Public vs Private Blockchains: Which One is the Best for Your Business?

Public vs Private Blockchains: Which One is the Best for Your Business?

Private Blockchains are used by organizations that need to share sensitive information among a limited group of participants, such as banks, insurance companies, and healthcare providers. A private Blockchain is a permissioned Blockchain network operated by a single organization public blockchain vs private blockchain or a group of organizations. Private blockchains are designed to allow only authorized participants to access and validate transactions on the network. In the education sector, private blockchains offer solutions for credential verification, academic records management, and digital rights management.

How CBDC Solutions for Payment Delays and Fraud Risks Are Revolutionizing Finance

Starting 2017, real world asset tokenization (RWA) emerged as a game-changer use case of blockchain technology. Now in 2024, the RWA market is exploding with an expected $16.1 trillion in tokenized assets by 2030. Blockchain https://www.xcritical.com/ technology has emerged as a revolutionary solution for a wide range of industries and has been the driving force behind the creation of digital assets like Bitcoin and Ethereum. The blockchain market size was valued at $12.3 billion in 2023 and is projected to reach $163.83 billion by 2029 at a CAGR of 56.3%, according to a report by Fortune Business Insights. Blockchain is shaping the future, and Identity.com is playing a key role in this evolution through our work with various blockchains and related initiatives. As a proud member of the World Wide Web Consortium (W3C), the standards body for the World Wide Web, we are committed to contributing to the development of open standards and blockchain technologies.

Public and Private Blockchain: What’s the Difference?

Real estate tokens represent ownership stakes in properties and can be traded on decentralized exchanges (DEXs), providing investors with opportunities for diversification and liquidity. Additionally, public blockchains facilitate crowdfunding platforms for real estate development projects, enabling access to capital for developers and investors worldwide. In the insurance industry, private blockchains offer opportunities to streamline processes related to policy issuance, claims processing, and risk management. By creating a tamper-proof record of insurance contracts and claims, private blockchains can enhance transparency, reduce fraud, and expedite claims settlement. Additionally, smart contracts deployed on private blockchains can automate insurance processes, such as premium payments and policy renewals, improving efficiency and customer experience. Unlike private blockchains, permissioned network data is normally public.

Private Blockchain: Verified and Vetted

Fortunately, businesses can focus on keeping out users that don’t have the required permissions to access the blockchain in the first place. They can also control the ledger more directly, so potential fraudulent records can be easily cleaned out. In contrast, a private blockchain is a closed system that is only accessible to authorized parties. Participants must be invited to join the network, and transactions are only visible to those authorized to view them.

Public vs. Private Blockchains: Key Differences

• In healthcare, blockchain technology might be used to track and secure patient data.
• Data is often protected by encrypting it which means that it’s turned into a code that can only be read by someone who has the key to unlock it.
• As a result of the high energy demands, many have criticized public blockchains for their environmental impact.
• Absolute decentralization is one of the key characteristics of a public blockchain because it brings with it a level of security and accessibility that public blockchains are known for.
• A public blockchain is decentralized and does not have a single entity which controls the network.
• However, a common question that arises is the difference between a public and a private blockchain.

Well, public blockchain platforms deal with scalability issues, and they slow down when there are too many nodes on the platform. 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. Either way, there is plenty of room for both private and public blockchain to develop, and they each have their own use cases.

The Risks of Adding Encrypted Data on the Blockchain

Consequently, this makes it exceedingly improbable for any single entity to engage in malicious tampering or fraudulent manipulation of the data. Blockchain, the technology of distributed ledgers, ensures the secure recording and storage of data through a unique process. It constructs a series of blocks, digital records, which can be effortlessly shared among multiple parties in a peer-to-peer network.

Permissioned Blockchain Network

Public blockchain networks are decentralized, meaning they’re distributed among a network of users who can create transactions and verify them without the need for a central authority. Anyone can join the network, participate in transactions, and view the blockchain’s history. Computers on the network verify the integrity of transactions through consensus mechanisms. Common consensus mechanisms include proof of work, proof of stake, and proof of space and time.

Utilize Decentralized Identity Management with 1Kosmos

The Chia Virtual Private Blockchain enables organizations to reap the benefits of blockchain without sacrificing the privacy and control necessary for true enterprise-wide adoption. Control over the number of individuals and the quality of nodes enables private blockchains to have faster processing speeds and improved scalability. As with public blockchains, private networks are not immune to criticisms, mainly due to being far more centralized than public ecosystems. This centralization requires a significant amount of trust to be placed in the managing organization, while also limiting third-party verification of a ledger’s integrity. From finance to supply chain management and healthcare, public and private blockchains have found their applications in various industries.

The Difference Between Public and Private Blockchains

When it comes to private blockchains, far fewer nodes participate in the consensus method, which results in faster transactions as we’ve already discussed. What this also allows for are more robust and expensive consensus methods as well as those that already know the identity of the node. For consensus methods in private blockchains, you’ll generally see Byzantine Fault Tolerance (BFT) and PoW.

Anyhow, let’s check out the next one in this public blockchain vs private blockchain guide. Basically, in this type of blockchain, there isn’t a centralized entity. Thus, the responsibility of maintaining the network is solely on the nodes.

A private blockchain is managed by a network administrator and participants need consent to join the network i.e., a private blockchain is a permissioned blockchain. There are one or more entities which control the network and this leads to reliance on third-parties to transact. In this type of blockchain only entity participating in the transaction have knowledge about the transaction performed whereas others will not able to access it i.e. transactions are private. Public blockchains, especially cryptocurrencies, are notorious for having scalability issues. Depending on the application, a blockchain should be able to add to the ledger without any issues and leave the recorded data cemented in time. This is one of the huge differences between public and private blockchains since choosing one over the other can have big consequences.

This requires high level of computational power and energy consumption, which can result in higher transaction fees and slower transaction processing times. The main advantage of public Blockchains is that they are highly secure and resistant to censorship (as there is no single point of failure). As all transactions are recorded on the Blockchain and can be verified by anyone, it makes the network more transparent and immutable. All data is publicly visible to anyone who wants to access it, ensuring full decentralization.

I’ve already told you that public blockchain solutions have a bitter past with a connection to criminal activities. Obviously, in an enterprise environment, it’s not something that you would want. To do this, private blockchains use eco-friendly consensus protocols to reach an agreement. To learn more about private blockchain and identity management, sign up for our newsletter and read more about 1Kosmos Identity Proofing. Blockchain technology is a new Web 3.0 technology that serves as a decentralized, irreversible ledger for record-keeping that doesn’t require the participation or management of a central entity or organization.