Unquestionably, this topic is as debatable as the
egg vs. chicken.
Nonetheless, both Blockchain and Bitcoin have shown immense potential. Both things have done remarkably excellent in recent years.
- Blockchain engrossed investment of more than $2 billion globally.
- Bitcoin’ value in the virtual world marked an all-time high of over$7000.
Many IT and banking enthusiasts think that the real invention of Satoshi Nakamoto was the Blockchain technology and not Bitcoin. The reason is that blockchain is getting leveraged by numerous industries to fix many fundamental issues that we face in different areas of our daily lives.
After the invention, the blockchain technology that introduced Bitcoin, or Bitcoin introduced, has transformed into several types of blockchains.
In general, there are three types of blockchain; a) public b) consortium and c) private.
Also, there’s another type called Hybrid blockchain that consists of best of both private and public blockchains.
Let’s begin with understanding the difference between Public and Private Blockchains.
A blockchain is known as Public if each participant in the network has read and write access and carry out transactions, as well as if anyone can participate in the consensus process. Thus, removing the intermediary part. Due to the open source movement and cypherpunk, the governance of public channels’ based on a simple concept, “Code is Law.”
In such an ecosystem, the nodes (computers) in the network verify the actions coded by the developers by deciding whether to incorporate the provided modifications. The operation follows the idea of crypto economics; the combined use of economic incentives and verification method through cryptography. Any public blockchain runs on a crypto coin or token.
On the other hand, a blockchain is known as Private (or semi-private) if the consensus is reached by a restricted or predefined number of participants.
Write access can only be provided by an organization and read permissions can be restricted or public.
In this type of blockchain, a preselected group of nodes within organizations controls the consensus process. Private blockchains don’t require mechanisms based on cryptography.
Thus, in private blockchains, there’s no need for mining, proof-of-work, and no remuneration. These are the differences that set private blockchain apart from public blockchains.
The mechanics of Public and Private Blockchains
As we know that blockchains are distributed ledgers that are tamper-proof due to the network of nodes that bolster it.
Although the fundamental definition remains the same for both Private and Public blockchains, they differ when it comes to providing access to the general public.
For instance, in a public blockchain such as Ethereum or Bitcoin, anyone in the world having access to the Internet can make the contribution of their computing power to the network and earn rewards by participating in the mining process.
Public blockchain, governed decentrally, brings transparency in what’s recorded in them.
Since they are within access to everyone, people from across the globe can audit the blockchain, and execute transactions without being scrutinized. Thus, making them decentralized and trustless.
When it comes to Private blockchains, it gives
Consequently, the general population won’t have access to run a complete node for a private blockchain or execute transactions on it without proper verification and authorization.
However, prominent advantages like decentralization and trustlessness of public blockchains come at a cost.
Since there’s no central authority or intermediary to facilitate transactions, millions of nodes are required to sync in real-time to ensure no fraudulent transactions are being conducted. It requires using a consensus method like Proof of Work or Proof of Stake (PoW or PoS). Thus, adding overheads in executing public blockchains and leading it to slower throughputs and increased costs for electricity consumption due to laborious calculations.
In comparison, Private Blockchains have faster processing as there are no meaningless calculations, avoided using trusted intermediaries.
Applications of Private Blockchains
So, to find out the answer whether Private blockchains are better than Public block chains, we must determine the conditions under which we are planning to use the blockchain. As mentioned above, both types of blockchains have different potentials when it comes to trustlessness, speed, and security. Here, private block chains lead for applications in which acceleration is of immense importance and where a few parties can be trusted that can secure the environment.
Take the case of cross-border payments for instance. At present, wire transfers are not easy to do, they may take up to several days and cost as high as $40 to make a transfer. A private blockchain application like Ripple which relies on coordinator nodes does bring down it along with providing a high degree of security.
In general, there can be three categories for private blockchains:
a) Applications to transfer assets (monetary use and securities, votes, industrial patents, objects, stocks, bonds, etc.):
b) Applications of the blockchain as a register; to ensure better traceability of assets and products;
c) Smart Contracts: These are stand-alone programs which automatically execute the conditions and terms of a contract without any human intervention.
Oodles Blockchain is one of the fastest growing organizations within the blockchain landscape. It’s because we have employed a team of block chain developers that have deep expertise in various subsections of the block chain, such as Smart Contracts, Wallet Development, Cryptocurrency Development, Hyperledger, Private Blockchain Development, etc.