Private vs Public Blockchains - What we see so far
As we continue our “CryptoWinter,” many are looking for the answer to low market prices and negative sentiment. But, if we put token prices aside and look at the blockchain and the businesses looking at using them in the near-future, then suddenly all looks very bright for the technology.
There are two common types of blockchains that are most prevalent:
1) Public Blockchains; Like the Bitcoin Network, anyone can use the cryptographic keys and be a node/join the network. Anyone can also be a miner to service the network and seek rewards for that effort. At the drop of a hat, the miner can leave and come back and then get a report of all network activity. This is the “immutable ledger” that people mention frequently that blockchain can provide.
As long as users follow the rules of the network since it is fully decentralized; then they can write a new block into the chain and make legitimate changes. That is some of the criteria that make it known as a Public Blockchain.
2) Private Blockchains; the old internet-intranet analogy comes to mind here. In the early days, some of us old-timers remember the local drives and directory systems that companies/universities used to host local pages, share files, etc.
This infrastructure is the same as a public blockchain, but with some subtle, but major differences. These can be designed to require permissions to read the information on the blockchain, that limit the parties who can transact on the blockchain and that set who can serve the network by writing new blocks into the chain.
A few popular tokens we know today run permission type systems. Ripple (XRP) and NEO (NEO) determine who can act as validators on their network. Essentially, they control consensus through a few nodes of their choosing rather than being totally open to anyone in the world running a node. Businesses may also choose to do that and privately monitor transaction records for reporting purposes.
So, where is the Silver Lining?
Right now, we are in the infancy of the technology. Companies like JPMorgan, who developed Quorum are very optimistic of the use-cases. Former JPMorgan blockchain lead, Amber Baldet said, “There are plenty of rational reasons for people to use private networks, whether it’s for added privacy, control over corporate governance, or a computationally expensive game to get performance and cost benefits.”
An industry heavily involved in using blockchain is supply chain.
The likes of WalMart, UPS and Fedex to name a few.
Supply chain processes are very concise and can be very costly with a million moving pieces, literally! Think of a company like Lamborghini (we know this from the “moon” talk); parts of their vehicles includes high-end custom-made leather and shifters which are very pricey items. Some of these parts are made at another factory and delivered for install. Authenticity between parties is built upon trust and business history.
But, what happens when a new vendor enters the field?
They can prove authenticity through an NFC chip on the box or unit itself. When the item passes certain shipping checkpoints, it is uploaded to the private blockchain and viewable between organizations. This is a case that private blockchains (for now) have a stronghold. A ticket can even be issued to the customer at the sale verifying all parts were checked on a blockchain for authenticity.
Once interoperable protocols and middleware are released, we will see a lot more use of public blockchains. Regardless of the market, the future is very bright for these blockchains and the assets of the ones that win the use-case race.