Public and Private Blockchain

BLOCKCHAIN

Am going to be talking about two types of blockchain, but first let us defined what is the blockchain before the types of blockchain.

What is Blockchain

Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system.

I will be talking about two types of blockchain and their comparison and how they works and they are.

[https://www.shutterstock.com/image-illustration/cardano-coin-ada-decentralised-public-blockchain-784292359]

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1. Public blockchain

2. Private blockchain

3. Public blockchain

What Is Public Blockchain?
A public blockchain network is a blockchain network where anyone can join whenever they want. Basically, there are no restrictions when it comes to participation. More so, anyone can see the ledger and take part in the consensus process.

For example, Ethereum is one of the public blockchain platform
Thus, if you want a fully decentralized network system, then public blockchain is the way to go. However, it can get a bit problematic when you try to incorporate a public blockchain network with the enterprise blockchain process.

Anyhow, the public blockchain network was the first-ever blockchain type in the revolution. As a matter of fact, it was Bitcoin that laid the foundation of blockchain technologies.

Once people started to see the underlying technological benefits, they started developing other blockchain variations to get rid of all the issues.

The best part about public blockchain companies is that they make sure that all the participants have equal rights no matter what.

People can join in and participate in consensus, transact with their peers as they please.

Public blockchain companies make sure that this technology offers the highest level of security. More so, it’s something that you won’t see in a private blockchain.

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Advantages of Public Blockchain
Trustable – Unlike in private blockchain, two nodes or participants do not need to worry about the authenticity of the other. In other words, they don’t need to personally know or trust the other nodes as the process of proof-of-work makes sure there can be no fraud in transactions. So, one can trust public blockchains blindly without feeling the needing to trust individual nodes.

Secure – There can be as many participants or nodes in a public network which makes it a secure network. The larger the network, greater the distribution of records and harder it is for hackers to hack the entire network. In addition to this, every node will do verification of transactions and proof-of-work which makes every transaction and block legitimate. Due to these practices and thoughtful cryptogenic encrypting methods, a public blockchain is much safer than the private one.

Open and Transparent – Public blockchain is open and the data is transparent to all the participant nodes. A copy of the blockchain records or digital ledger is available at every authorized node. This makes the entire blockchain system completely open and transparent. No one shows a fake transaction or hides an existing one as every node has an updated copy of the database at any given point of time.

Disadvantages of Public Blockchain
Lower TPS – The rate of transactions per second in a public blockchain is very low. This is because it is a huge network with a lot of nodes and for every node to verify a transaction and do proof-of-work is time-consuming. This is why public blockchains like Bitcoin can process only 7 transactions per second or Ethereum network has a rate of 15 TPS. On the other hand, a private network such as Visa has a rate of 24,000 TPS indicating a huge difference in speed of transaction processing and execution.

Scalability Issues – Like we just saw in the point above, that public blockchain have a slow rate of processing and completing transactions. This causes issues in scalability as well. Because the more we try to increase the size of the network, the slower it will get. However, solutions like Bitcoin’s Lightning Network helps in overcoming this problem. It maintains a rate of the transaction as we increase the size of the network.

High Energy Consumption – The process of proof-of-work is highly energy consuming as it needs specialized systems (hardware components) to run a special algorithm. It is a matter of concern from both an environmental and economical standpoint. The apparatus to do proof-of-work is costly and consumes as much energy as the country of Ireland! The technology definitely needs to come up with energy-efficient consensus mechanisms.

1. Private blockchain

Private blockchain is a special type of blockchain technology where only a single organization has authority over the network. So, it means that it’s not open for the public people to join in.

In reality, all the private blockchain solutions will have some form of authorization scheme to identity which is entering the platform. Basically, private blockchain solutions develop these platforms for the internal networking system of a company.

Thus, you would need trust to use this platform. Without trust among the nodes, this network model won’t work. Thus, only employees within an enterprise can get access to it.

You might think, how is this decentralized then? Well, it’s not technically, anyway. A private blockchain isn’t fully decentralized like public blockchain platforms. It’s more of a partially decentralized situation.

However, in private blockchain platforms, you’ll get regulations that other platforms don’t have. So, all the nodes have to abide by certain rules to ensure a company’s proper flow.

There’s a lot of controversies with private blockchain platforms as well. Basically, people believe that the governing authorities can override a transaction if they deem it fit. But it’s highly unlikely.

Also, as enterprises need privacy, private blockchain use cases seems a perfect fit in this case. Without proper privacy, their competition can enter the platforms and leaks valuable information to the press.

Advantages of Private Blockchain
Speed – Private blockchains’ transactions occur at greater speed as compared to public blockchains. That means the transactions per second (TPS) rate is higher in the case of private blockchains. This is because there is a limited number of nodes in a private network as opposed to a public network. This fastens the consensus or verification process of a transaction by all the nodes in a network. Also, the rate of adding new transactions in a block is fast. Private blockchains can facilitate the transactions at a rate of up to thousands or hundred thousand TPS at a time.

Scalability – Private blockchains are pretty scalable. That is, you can choose the size of your private blockchain as per your needs. For instance, if there is an organization that needs a blockchain of only 20 nodes, they can easily deploy one. Then after expansion, if they need to add more nodes, they can easily do so. This makes private blockchains very scalable as it gives an organization the flexibility to increase or decrease the size of their network without much effort.

Disadvantages of Private Blockchain
Needs Trust-building – As far as a public blockchain is concerned, it is like an open book or as we call it, an open ledger. This ensures the security and legitimacy of every user. Whereas, in a private network, there are limited participants in a restricted network. Especially within an organization, where colleagues know each other. They need to build trust to transmit confidential information within a network.

Lower Security – As a private blockchain network has lesser number of nodes or participants, it runs a higher risk of a security breach. If anyone of the nodes gains access to the central management system, it can gain access to all the nodes in the network. This makes it easier for a node to hack the entire private blockchain and misuse the information.

Centralization – Private blockchains are restricted that is they need a central Identity and Access Management (IAM) system for functioning properly. This system has all the monitoring and administrative rights. It gives permissions to add a new node in the network or decide the level of access they get for the information stored in the blockchain. This whole system contradicts the idea of decentralization which is one of the pillars of blockchain technology.by
[Dataflair team]

Comparison between Public Blockchain and Private Blockchain are.

In a public blockchain, you’ll get true decentralization. This is something that is quite absent in private blockchain networks. As everyone has a copy of the ledger, it creates a distributed nature as well.

On the other hand, private blockchain does have a big authority looking over the system.

You might think, how is this decentralized then? Well, it’s not technically, anyway. A private blockchain isn’t fully decentralized like public blockchain platforms. It’s more of a partially decentralized situation.

This is where public and private blockchain seems to differ in a smaller way. Even though private blockchains may be partially decentralized, it still works best for the enterprise environment.

Access
In a private blockchain, only a single organization has authority over the network. So, it means that it’s not open for the public people to join in.

In reality, all the private blockchain solutions will have some form of authorization scheme to identity who is entering the platform. Thus, only selected members have access to the network.

On the other hand, in a public blockchain network, anyone can join whenever they want. Basically, there are no restrictions when it comes to participation. More so, anyone can see the ledger and take part in the consensus process.

Transaction Cost
Public blockchain platforms tend to have a higher transaction cost compared to private blockchain platforms. In reality, the enormous number of nodes on the platforms allows down the performance. And as a result, it takes a lot of time to process the requests. Thus, prices rise drastically.

On the other hand, in private blockchain platforms, the transaction fees are extremely low. Unlike public blockchain platforms, the transaction fee does not increase based on the number of requests. So, no matter how many people request for a transaction, the fees will always stay low and accurate.

Consensus
In a public blockchain, nodes have no restrictions in joining the consensus process. As a result, everyone is free to participate and get the benefits of the platform.

On the other hand, private blockchain decides beforehand who can join the consensus and who can’t. As a result, many nodes won’t really participate in the process at all.

Transaction Speed
For private blockchain vs public blockchain comparison, we can take a look at their transaction speeds. In reality, until a certain point, both platforms can perform quite the same. But after that certain point, the transaction speed varies drastically.

Usually, in a public blockchain, anyone can request a transaction. So, when there are too many requests on the network, the network relatively slows down with the transaction speed. It can take a lot of time to even process a transaction then.

But not in private blockchain platforms. Here, only a handful of nodes can participate in the transaction process. So, speed always remains the same.

Data Handling
Let’s see the data handling of these two technologies for the sake of private blockchain vs public blockchain comparison. In a public blockchain, anyone can read and write on the ledger. But you can’t alter it once it gets on the ledger.

But in a private blockchain, only a single organization can read and write on the ledger. More so, only a handful of nodes can write on the ledger. In some cases, they can even delete a block as well.

It’s more of a similar situation for both public and private blockchain examples.

Efficiency
This is the last point of the public vs private blockchain guide. In reality, public blockchain is less efficient compared to private blockchain platforms. How? Well, public blockchain platforms deal with scalability issues, and they slow down when there are too many nodes on the platform.

On the other hand, private blockchain only has a handful of nodes on the platform. So, they always remain efficient no matter what.

Immutability
The public blockchain network is fully immutable. But what does that mean? Well, it means that once a block gets on the chain, there is no way to change it or delete it. So, it makes sure that no one can just alter a certain block can get benefits from others.

On the other hand, private blockchains are partially immutable. In certain cases, authorities can delete a certain block if they seem it fit.
By [Gwyneth Iredale]

Conclusion :
From my comparison between the two types of blockchain, public and private blockchain. I discovered that all have one beneficiary in one way or the other and both have one weak point too. So my advice to you is that look out for updates and information when it comes to online trading for you to choose which one is better.

Thanks professor.