Private, Public, and Consortium Blockchains: The Difference Explained

Private blockchains give users the complete privacy they want.

Private blockchains (which are licensed settings) set rules that govern who can see and write to the chain, as opposed to public, permissionless blockchains. There is a clear hierarchy of control in these systems; Hence, they are not hierarchical. However, they are distributed because many nodes are still keeping a copy of the chain on their machines.

A private blockchain network requires an invitation, which must be approved by the founder of the network, or a set of rules drawn up by the network initiator. Companies that create a private blockchain usually do so on an authorized network. This limits who can participate in the network and what specific transactions. Participants must first receive an invitation or authorization.

Existing participants can decide on potential participants; A supervisory authority can grant a license to participate or a consortium can decide. When a company joins the network, it helps to keep the blockchain running in a decentralized manner.

This type of licensed blockchain model allows users to leverage over 30 years of technical documentation for significant benefits. & Nbsp;

Private chains are more suitable for corporate environments when a company wants to benefit from the qualities of the blockchain without making its network accessible to the public. Digital identity, dealing with supply chain problems, disrupting the banking sector or facilitating the secure exchange of patient / service provider data in healthcare are some of the use cases. The Linux Foundation’s Hyperledger Fabric is a great example of a private blockchain.

The controversial claim that private blockchains are not actually blockchains, since the basic principle of blockchain is decentralization, is one of the downsides of private blockchains.

Also, since centralized nodes determine what is valid, it is more difficult to faithfully create information on a private blockchain. The minimum number of nodes can also imply a lower level of security. The consensus mechanism can be compromised when a few nodes are inefficient.

In addition, the source code of the private blockchain is usually proprietary and locked. Users cannot independently review or test it, which can compromise security. There is no anonymity on a private blockchain.