Public Chains are not a Panacea
The fundamental goal of adopting a blockchain is to allow people to communicate valuable data safely, tamper-proof fashion, even when they don't trust one another. Because blockchains use complicated arithmetic and novel software rules to store data, adversaries find it incredibly difficult to corrupt them.
Among all blockchains, a public chain not only has all of the above advantages, but also can be used to construct an utterly open blockchain, similar to Bitcoin, that allows everyone or anyone to join and contribute to the network's essential operations, which can be read, written, and audited by anybody. The public network is run on a reward system that encourages new users to join and keeps the network flexible. Substantial decentralization helps a public blockchain preserve its self-governed nature.
Despite these advantages, what's worrisome is that some evangelists and fervent believers have placed far too much expectation on public chain technology to solve trust issues. However, in the real world, where things can get messy, even the best-designed public blockchain systems can fail in areas where the fancy software rules and challenging mathematics come into contact with humans who are experienced cheaters. This article aims to explain several drawbacks of the public chain that make it unable to be the solution in some cases, as explained in the sections below:
Absence of privacy and anonymity
Privacy and anonymity are the essential features of public chains. Privacy refers to an individual's right to know how his or her data will be handled to achieve the goal for which it was gathered, particularly about third parties. On the other hand, anonymity is the ability to convert one's identity into something unrecognizable, making establishing a bond with the original identity irreversible.
However, complete privacy and anonymity are not as solid as one might think in public blockchains. For instance, information about one's health must be kept private. A public key is associated with the individual's identity when a public blockchain stores health data to safeguard the individual's genuine identity through a pseudonym. Nonetheless, there is a possibility of re-identification using public data in the blockchain, which would reveal the individual's genuine identity, which would be a severe problem because miscreants can jeopardize participants' privacy.
As a result, public chains may not be a suitable option for many systems that require a high level of information security, such as government agencies or healthcare systems.
Blockchain is prone to transactional privacy leakage because all of the network's public keys are visible to everyone. Similarly, network participants may occasionally include fraudulent members engaged in hostile actions like network congestion, hacking, or token theft, as discussed below.
- 51% attack: When two miners simultaneously calculate the block's hash and get the same results, this attack happens. In this event, the blockchain will split, leaving users with two distinct chains, both of which are considered valid. In a 51% attack, an entity can gain control of the network by controlling 51% or more of the network nodes. They can change the data in the ledger and double-spend due to this. This is conceivable on networks where miners or nodes can be controlled. This means that public networks are more vulnerable to 51% of attacks, whereas private networks are more resistant to 51% of attacks. 51% of attacks have hit projects like Verge, Bitcoin SV, and Ethereum Classic.
- Double spending: Another issue with existing blockchain technology is double spending. For instance, Bitcoin is unable to avoid double-spending. To avoid double-spending, the blockchain network uses various consensus methods, including Proof-of-Stake and Proof-of-Work. However, only networks vulnerable to the 51% attack can engage in double-spending.
- Sybil's attack: Because the network cannot authentically identify the physical devices, it is possible when one node takes many essences. Sybil's attack can help fill the public blockchain with users who are under Sybil's control. It has the potential to lead to the previous two attacks and the capacity to see all transactions through the use of special applications. If left unchecked, this form of attack, for instance, can allow an attacker to utilize a minority of nodes with several identities to overvote and outvote legitimate participants in voting or majority-based systems. In peer-to-peer networks, such assaults are prevalent, jeopardizing the network's overall security and integrity.
- Distributed denial-of-service (DDoS) attack: The nodes are assaulted with similar requests in a DDoS attack, clogging the network and bringing it down. According to Colin Wu, a well-known Chinese journalist, Solana suffered a DDoS attack on January 4th, 2022 using spam. However, after almost four hours, the network was up and running again.
- Cryptographic cracking: The cryptographic solution that blockchain technology employs is another problem leading to network insecurity because it can be broken by quantum algorithms or computing. For instance, using quantum algorithms like 'Shora,' it is possible to break the RSA (Rivest–Shamir–Adleman) encryption.
Other Choices of Blockchain
In addition to the above drawbacks of public chains, fully public chains have no blockchain as a service (BasS) capabilities. This means participants are required to do everything for themselves, which generates substantial costs of money, time, and ties-up resources that can’t be deployed elsewhere. Thus, the public chain is not a viable approach for SMEs and not an effective one for more giant corporations.
Big corporations like JPMorgan, Intel, Walmart believe enterprise blockchain matches their purposes better than a public blockchain network like Bitcoin because a small group of people controls the visibility of their data. Enterprise blockchains provide immutability, accountability, ease of use, scalability, security, and control to organizations and corporations, dramatically changing the way they do business.
However, permissioned chains are effectively just local area networks (LANs). Only consortium members can see and call services through the network. This procedure can become cumbersome when the consortium in question is large and complex or quickly expanding and developing.
To compromise these demands, BSN initiates Open Permissioned Blockchain (OPB), an innovative new form of a blockchain network that combines public and permissioned systems features. The OPB allows business users access to BaaS facilities at the lowest possible cost because users only need to pay for the cloud resources they use, not for the maintenance of the whole network. In this way, enterprises can enjoy a considerably more transparent network with low cost in a predictable manner.
While many projects on public chains are growing, and an increasing number of companies are turning to enterprise blockchain-based solutions, optimism about blockchain’s future is far from universal. The majority of companies are still unsure if they are ready for enterprise-wide implementation. So far, different types of blockchain have their own business logic and suitable scenarios, it is not advisable to put all trust in a single solution. As a cross-cloud, cross-portal, cross-framework global infrastructure network, it has always been BSN’s mission to make creating, deploying, and maintaining blockchain dapps more cost-effective and to include as many blockchain choices as possible for developers in a one-stop-shop platform. Only when different blockchain technologies compete with one another, will there be more innovation and development in the whole industry to impose the mass adoption of blockchain technologies.