> Blog > Public vs. Private Blockchains

Published August 30, 2022

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Blockchain technology is based on a few core tenets: decentralization, transparency, and immutability. These qualities have made blockchain popular for a wide range of applications, from payments to file storage, and even supply chain management. The most popular blockchains in the world today are public blockchains like Bitcoin and Ethereum. However, private blockchains are also gaining traction in a number of industries.  

So, what’s the difference between private and public blockchains? Is it even possible to have a ‘private blockchain’? 

This article will dispel some of the myths around private and public blockchains, and explain how each type of blockchain is used in the real world. 

public vs private blockchain definitions

What is a Public Blockchain?

A public blockchain is an open-source, peer-to-peer, decentralized network that anyone can join. When discussing public vs private blockchains, the key word to keep in mind is ‘open’. Public blockchains are open networks that anyone can access and participate in.  

The most popular public blockchain in the world is the Bitcoin network. Anyone with an internet connection can join the Bitcoin network and start using or mining bitcoin. Ethereum is another example of a public blockchain, and although it operates slightly differently to Bitcoin, it’s also an open-source, peer-to-peer network. 

Features of a Public Blockchain

Public blockchains share a number of features that make them different from private or permissioned blockchains:  

Open-source

When the pseudonymous person or group known as Satoshi Nakamoto launched Bitcoin in 2009, they released the underlying code as open-source software. This means that anyone could inspect or make changes to the code. While some private blockchains may also have open-source code, the difference is that not everyone has permission to view or edit the code. Being open source is a key feature of public blockchains, and means that there is no single point of control or failure. Any changes to the code must be agreed upon by the consensus of the network.  

Decentralization 

Decentralization is a key feature of public blockchain networks. There is no single entity that controls or owns a public blockchain. Instead, the network is maintained by a decentralized network of nodes, each of which has a copy of the blockchain. Without any centralized authority in control of the protocol, public blockchains are much more resistant to censorship and external interference than private blockchains are.  

Transparency

Launched in the wake of the global financial crisis, blockchain technology ushered in a new era of transparency in finance. All data on a public blockchain is publicly accessible and transparent. This means that anyone can view the transaction history of a public blockchain, and verify that the data has not been tampered with. One of the biggest advantages of public blockchains is that they can be used to build trust in systems where trust has been lacking, such as in the case of cross-border payments and financial services.  

Immutability

If a blockchain’s records could be altered at will, it would undermine the entire purpose of the technology. Public blockchains are immutable, meaning that once a transaction is recorded on the blockchain, it cannot be changed or deleted. This is made possible through the use of cryptographic hashes and digital signatures, and contributes to the trustless, transparent nature of public blockchain networks. 

Why Public Blockchains are Utilized

Public blockchains bring a number of advantages to certain projects over private or permissioned blockchains. 

Censorship Resistance

One of the most important advantages of public blockchains is that they are censorship-resistant. Because there is no single point of control, it is very difficult for anyone to censor transactions or prevent them from being recorded on the blockchain. This makes public blockchains ideal for projects or use cases that require censorship-resistance, such as storing transaction data and enabling peer-to-peer payments.  

Trustless Environment

A key advantage of public blockchains is that they provide a trustless environment. Because the code is open-source, anyone can audit the protocol to ensure that it is secure. And because the data is transparent and immutable, once recorded, it can’t be tampered with. This creates a very high level of security and trust.  

Decentralized Governance

Another advantage of public blockchains is that they enable decentralized governance. Because there is no central authority, decisions about the direction of the project are made by the consensus of the community. This can be a very powerful tool for projects that are looking to decentralize control.  

What is a Private Blockchain?

A private blockchain is a blockchain that is permissioned, meaning that there is a central authority that controls who can view or edit the data on the blockchain. Private blockchains are often used by enterprises or organizations that want to maintain control over their data.  

Features of a Private Blockchain

Private blockchains share a number of features that make them different from public blockchains:

Permissioned 

As mentioned above, private blockchains are permissioned, meaning that there is a central authority that controls who can view or edit the data on the blockchain. This central authority can be an enterprise, organization, or individual. Private blockchains are often used by these entities to maintain control over their data.  

Scalability

Private blockchains are often more scalable than public blockchains. This is because private blockchains can be designed to have fewer nodes, and these nodes can be given more resources. This allows private blockchains to process more transactions more quickly than public blockchains, as they operate in a ‘trusted’ environment which may not require the same stringent verification processes necessary in a ‘trustless’ environment.  

Flexibility

Private blockchains are also generally more flexible than public blockchains. This is because private blockchains can be customized to the specific needs of the entity that is using them. For example, a private blockchain can be designed to only allow certain individuals or groups to access the data on the blockchain, while any changes to a public blockchain would require the consensus of the community. 

Purpose of Private Blockchains

Private blockchains are often used by enterprises or organizations that want to maintain control over their data. Imagine a logistics company that wants to track shipments on a blockchain. By using a private blockchain, the company can control who has access to the data on the blockchain, and they can also customize the blockchain to fit their specific needs. They could choose to only allow certain individuals or groups to access the data, or could make the data private and only accessible to employees of the company, which would not be possible on a publicly distributed ledger.  

features of public and private blockchains

Choosing Between Private vs. Public Blockchains

So, which type of blockchain is right for your project, private or public? That depends on your needs. For organizations and enterprises that want to maintain control over their data, private blockchains are a good choice. The ability to customize private blockchains to specific needs is also a plus, and private blockchains are generally more scalable and secure than public blockchains.  

On the other hand, public blockchains offer the advantage of being decentralized and controlled by the community. This can give public blockchains more legitimacy and trustworthiness. Public blockchains are also generally more accessible, since anyone can view or edit the data on the blockchain.  

In the end, there’s no clear answer to which solution is better. Private blockchains offer certain advantages that may be appealing to some organizations, while public blockchains offer other benefits that may be more appealing to others. The important thing is to choose the type of blockchain that best meets your project’s needs and requirements.  

If you’re interested in learning more about blockchain technology, check out our other posts, where we take an in-depth look at the various projects and protocols that are shaping the blockchain industry.  

To stay up to date with the latest news and analysis, be sure to follow FTT DAO on Twitter, and get involved in the community. 

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