Private and Public Blockchains What is the main difference?
So how do private and public blockchains function and what is the difference between them? Let’s reveal the advantages and disadvantages of these blockchains.
The public blockchain is an open source and permissionless network. As previously mentioned, anyone can participate and run the node. The network’s information is encrypted and stored on a huge number of devices. As a result the network is immutable, resistant to DDoS attack and censorship free.
Due to their distributed nature, public blockchains have several significant drawbacks:
- Public Blockchains require massive computational power to maintain a decentralized ledger at a large scale.
- Another drawback is connected to the opportunity to change the rules of the network. To update the rules the community needs to come to a common consensus about what can take time. As a result, blockchain is slow and ineffective.
The most widespread and well-known public blockchains are:
- Bitcoin. Bitcoin is the first successfully applied protocol that utilized the principle of a public decentralized ledger via peer-to-peer transactions. Bitcoin in 2018 [Infographics]
- Ethereum. With the appearance of Ethereum, public protocol users can now create smart contracts without building their own ecosystems. About smart contracts coding.
Unlike public blockchains, private blockchains are closed. This means that not everyone can run the network’s node. To participate in the work of the ecosystem users need authorized aссess. Regardless, participants operate under the control of the centralized organization. This is the sole distinction from public protocol.
Taking into consideration this prominent feature, private blockchains are faster and more effective in terms of scalability.
It also should be mentioned that private blockchains function in a trustless environment, while private blockchains demand a high level of trust among their members.
The main disadvantage of the private blockchain approach is that it is vulnerable to attacks and maintained by centralized governance.
There are also platforms for private blockchains:
- Hyperledger builds frameworks and platforms for corporate blockchains. It is designed to improve the mechanisms for the transfer and processing of payments, and is developed primarily for large financial institutions. In addition to being hosted by The Linux Foundation, Hyperledger consists of a global collaboration of more than 200 participants including Intel, IBM and JPMorgan.
- Ripple is an independent, decentralized, open-source payment system. This system allows users to create different types of currencies and set-up credit relations with each other worldwide. Ripple relies on RippleNet, a private blockchain network that provides transparency and security.
- Multichain is an open-source platform for building private blockchains. MultiChain helps organizations to build and deploy blockchains with speed. It’s a customizable blockchain platform that can be built for a wide range of applications and industries. Users can add MultiChain to their ecosystem, and then create a blockchain to suit their needs.