The value added of private chain is in application-wise, while the value added in public chain is in political-wise (e.g. not blocked by government or authority).
Instead of comparing private chain with public chain, we should compare private chain to traditional database. Or more specifically, we can view private chain as a special case of database which is designed to fulfill requirements of inter-bank transactions. And hence used to do others tasks with similar underlying structures. E.g. supply chain, insurance, and health-care.
Features of private chains
- Privacy
- Transaction finality
- Legally identified parties
- (Immutable) Auditable trail
Privacy
Only authorized entities can view or add a new transaction to it. Specifications can be customized.
While in public chain and IPFS, all the transactions and data are available for the public. This is clearly not a desirable feature for business applications.
Finality
At the time of completion of a transaction, all parties must have an assurance that the transaction is final without ambiguity and cannot be reversed.
Identifiable Participants
To prevent the case of Non-repudiation (any parties to agreements or transactions that have the ability to later claim they did not enter the agreement), it is essential to link actions to a unique, identifiable entity.
Customizable
Business use-case has its own specific, and complex set of requirements. Hence rules in the system should not be defined strictly. A large degree of freedom is allowed. E.g. System access level, consensus algorithms, and structure of network.
(Immutable) Auditable trail
Immutability is only possible if a predefined group of entities agrees to make changes together. For example, a program in one hospital writes a large and erroneous data set to the chain. With the consensus of all six hospitals, the node can be rewind back.
And just like other version control systems, Merkle tree is used to validate the trail of any transactions such that activities can be audited.
Private chains can be viewed to be a special form of database and blockchain that is designed for business inter-bank usage, where the underlying structure is the above mentioned features.
