Cryptocurrencies, such as bitcoin, litecoin, Ethereum, use public blockchains and receive the most attention. But they can also be used by governments for a voting platform or to keep health care records. On these platforms, anonymity and transparency are the key features. Private blockchains, which can also be called managed blockchains, are authorized blockchains controlled by a single organization.
On a private blockchain, the central authority determines who can be a node. Nor does the central authority necessarily grant each node equal rights to perform functions. Private blockchains are only partially decentralized because public access to these blockchains is restricted. Examples of private blockchains are the business-to-business virtual currency exchange network Ripple and Hyperledger, an umbrella project of open source blockchain applications.
The bitcoin blockchain, the Ethereum blockchain and all other leading blockchains are public. This means that anyone can use these networks (Bitcoin to transfer or store value, Ethereum for decentralized application development, etc.). Basically, private blockchain solutions develop these platforms for a company's internal network system. A private blockchain controls user access to information, but it is less secure than a public blockchain.
In reality, both public and private blockchain is suitable for the enterprise environment if you can take the functions you want. But with all the security protocols of a public blockchain, they can easily stop all the hacking problems they face. The only distinction between public and private blockchain is related to who is allowed to participate in the network, execute the consensus protocol, and maintain the shared ledger. Corda, created by R3, is also a private blockchain project designed for companies that want to build distributed and interoperable networks that include private transactions.
Let's take a look at the best features of public blockchain in this guide to public blockchain vs. private blockchain. One of the drawbacks of a public blockchain is the substantial amount of computational power needed to maintain a large-scale distributed ledger. The main distinction between public and private blockchains is that private blockchains control who can participate in the network, run the consensus protocol that decides mining rights and rewards, and maintain the shared ledger.
In reality, all private blockchain solutions will have some kind of authorization scheme to identify the one entering the platform. Public blockchains do not have permission, allow anyone to join, and are completely decentralized. Hyperledger, a project with private blockchains, is created by the Linux Foundation to develop distributed ledgers to support private business transactions. In simple terms, private blockchains control who can participate, execute, validate and govern the network.
Hybrid blockchains are blockchains controlled by a single organization, but with a level of oversight performed by the public blockchain, which is required to perform certain transaction validations. Because supply chain members have important competency and data privacy considerations, blockchain for supply chain requires some degree of allowed functionality, which exists in private, consortium, and hybrid blockchain models. .
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