Blockchain is a hot topic in technology. Blockchain is a technology that has been around for ten years, but it only recently became popular due to its potential real-life applications. Blockchain technology can be spread across several computers. All computers receive the same updates. The Blockchain has been encrypted, so data cannot be altered.
That makes it an excellent choice for sensitive data, such as financial transactions or medical records. The two most common types of blockchains are Public Blockchains and Private Blockchains. In the crypto community, there is much debate about whether private or public blockchains are better. This article will provide a quick overview and help you decide which blockchain to use. Before we get into the differences between private and public Blockchains, let's look at the basics of blockchain technology.
What is Blockchain?
Blockchain is an electronic ledger that keeps track of transactions. The blocks are created and distributed over the network. The blocks of a chain can contain several transactions. Every time there is a new transaction, the ledger will update. The digital signature uses a hash which is an unchangeable cryptographic electronic signature. Blockchain is a shared database that many users can access. The term distributed ledger technology can also be used.
Blockchain technology allows for creation of decentralized databases that can track and record transactions. It is transparent and not centralized. Once data has been stored, it is tough to delete them. This technology is believed to make it more resistant to fraud. The system could be hacked to alter the flow of blocks. Hackers would then have to change every block on the vertical axis.
Blockchains can be decentralized, secure and immutable. Also, they can be untraceable, anonymous and programmable. They can be tracked in real-time. Because all parties must agree on the transaction's confirmation, blockchains require consensus.
Three distinct features distinguish blockchains:
- It's decentralized.
- Control and jurisdiction are distributed.
- Any Internet user can access it.
Blockchain technology has revolutionized distributed ledgers. More efficient cryptographic techniques have replaced complex consensus algorithms. Many new blockchain platforms use data storage and messaging layers, which give developers powerful tools to create applications beyond financial transactions. The underlying technology must be flexible enough to support a variety of applications.
Blockchain Applications in Business
Supply Chain Management
The blockchain is well suited to tracking products in real-time while they move and change hands throughout the supply chain. Companies that move these goods have various options when using a blockchain. A Blockchain entry can queue up events within a supply chain - for example, allocating goods that arrive at the port into different containers. The Blockchain system is an innovative and dynamic way to organize and track data.
Healthcare
The blockchain can store basic health information such as vaccination records, vital signs or immunization history. These data alone are not enough to identify an individual patient. The report can be stored on a Blockchain and shared with many users without any privacy concerns.
As specialized medical equipment becomes more common, blockchain can be used as a way to link these devices with the individual's health records. These devices will add data to the medical history and store it on the blockchain. It is essential to address the siloing of data created by medical devices that are connected. This problem has been a big issue for this industry benchmark. Blockchain technology could be a potential solution.
Real Estate
The average homeowner sells their house between 5 and 7 times in their lifetime. The real estate market could benefit from blockchain, as people move so often. It would be possible to speed up the home sale process using blockchain technology. That is because it can verify financial transactions quickly and prevent fraud through its encryption.
The Media
Media companies are already using blockchain technology to protect Intellectual Property (IP), reduce costs, and eliminate fraud.
Eluvio, Inc. has gained attention for using blockchain technology in the media. Eluvio Content Fabric was launched in 2019 and uses blockchain technology to allow content producers to distribute premium videos without using content distribution networks.
Studios is a major media company that has recently launched a platform to stream "certain properties" globally on the web, mobile wallet adoption, and television anywhere.
Energie
It claims that the blockchain can be used to facilitate energy transactions, as well as provide an underlying basis for processes such as billing, clearing and metering. States that asset management, documentation of ownership, and the generation of renewable energy certificates are all potential applications.
Other Industries can use Blockchain Technology
Financial Accounting and Management
It would be a great relief to customers who worry about fraud if blockchain security was at least as good as it has shown in the past few years.
Record Management
The encryption of the blockchain makes it a valuable tool for managing records. That prevents fraud and duplicates.
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Cybersecurity
The most significant advantage of blockchain technology in cybersecurity is that it removes all single points of failure. Blockchain technology offers privacy and encryption from end to end.
Big Data
The immutable nature of blockchain and the fact that every computer on the network verifies stored data constantly make it a good tool for storing big data.
Data Storage
The same principles apply to data storage as they do to big data.
IoT
Blockchain technology will revolutionize many IoT sectors, including:
- Supply chain. Monitoring the products movement as they are shipped to ensure they comply with specific requirements.
- Asset tracking can be used to track assets and machinery and their output. It is an alternative to cloud-based software.
Even though blockchain is helpful in these fields, IoT technology still relies on startups.
Types of Blockchain
Blockchain is a ledger that records communications between users in a sequence. Cryptography is used to connect the blocks. The transactions are managed and regulated by a group of computers. There are several ways in which this technology can be used, so there are various types. There are two main types of blockchains:
- Private Blockchain.
- Public Blockchain.
Private Blockchain
To access the blockchain, users must first be given permission. The number of users can be limited by using permissions. Only those involved in the transactions will have access. Third parties and stakeholders will not have access. Hyperledger fabric is an example of a private blockchain. Participants can decide the future, or a government agency may grant licenses. Associations make future decisions.
Private blockchains are ledgers that have been decentralized and have pre-defined conditions for data exchange or transactions. Because they are distributed over multiple nodes, private blockchains differ from traditional databases with restricted access. It depends on the network's purpose and what algorithm is used for determining consensus. The features of speed, privacy and security are given priority. A private or a public Blockchain can be chosen depending on the company's needs regarding transparency and control.
Why Use Private Blockchain?
Private blockchains have many benefits over public ones. Private blockchains are more secure than public ones. Employees within an organization can manage them. They can also be programmed with conditions. It allows businesses to operate more efficiently without requiring third-party supervision. They are also easier to implement compared with public blockchains. To run the game, you must create an entire state. That is not possible on a public blockchain. Developers could make large-scale Ethereum games with a private blockchain, lowering transaction costs.
Private blockchains can facilitate cross-border or inter-organizational transactions, even if the participants do not know each other. For example, farmers could sell their goods to buyers who export them to another country as part of a contract. Farmers and buyers would track each transaction step on their respective blockchains. Many applications need to be more suitable for public blockchains. However, private blockchains can. It can transform the business world in many areas, including finance, banking industry and cyber security.
Public Blockchain
All can access the public blockchain. Blockchain is open to everyone. The network is not controlled or supervised by any authority. The data on the public blockchain cannot be modified or altered after they have been validated. Bitcoin and Ethereum are both examples of public Blockchains.
The processing power required to operate a distributed ledger at a massive scale can be provided by public blockchains. Each node must solve a complex and resource-intensive problem to reach a consensus. While transparency is a benefit, it can also have disadvantages when applied to a public Blockchain. Transactions are public.
Both public and private blockchains are unalterable. Records can be only deleted or modified but not added. This type of blockchain is decentralized, distributed and operates peer-to-peer. The validity of the documents is established. Participants agree to a consensus. The records cannot be tampered with. The main difference between the two types of blockchains is their access.
Why Use Public Blockchain?
Public Blockchain offers many benefits that you should take full advantage of. Low fees are one of the most significant benefits that public blockchains provide. The majority of transactions are under one penny. The fact that they don't charge any transaction fees makes them a fantastic way for businesses to do business. Anyone can use a public blockchain. It is optional to give their data if they are unsure. The cost of operating public blockchains is lower because all the data does not need to be stored on centralized servers. That is possible because the network nodes support distributed architectures and keep copies of all data.
Blockchain Platforms are available 24/7 without interruption. The system is accessible at all times, day and night. Users can also communicate. The system is always available, so users don't have to worry about it being unavailable. The public blockchain platform is transparent. All transactions are visible to anyone using the Blockchain Platform. Transparency and trustworthiness are enhanced.
Public blockchains can be used anonymously. Public blockchains don't require users to disclose their personal information to gain access. That provides extra protection for people who don't know if they should disclose personal data on the Internet. Immutability is the last and most significant benefit that public blockchains offer. A transaction cannot be changed once it has been recorded. Users can be assured of their security when using this technology since all records are permanently stored.
Different Types Of Blockchain Industry
Access
A single organization manages a blockchain. The blockchain is closed to the general public. Private blockchains use authorization systems to track platform users. Only certain users can access the network. A public blockchain is the opposite. Participants can be anyone. Anyone can participate.
Consensus
Who can be part of the consensus will depend on who uses a private blockchain. Anyone can reach an agreement on a public blockchain.
Transaction Speed
Only participants are authorized to take part. Speed is maintained. Everyone can request and access the transaction/record on a blockchain. It can be lengthy to complete multiple transaction requests because there are so many.
Transaction Cost
Costs for a blockchain private platform are minimal. Prices do not change based on how many requests are made. The costs are constant, low and precise. Public blockchain platforms' transaction costs are higher than private blockchains. The venue may need to be faster due to its many nodes. It takes too much time to respond to requests. The prices increase drastically as a consequence.
Data Handling
Only one organization can access or change a ledger in a private blockchain. Only a limited number of users can add to the roster. Blocks can be removed depending on how the catalog has been constructed. This Blockchain, as its name implies, is available to everyone. Anyone can access it and read, write on, or use it. This type of ledger cannot be modified or altered once it has been finalized.
Efficiency
The private blockchains are almost always successful because they only allow a few nodes to access the ledger. Public blockchains may be faster, but they need to solve scaling problems. Public blockchains are less effective than private platforms.
Impermanence
Blocks can be removed from a ledger depending on the circumstances mentioned above. Private blockchains are, therefore, (partly) immutable. A partnership added to the blockchain cannot be terminated or modified. That means that the public blockchain cannot be changed.
Each Type of Blockchain has Its Advantages and Disadvantages
Private Blockchain
Benefit 1
There are fewer participants, so access is restricted. The consensus can be reached faster and more efficiently. Public blockchains are slower and can handle fewer transactions in a second. Private blockchains have fewer limitations. Decentralized public blockchains can have a slow consensus. Private networks are centralized, and decisions can be made much faster. A private blockchain requires significantly less energy and material than a public one. Peace can be achieved much quicker.
Private blockchains do not include a system of continuous notifications, and there is no issue with confidence. The integrity of the blockchain depends on the interaction between humans and their dependability. Records can only be checked in collaboration. Therefore, it is impossible to identify the responsible party. Each participant in a private blockchain network is determined and has the credentials to gain access. There can be no adverse effects.
Read More: Everything You Need to know About Public, Private and Consortium Blockchain Technologies
Benefit 2
The integrity of private Blockchain depends on the members that are authorized. Trust is essential because it confirms and certifies transactions. Only participants in the Blockchain can confirm the sent data. Hackers can take control of the network by reducing users. Hackers will have the ability to alter data or even destroy a system.
This system has partially undermined the goal of Blockchain. Blockchain aimed to build a decentralized ledger that many individuals could manage. Companies or groups of companies create and maintain private blockchains. The centralization of the blockchain leads to its counterproductive purpose.
Public Blockchain
Benefit 1
Public blockchains are the only ones that contain information accessible to the public. Users and participants can use the Blockchain to secure data and verify transactions. A Blockchain open to everyone offers transparency, one of its best qualities.
Decentralized ledgers and blockchains are public. This network has multiple nodes. They are immune to hacking that might corrupt data or invalidate transactions. Everybody can help maintain and secure public Blockchains. The public blockchain network is not regulated. Users and participants are empowered to participate in the truncation verification. A central authority must refrain from overruling users.
Benefit 2
Public blockchains can be more dangerous, as they allow for easier verification of transactions and data. The speed of public blockchains can be variable. It takes time for the entire network to reach a consensus. There are restrictions/limitations on the number of transactions that may be fed in a block, so processing all the transactions in the network takes time. The public blockchain needs to be more scalable due to the high electricity consumption. The public blockchain has lower scalability than its counterpart.
The Legal Issues Surrounding Blockchain
Blockchains are used in almost every industry. It is, therefore, vital to regulate blockchain. Any regulations or guidelines do not regulate blockchain. That raises many interesting questions. These are some of the most exciting questions.
Privacy
Privacy is not protected by the Indian IT Law or any other privacy laws worldwide. The fact that others can identify the participants and the transaction is one of the key features. Participants can be identified using their IP addresses, digital marketing IDs, public keys and other information. Section 43A of the Information Technology Act of 2001 provides a great example. Section 43A of the Information Technology Act of 2000 states: "Wherever an organization handles or holds sensitive data or information, they are responsible for compensating any affected persons who control, own, or operate computer resources." Blockchains are not controlled by one entity. Technology is decentralized. As described above, the privacy of sensitive data does not apply to Blockchain transactions and the identifiers used by participants.
Cybersecurity
Even though blockchain technology has been touted as robust and secure, it is still not invulnerable. For example, private blockchains can be compromised, and their data is stolen. There are different types of blockchains. A central unit controls some private blockchains. Public blockchains can be decentralized and may require revisions to the regulations on data protection. Cyber security is essential now that every industry recognizes and accepts advanced technology. It can also handle transactions of high value.
The Problem with Irreversibility
Transactions are irreversible due to technology. It is hard for courts and regulatory bodies to trace a fraudster that enters a trade with the intent of fraud. It is difficult to track down the criminal. Unlike traditional ledgers, blockchain transactions are not reversible and can be accessed by the RBI, banks, courts, tribunals, and other central authorities. Justice is difficult to deliver for victims. Even if the wrongdoer has been identified, it can still be hard to judge. The next topic I'll discuss is pseudonymity.
Pseudonymity
Although IP addresses can be used to identify where the transaction occurred, they cannot remember the individual who initiated the transaction. It is hard for regulators because the real names of participants cannot be linked together. It is difficult to enforce the law. The problems include terrorist financing, money laundering, tax and jurisdictional obligations, and contract and tax issues. Identity theft is a problem.
Problem Regarding Jurisdiction
Blockchain is a distributed system with a lot of methods. That makes it hard to find the person. It is difficult to pinpoint the exact location because there is no standard for data storage. Few countries have written internet laws. These include storing data on local servers and restricting access to data. Blockchain requires the same regulations. Only if Blockchain becomes part of international law is it possible. However, The data can be stored anywhere in the world until then. It will be a question of jurisdiction.
Enforcement of Contractual Obligations
Smart contracts blockchain, based on technology, allow for contract creation and execution. The software creates an obligation within the virtual world, and the transaction occurs when fulfilled. Many problems exist, including jurisdictional issues, regulatory challenges, pseudonymity, and lack of regulation. It is essential to consider how Blockchain transactions will be shared among contacts.
Can these contracts be used as traditional ones, or are they valid? The traditional contracts may be compromised or kept secret. Lawyers must be familiar with the programming language of these smart contracts. A single language will govern all smart contracts. Parties could then resolve their disputes using traditional methods. To manage blockchain-based contracts, legislation is required.
Questions Relating to Autonomous, Decentralized Organizations
DAOs (virtual autonomous organizations) are virtual organizations. All the functions of an organization are contained in the software. Smart contracts are created and converted into smart contracts to regulate an organization's operations. These smart contracts become automatically enforceable when certain conditions are met. DAOs can run themselves and don't require any central authority. It is difficult to challenge them under any law or jurisdiction. Everyone is accountable because it is an open-source interactive projection. They are very flexible. DAOs recognized by the Association of Persons are subject to severe sanctions. DAOs cannot be allowed to go unnoticed and are considered nefarious.
When implementing the blockchain, some gray areas need to be considered. That is a new technology that must adhere to moral laws. The Internet has made these changes more evident. We are gaining more control over the Internet. Similar initiatives are needed for blockchain regulation. Experts agree that tokens and cryptocurrency are required to make blockchain successful. It is essential to understand the risks of blockchain technology. Regulators and lawyers must be able to adapt to this new technology to understand it and create laws to address it.
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Final Thoughts
Both blockchain networks have very distinct differences. The two types of Blockchains are compatible. Permissioned blockchains are a third type. Middleware allows you to mix both public and private chains. The middleware enables customization. Only those with the right to use this type of Blockchain and verified as having their identity confirmed can access it. This type of Blockchain can only be used for specific tasks. Both public and private Blockchains are useful in enterprise settings if the selected features are valued.
Participants make the final decisions. Blockchain technology is a powerful tool. Sometimes it is called the "edge of digital trends disruption". It is possible to boost the economy by addressing issues early. What type of blockchain works best for you? Public or private? The kind of blockchain that is best for you will depend on your needs and the degree of transparency and confidentiality in your company.
The article on Errna can help you locate blockchain consultants and provide more information about public and private Blockchains. Private blockchains may be the right choice for businesses with high privacy requirements. Public blockchain networks are open to everyone.
