What is the Similarities and Differences Of Public Blockchain And Private Blockchain? Ever wondered what would be the most fundamental reason for people adopting blockchain technology? The very fact that it creates a high level of trust for people to secure their data and processes over a secure network.
Right from the advent of the Bitcoin, blockchain technology is disrupting each and every industry as it is adopted at a massive rate by enterprises of every nature: small, medium, and large. More and more companies are realizing the revolutionary potential of this technology and are looking to leverage it for their daily operations, thereby making it less of a buzz word and transforming it into a forward-thinking mantra.
Therefore, it’s actually really important to know the big differences between public, private, and permissioned blockchains play a huge role in the companies looking for the perfect blockchain type for their solutions.
What Is A Public Blockchain?
A public blockchain is permissionless. Anyone can join the network and read, write, or participate within the blockchain. A public blockchain is decentralized and does not have a single entity which controls the network. Data on a public blockchain is secure as it is not possible to modify or alter data once they have been validated on the blockchain. Bitcoin and Ethereum are well-known examples of a public blockchain.
What Is A Private Blockchain?
A private blockchain is a permissioned blockchain. Private blockchains work based on access controls which restrict the people who can participate in the network. There are one or more entities which control the network and this leads to reliance on third-parties to transact. In a private blockchain, only the entities participating in a transaction will have knowledge about it, whereas the others will not be able to access it. Hyperledger Fabric of Linux Foundation is a perfect example of a private blockchain.
Similarities Of Public Blockchain And Private Blockchain
Here are some Similarities Of Public Blockchain And Private Blockchain.
- Both function as an append-only ledger where the records can be added but cannot be altered or deleted. Hence, these are called immutable records.
- Each network node in both these blockchains has a complete replica of the ledger. Both are decentralized and distributed over a peer-to-peer network of computers.
- In both, the validity of a record is verified, thus providing a considerable level of immutability, until the majority of the participants agree that it is a valid record and reach consensus. This helps prevent tampering with the records.
- Both blockchains rely on numerous users to authenticate edits to the distributed ledger thus helping in the creation of a new master copy which can be accessed by everyone at all times.
Differences Between Public And Private Blockchains
- The order of magnitude of a public blockchain is lesser than that of a private blockchain as it is lighter and provides transactional throughput.
- Level of access granted to participants- In a public blockchain, anyone can take part by verifying and adding data to the blockchain. In private blockchains, only authorized entities can participate and control the network. Examples are Bitcoin and Ethereum.
- A public blockchain is decentralized, whereas a private blockchain is more centralized. Examples – Hyperledger and Ripple.
- Consensus algorithms such as Proof of Elapsed Time (PoET), Raft, and Istanbul BFT can be used only in case of private blockchains.
- Transactions per second are lesser in a public blockchain when compared to private blockchains. As the number of authorized participants is less in a private blockchain, it can process hundreds or even thousands of transactions per second.
- A public blockchain cannot compete with a private blockchain in terms of scalability issues as it is slow and hence can process transactions only at a slow pace. In a private blockchain, as only a few nodes need to manage data, transactions can be supported and processed at a much higher pace.
- A public network is more secure due to decentralization and active participation. Due to the higher number of nodes in the network, it is nearly impossible for ‘bad actors’ to attack the system and gain control over the consensus network. A private blockchain is more prone to hacks, risks, and data breaches/ manipulation. It is easy for bad actors to endanger the entire network.
- A public blockchain consumes more energy than a private blockchain as it requires a significant amount of electrical resources to function and achieve network consensus. Private blockchains consume a lot less energy and power.
- In a public blockchain, it is necessary to grant access to a centralized authority to oversee the entire network, thus making it a private blockchain at this point. In a private blockchain, anyone who is overseeing the network can alter or modify any transactions according to their needs.
- In a private blockchain, there is no chance of minor collisions. Each validator is known and they have the suitable credentials to be a part of the network. But in a public blockchain, no one knows who each validator is and this increases the risk of potential collusion or a 51% attack (a group of miners which control more than 50% of the network’s computing power).
What is a permissioned blockchain?
There’s also a third category of blockchain infrastructure, known as permissioned blockchain, or consortium blockchain. As the name suggests, these networks require the permission of the operator to join and execute different functions. Permissioned blockchains aren’t private blockchains but have an additional access control layer as a security measure that allows only identifiable participants to execute certain on-chain actions. While private blockchains only allow known nodes to operate, any node can operate on a permissioned blockchain once allowed by the operator.
Permissioned blockchains aren’t as common as public or private ones. They’re the preferred type of blockchain for organizations looking for an additional layer of security, identity maintenance, and permission management features. Thus, permissioned blockchains are often the middle road between private and public infrastructure.
The most important element of a permissioned blockchain is the above-mentioned access control layer, which enables the network operator to limit the access of participants and assign different roles to each of them. For instance, this can enable the participation of a node or a miner, without giving them access to the whole record of transactions or additional functions.
As for the rest of the technical characteristics, permissioned blockchains have the same technology as the underlying blockchain protocol, except for the access control layer. They retain all the positive features of the original blockchain but vary greatly among each network.
Based on the needs of the network operators, the level of decentralization, consensus architecture, and governance can be different for each implementation.
|Accessibility||Anyone||Single Person/ Central Incharge||More than one central in-charge.|
|Who can join?||Anyone||Permissioned and known identities||Permissioned and known identities|
|Consensus Mechanism||PoS/PoW||Voting or multi-party consensus algorithm||Voting or multi-party consensus algorithm|
|Transaction Speed||Slow||Lighter & Faster||Lighter & Faster|
|Decentralization||Completed Decentralized||Less Decentralized||Less Decentralized|
To declare which blockchain is best won’t be right because each blockchain has its own features, advantages, usage, and requirements. If you are a part of a public blockchain, then you should have an in-depth knowledge of it. But if you want to design and implement your own enterprise blockchain, a private blockchain is a one-stop solution in that case. Consortium blockchain is likely to interest enterprises and organizations who want to efficiently streamline communication among one another. Hope this article will be helpful for investors. Subscribe to GIG Dollar to stay updated with the latest news on blockchain, cryptocurrency, digital asset investment, etc.
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