Introduction
Blockchain technology is witnessing continuous growth, bringing about rapid changes in the world. Its evolution has been swift, reshaping various industries and experiencing an upward trend in adoption. Two distinct types of blockchain networks, Public and Private, have emerged. It is imperative to grasp the advantages and distinctions between these networks to make informed decisions regarding the most suitable option for a company or platform.
In this blog, we will delve into the key differences between public and private blockchain networks and understand how different they are from one another.
Understanding the Public and Private Blockchain
1. Public Blockchain
Conversely, It is a permissionless, decentralized, and non-restrictive network, which means anyone can access and join the network using an internet connection. public blockchains operate on a decentralized and open framework, allowing anyone to join the network, validate transactions, and participate in consensus mechanisms. This inclusivity is a hallmark of public blockchains, making them suitable for applications where transparency and decentralization are paramount, such as cryptocurrencies.
1.1 Pros
Public blockchain networks offer greater transparency where all the participants can view and access the data without any restriction. The transactions recorded in the public blockchain networks are easily accessible and build trust and accountability among the participants.
Another key advantage is security, as public blockchains utilize advanced cryptographic algorithms for authenticating and securing the transactions within the decentralized network. This approach increases security and protects against unauthorized manipulation of data.
1.2 Cons
The primary disadvantage is energy consumption. Handling many transactions and using proof of work requires a lot of power consumption, leading to high environmental concerns, and is quite expensive.
2. Private Blockchain
It is a permission-aided, restricted, and centralized network, which means it is controlled only by a group of people or authorized persons who can access it. It is a closed network. In a private blockchain, entities have the ability to utilize blockchain for storing internal data, ensuring privacy and restrictions from external access.
2.1 Pros
One of the key advantages of a public blockchain is a reduction in the usage of energy consumption. Certain private blockchains employ consensus mechanisms that are less energy-intensive than the widely used proof of work consensus mechanism in public blockchains.
2.2 Cons
On the other end, transparency and a centralized system are challenging concepts of private blockchains. Compared to the public blockchain, The transparency level is restricted in private blockchain compared to the public as certain information is not available to everyone and can’t be accessed by outsiders as the rules control them, and only limited persons can access it. This can be a drawback to the stakeholders as they seek all the information and activities to be disclosed.
3. The Key Differences: Public Blockchain vs. Private Blockchain
The most important thing before choosing what type is suitable one has to have knowledge of the differences between them to understand their requirements and needs for the entity and choose accordingly. Before making a decision on which type is most suitable, it is crucial to have a comprehensive understanding of the differences between them. This knowledge is essential for discerning the specific requirements and needs of the entity, allowing for an informed choice.
3.1 Controllability
In a public blockchain, the accessibility is open to everyone to anyone without the need for permission as it is a decentralization network. Participants can join the network easily, and transactions are verified by a consensus mechanism that operates independently of trust among participants, which results in slower transaction speeds. This results in slower transaction speed.
On the other hand, private blockchain access is limited to a specific group of participants who are typically known and permitted by the central authority, that is centralized network. This creates a high level of trust among participants. This structure enables faster transactions and reduced latency.
3.2 Speed and Scalability
In a public blockchain, the speed is less when compared to a private blockchain, and the scalability level also tends to be slow. As the participants are large in numbers, the counts keep
growing every now and then. This process involves a decentralized system, and the complexity level will make the process take longer a longer time for transactions.
On the contrary, a private blockchain is faster and typically offers enhanced speed and scalability due to a controlled and limited number of participants. The smaller number of nodes enables expedited consensus and validation processes.
3.3 Consensus Mechanism
In a public blockchain, the consensus mechanism used here is Proof-of-Work (PoW) or Proof-of-Stake (PoS) for the decentralized system to make it an open-ended platform that is transparent to everyone. These are time-consuming and energy-intensive processes.
In the case of a private blockchain, the consensus mechanism is Practical Byzantine Fault Tolerance (PBFT) or Raft where these are suitable to keep the information private and are controlled by only the authorized participants.
3.4 Anonymity
In a public blockchain, user’s identities are transparent and known to all. This means that transactions and their associated identities are visible to all participants.
Meanwhile, in a private blockchain, users' identities are unknown and not transparent to everyone, Whereas, in a private blockchain, users' identities are unknown and are not transparent to everyone, and they can remain anonymous.
Public Blockchain | Public Blockchain |
|---|---|
Decentralized, open-source network | Centralized, closed network |
A high level of transparency | Lack of transparency |
Regulatory control is less | Regulatory control is high |
Immutable | Chances of mutable |
Secure | Vulnerable to attacks |
5. Top Entities Using Public Blockchain and Private Blockchain
IBM and Walmart companies are using private blockchain technology. The other use case of private blockchain is CBDC.
Paypal runs on Ethereum and a Closed network that is, it uses both private and public blockchains. A recent announcement reveals PayPal is launching its own stablecoin.
Conclusion
Public and Private blockchain networks both have their own unique significance and features in terms of efficiency, security, and other aspects of the blockchain network that make them suitable for specific use cases. The entities must understand what works best for them according to their requirements and objectives.
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