Private vs. Public Blockchains
What’s really the difference?
One area we get many questions about is the difference between public and private blockchains. It’s an area with plenty of confusion — and as a question we approached in the early days of MyBit, we might just be able to offer some insight. Here’s our take.
So, when it comes down to it, what really sets a private and public blockchain apart?
The easiest way to separate the two is through participation. That is, who is allowed to access the blockchain and maintain the ledger. In a private blockchain, it’s a preselected group who are invited to participate. For a public blockchain it’s, well, anyone. This may seem like a small distinction but it has important repercussions — as well as raising some philosophical points about what a blockchain should be.
“The easiest way to separate the two is through participation. That is, who is allowed to access the blockchain and maintain the ledger.”
Because a public blockchain is completely open and anyone can join the network, there needs to be an incentivising model in place. This ensures the network is maintained and grows. And this is exactly how Bitcoin — the archetypal public blockchain — got to where it is today.
The result is an incredibly secure, transparent ledger (great) — but one that takes a substantial amount of computing power to run (not so great). And while all of the big public blockchains are working on scaling solutions, it’s fair to say this has hindered more widespread adoption so far.
That said, supporters of public blockchains — like Bitcoin and Ethereum — see this as a price worth paying for the benefits gained. For some, though, it’s this same ‘openness’ of public blockchains that becomes their main disadvantage. Mainly because it means little to no privacy for transactions.
Think about it like this. Many traditional businesses may want to integrate blockchain but are understandably uncomfortable with the idea of a truly transparent ledger of all their — or their clients’ — transactions. And so the demand for private blockchains has been growing steadily.
“Many businesses may want to integrate blockchain, but are uncomfortable with the idea of a truly transparent ledger.”
IBM is creating its own private blockchain, called Hyperledger, which lets organisations create their own custom solutions on top of it. Here, network members are known to other members but all of their transactions are kept secret. In theory, then, Hyperledger offers all of the advantages of blockchain — with the added secrecy these businesses crave.
At MyBit, we’ve had to balance the benefits of a public blockchain with those of a private one — just like when we broached the Ethereum vs. EOS question. It’s fair to say, we expect the demand for private blockchains to increase, especially as more and more businesses start to incorporate blockchain into their back-end. But, ultimately, because our vision is to create a fully-autonomous, transparent organisation, a public blockchain made the most sense. It was and still is, the best ‘fit’ for MyBit.
As always, feel free to reach out to us on Discord, Telegram or Reddit with any questions or thoughts.
Until next time!
The MyBit Team.
