The difference between public and private blockchain

Both use blockchain technology and serve a similar purpose, but they also have significant differences.

Blockchain technology is forming the backbone of the cryptocurrency industry and is quickly adopted by other traditional industries as its usefulness becomes apparent.

But not all Blockchain works in the same way because they have different features, with some public and some private. So what is the difference between public and private Blockchain?

WHAT IS BLOCKCHAIN?

Blockchain is an immutable ledger of data blocks distributed among multiple nodes or devices in a network. This allows the data to be delegated, with no one having the authority to hold all the information in the network or grant permissions on the web. Blockchain enthusiasts commend the technology for increasing its level of privacy and transparency.

Blockchain technology is best known for its use in the world of cryptocurrencies. In addition, it is also used by companies such as Microsoft and Amazon. Now, let’s talk about the differences and usage of public and private Blockchain.

Public Blockchain

It is a blockchain that anyone can use. Both Bitcoin and Ethereum use public Blockchain, alongside other cryptocurrencies such as Algorand, Monero, and Tezos. For public Blockchain, anyone can view the data stored on the Blockchain to ensure the transparency provided by this type of technology.

However, no one in the network can change this data. Public Blockchain is immutable, which means that once the information is there, it cannot be deleted.

Blockchain is public and completely decentralized, so no one group or individual is authorized to control the entire network. Many people prefer public Blockchain because large technology companies use centralized systems and often mishandle user data.

Private Blockchain

The Blockchain is used by organizations that want to store their data more securely while ensuring that not everyone can access it. A private blockchain is only accessible to authorized parties, and the blockchain authority or network administrator grants this permission – this is not the case for a public Blockchain.

Private Blockchain is less used in the e-industry but is more geared towards internal business networks. IBM is one of the major companies that create private Blockchains for customers, and the company also developed the licensing Blockchain, which combines public and private. Licensing Blockchain involves the limited ability of users and access to data for those who verify their identity first.

Private Blockchain is not completely centralized because a party has control over the ledger and the accessor. The log is not utterly immutable because it is on a public blockchain. While public Blockchain has a coin or token, private Blockchain does not need them due to fewer nodes. This results in a private blockchain that does not require much computing power to function as a public blockchain, so they are often more environmentally friendly.

But as the Blockchain makes public, the real identity of the nodes on a private blockchain is always known to the authority. An individual needs to have an identity to have access to the network, so by the time they start verifying transactions or viewing the ledger, their identity is well known to the network.

Because private Blockchain is not fully decentralized, they will lose points regarding security. This is because an individual with the ability to change block data may misrepresent the operating system in their favor.

Because anyone can access the Blockchain publicly, cybercriminals can join malicious networks without permission. This is more minor the case on the private Blockchain due to the construction of the Blockchain and the overview of the network managed by a single agency.

Similarities between the two technologies

Public and private Blockchain has several things in common. First, both require individual nodes to reach a consensus to verify the blocks. However, while private Blockchain has fewer nodes, many nodes are still required to keep data secure.

In addition, every node on the public and private Blockchain has access to the entire network ledger. These elements form the backbone of blockchain technology, so it is not surprising that they are present in both types of Blockchain.

The role of the two technologies

Although most Blockchain is notoriously public, this does not mean that private Blockchain is not too important. Both of these blockchains can offer tremendous benefits in different situations, with their features providing users with additional privileges and disadvantages.

It seems that blockchain technology is on the rise, and we can see that it will replace many more traditional technologies shortly.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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