process is designed to filter out intruders trying to access the system. As already said, public blockchain solutions are prone to criminal activity. It's obvious that it is not something you would want in an enterprise environment. Only verified people can enter the system and eliminate any illegal activities.
Regulations
Private Blockchain could be the best technology to help your company. Why? You can face severe consequences if you don't comply with them. The theory works in a private blockchain. It allows you to define all rules; your employees must follow them. Let's start by comparing these different types of blockchains. Let's start with the similarities.
There are Many Similarities Between a Private and Public Blockchain
Both public and private blockchains can only add information to the network, while participants cannot alter it. This particular characteristic of the Blockchain means that it is immutable. This is only possible in rare cases, such as when hackers gain 51% of the network's "hash power."
Neither the public nor private blockchains offer "update" and "delete" options. A blockchain contains sequential, time-ordered data. Transactions are organized in blocks, which form a chain of data. This is a useful feature that allows transparency, accountability, and accuracy. Each transaction can be viewed by everyone who uses the Blockchain.
The terminology of blockchain technology has changed over time. Because the public and private blockchains share some similarities, so they have changed their terminology.
- Both are peer-to-peer blockchain networks.
- Both blockchains have an append-only ledger that digitally signs transactions. Both blockchains can store immutable records.
- They are distributed entirely over a peer-to-peer network of a computer.
- The validity of both records can be checked.
- Both blockchains can be in sync using a protocol called consensus.
- Both private and public blockchains offer assurance about the integrity of the ledger.
Public Blockchain vs. Private Blockchain: Which one to Choose?
Authority
True decentralization is possible in a public blockchain. This is something you won't find in private networks. Because everyone has a copy, it creates a distributed nature. Private Blockchain, on the other hand, has a large authority that oversees the system. It might seem strange to think that this could be decentralized. Technically, it isn't. Private blockchains are not fully decentralized as public ones. It is more decentralized. This is where private and public Blockchain differs less. Private blockchains can be decentralized, which is still best for enterprise environments.
Access
A single entity controls a private blockchain. It means that the network is closed to the public. All private blockchain solutions will be able to identify who enters the platform through some authorization scheme. Only selected members will have access to this network. Anyone can join a public blockchain network at any moment. Participation is open to all. Also, anyone can view the ledger and participate in the consensus process.
Transaction Costs
Public blockchain platforms have a higher transaction price than private ones. The performance of the platforms is affected by a large number of nodes. It takes a long time to process requests. As a result, prices go up dramatically. Private blockchain platforms have extremely low transaction fees. Unlike public blockchain platforms, transaction fees do not rise with the number of requests. No matter how many transactions are requested, transaction fees will remain low and exact.
Consensus
Nodes can join the consensus process in a public blockchain without restrictions. Everyone can participate in the consensus process and reap the platform's benefits. Private Blockchain, on the other hand, decides before the consensus is formed who can and cannot join it. Many nodes will not be able to participate in the consensus process.
Transaction Speed
We can compare private, and public blockchains' transaction speeds to see which is better. Both platforms work fairly well up to a point. After that point, however, transaction speeds can vary dramatically. A public blockchain allows anyone to request a transaction. The transaction speed will slow down if there are too many requests. Sometimes it can take quite a while to process transactions. Private blockchain platforms are not permitted. Only a few nodes are allowed to participate in transactions. Speed is maintained at all times.
Data Handling
Let's compare the data handling between these two technologies to see how private and public blockchains differ. Anyone can view and modify the ledger in a public blockchain. However, you cannot alter the ledger once it is on it. Private blockchains are restricted to a single entity that can read and write on the ledger. Even more, only a few nodes can write on the ledger. They can sometimes even delete a block. This is true for both private and public blockchain examples.
Efficiency
Public Blockchain is less efficient than private blockchain platforms. How? Private Blockchain, however, has only a few nodes. They are always efficient regardless of what.
Immutability
The public blockchain network is completely immutable. What does this mean? It means that once a block is added to the chain, it cannot be removed or changed. It means that anyone who alters a block cannot benefit from it. On the other side, private blockchains have some degree of immutability. Authorities can remove a block in certain circumstances if they feel it is necessary. This is where the public and private blockchains differ greatly.
Public blockchain security is now more secure. They will continue to increase in value. Private Blockchain gives you greater control over who can access it and how much. Both blockchain technologies can be used in different business scenarios. Public blockchains will be more beneficial for B2C users. Public blockchains are more useful for B2B transactions, while private blockchains work well in B2B. The Blockchain's use will determine whether the public or private Blockchain is better for them. The type of blockchain platform that businesses want should be decided by them.
What is the Importance of Anonymity?
Blockchain technology is a key component of privacy and anonymity. Individuals and companies should keep transaction information private when they do business. Transactions can be traced back to their original addresses in a blockchain. However, these numbers are just numbers on a private key without other identifying information.
Let's look at the legacy system. All information identifying an individual or company would be stored in a standard bank account. Banks also keep sensitive information like name, address, and Social Security number (SSN). However, keys only identify the wallet used to make the transaction. Blockchain's anonymity can prevent users from becoming kidnapped or stolen. Blockchain users can securely execute transactions anywhere, regardless of where they may be located worldwide. Blockchain networks don't have operating hours, unlike banks. Anonymity on the Blockchain can be a double-edged sword. The technology does not reveal its participants but can open the door to criminally motivated activities like money laundering or human trafficking.
Conclusion
We've now discussed the advantages and disadvantages of private and public blockchains and their best and worst features and drawbacks. We have discussed the essential role of anonymity in public vs. private blockchains and why it might be necessary. The public vs. private blockchain comparison guide has reached its final point. There are many differences between the two technologies. If you have the right features, private and public blockchains are suitable for enterprise environments.
What is the biggest difference between private and public blockchains? Their scalability is the most important difference. However, it will ultimately depend on your specific use case and priorities. A private blockchain might be the best choice if you want complete control over your network and the ability to process thousands of transactions in just minutes. A public blockchain is your best option if anonymity and open source are more important to you than scalability. The final decision is up to you. This guide should help you choose the right one for your company.
