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Public vs private blockchains: What's the difference?

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Published:June 21, 2022
Last Modified:July 20, 2022

You’ve probably heard of blockchain technology by now, but did you know that there’s more than one kind? Some of the world’s leading distributed ledger technologies (DLT) like Bitcoin and Ripple operate on two different types of blockchain: public and private. Public blockchains like Ethereum and Bitcoin level the playing field with decentralization for users and creators worldwide. On the other hand, private blockchain models like Hyperledger Fabric and Ripple allow businesses to leverage encrypted ledger technology for IoT, finance, manufacturing, and much more. Understanding the difference between these technologies is key to formulating the right architecture for your startup or business project. This article will explain the core difference between the two and the details about data access, authority, transactions, consensus, data handling, and immutability of public vs. private blockchains.

Public Blockchain

A public blockchain is a cryptographically secured, decentralized database that allows anyone to access it with complete anonymity to acquire access to read and write. Transactions on a public blockchain are accessible by anyone and have absolute immutability, so they cannot be deleted or modified by anyone on the network. Users that want to make money can freely “mine” on a public blockchain, securing and verifying transactions on the chain. Because a public blockchain is permissionless, it does not require authorization, nor does it have a governing body that users must go through to process transactions, like CashApp or Paypal.

Public blockchains have evolved beyond just cryptocurrency, and many chains are now focused on storing and processing data for NFTs, dApps, or games. Read further to learn more about access, authority, transactions, consensus, data handling, and immutability of a public blockchain.

Access

Public blockchains allow anyone to access the platform. Through a peer-to-peer network (P2P), users can freely contribute or verify data to the blockchain. All public blockchain nodes have equal rights to access and send & receive transactions, agreements, and information without restrictions.

Authority

The authority on a public blockchain is decentralized, so anyone with a web connection can use it to make transactions or add to the network’s code without passing through a central authority. A decentralized system means that no single entity controls the backend. Instead of operating on a server, a blockchain uses smart contracts and nodes that contribute to the overall webserver. The elimination of a central authority cuts costs and increases security because it removes “the middle man,” like big corporations, governments, or other exclusive entities.

Transaction Speeds

Transactions on a public blockchain are extremely sluggish, causing major setbacks for leading public blockchains like Ethereum, which can only process 30 transactions per second, and Bitcoin, ~ 7 transactions per second.  Layer 2 Ethereum chains were developed to solve transaction speeds and gas fees in response to these slow transactions, but many have drawbacks.

Consensus

The consensus for a public blockchain is permissionless, which means that anyone can:

  • Access or create data
  • Publish smart contracts, or
  • Run a node

Without a central authority, both users and suppliers can participate in business and trade without restrictions on participants and validators as long as they meet the conditions within the smart contracts that exist on the blockchain. Because there’s 100% transparency on a permissionless blockchain, all transactions and modifications are documented and available to the public.

Data Handling

A public blockchain is open-source, which allows read and write access for all users to contribute and re-use code.

Immutability

A public blockchain has complete immutability, so no one can modify or delete it after data is entered.

Private Blockchain

A private blockchain is a partially decentralized network of well-defined users granted read and writes access by a single organization. Users on a private blockchain are verified by the organization, limiting anonymity between users. Unlike a public blockchain, a private blockchain does not offer any financial benefits for mining. Private blockchains support IoT devices, mesh networks, and internal applications.

Read further to learn more about access, authority, transactions, consensus, data handling, and immutability of a private blockchain.

Access

Private blockchains are closed ecosystems controlled by a single organization or central authority. Instead of being open to all users, a private blockchain is only available to an authority verified by a select group of users. All private blockchain nodes do not necessarily have equal rights and must be permitted to receive transactions, agreements, and information.

Authority

Private blockchains are only partially decentralized, so there is restricted public access. Only users verified by the central authority have access to the network and must receive additional permissions to run a node, publish smart contracts, or access and create data.

Transaction Speeds

Because private blockchains are much smaller than public ones, they can execute transactions much faster. A private blockchain uses as many resources as necessary to process transactions, which allows for faster and more efficient transaction speeds.

Consensus

Just as it sounds, permissioned blockchains require authorization from a designated authority to join them. With a permissioned blockchain, there is restricted access to the network, specific nodes, and the rights of those nodes and the users' identities are shared with others on the network.

Data Handling

Private blockchains offer read and write access only for a single organization, so users cannot freely contribute to and re-use code like they can with a public blockchain. This limitation of access provides many opportunities to leverage blockchain technologies for business use cases.

Immutability

A private blockchain has partial immutability, so the authority can overwrite a transaction or information if they choose to.

Permissioned Blockchains

Permissioned blockchains are a variant of public blockchains that incorporate a dash of private blockchain methodologies. Permissioned blockchains offer limited access to the validating and consensus process. Consensus is built among a smaller group of verified members, but read access to the chain is still public.

Access

Authority

Transaction Speeds

Consensus

Data Handling

Immutability

Public Blockchain

Anyone

Decentralized

Sluggish

Permissionless

R/W Access for anyone

Complete

Private Blockchain

Any single group

Partially Decentralized

Efficient

Permissioned

For group only

Partial

Which blockchain protocol is right for your business? 

The differentiating factor between public and private blockchains is their access to users. A public blockchain is best for a business that wants its users to have the freedom to read and write whatever they want with 100% transparency. All users operate on a level playing field on a public blockchain and can be anonymous. Private blockchains are best for businesses that want authority over users on the network and what’s happening on it.

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