Difference Between Public and Private Blockchain
Blockchain is a revolutionary technology that has ushered in an era of decentralized information sharing and participation. Through blockchain technology, anyone, anywhere in the world has the ability to join a network and to support and send transactions or data through it. While we tend to think of the traditional blockchain technology that powers networks such as Bitcoin and Ethereum as being the only type of blockchain technology that exists, there are actually more blockchain options out there that deviate from the norm. In this article, we are going to cover public and private blockchains and the differences between the two technologies.
First… The Similarities
The terms “public” and “private” can confuse users, leading them to believe that the technology between the two is different. The truth is that both blockchain technologies are quite similar and both of them satisfy three important requirements.
- Both public and private blockchains are decentralized peer-to-peer networks that rely on a community of users to keep the network working and operate within it.
- Both public and private blockchains use a consensus protocol to ensure that transactions and data are correct. All of these transactions and data are stored on a ledger that can be accessed by users of the network.
- Both public and private blockchains prevent users from altering verified data that has already been recorded on the ledger.
As you can see above, public and private blockchains are extremely similar and operate like any normal blockchain. So, what makes these two blockchain technologies different?
Public Vs. Private
The difference between public and private blockchains is small but the impact it has on the overall functionality of the network is major. To begin with, public blockchains are blockchains in which anyone who is interested can join the network, take part in the consensus protocol, and view/support the community ledger. No matter how long the network has existed or if a user should leave the network and return at a later time, they will be able to take part in the network. While public blockchain technology is often the preferred blockchain, public blockchains require large amounts of computing power in order to verify transactions and maintain the public ledger and they also are unable to hide any private, sensitive information.
A private blockchain, also called a permissioned blockchain, on the other hand, only gives users the ability to operate in the same manner as users on a public network if they have permission to do so. Users on a private blockchain must receive an invitation from the creators of the blockchain and will only be able to take as much action as the blockchain allows. Private blockchains, such as IBM Hyperledger or Quorum, require much less power to operate and provide the privacy businesses and organizations need but are typically frowned upon due to the fact that they are controlled by businesses and go against the initial values of the crypto community.
A public blockchain is an open-source technology in which users can participate without limitations and a private blockchain is one in which users must be invited by the developer and users may be limited to what they can accomplish on the network depending on their place in the network. Although you may not see both of these blockchain technologies in use, these are the two main types of blockchain technologies that are currently being utilized in the real world.