What is the difference between private and public blockchain
Blockchain technology can transform many industries and economies, allowing you to quickly transfer data (make transactions) in such a way that, if necessary, they can be checked and tracked.
At its core, blockchain is a distributed registry that records data about each transaction in an immutable chain. Blockchain is usually considered as a single technology, although there are two main types of it: public and private (private).
The most famous public blockchains are used in the field of cryptocurrencies. For example, the Bitcoin blockchain is used to make bitcoin transactions, and it is completely transparent.
This type of platform is not suitable for organizations that deal with confidential information, such as commercial contracts or personal data of individuals.
Private organizations prefer to join the private blockchain, which allows “invited and allowed” users to make transactions so that no data about it is open and cannot accidentally fall into the hands of third parties.
Private blockchains provide various levels of authority for users, and therefore access can be limited, and information can also be encrypted with varying degrees of complexity in order to protect confidentiality.
Blockchain technology can be adapted to the needs of users.
So what is the difference between private and public blockchain
Blockchain can be applied in many areas – from accounting to agriculture. In fact, it is a distributed registry (journal) that records transactions between users.
There are various types of blockchains. Some of them are open and public, and some, private, are available only to people who have been given permission to use them.
A public blockchain is an open network. Anyone can download his protocol, read, write an addendum to it and take part in the network.
The public blockchain is distributed and decentralized. Transactions are recorded in the form of blocks and connected to each other so that they form a chain. Each new block has a timestamp, and it is checked by the host computers (nodes) before it is written to the blockchain.
All transactions are public and all nodes are equal. The data in the public blockchain is unchanged: it cannot be changed after the blocks are verified.
On the most famous public blockchain, the open-source cryptocurrency Bitcoin is built. Another outstanding example is Ethereum, with which you can create and run smart contracts.
A private blockchain is a network managed by one organization, and you can participate in its work only at the invitation of such an organization and the corresponding permission from it.
Network participants must have permission to read, write or check the blockchain. There are various levels of access to the private blockchain, and information must be encrypted in order to protect confidentiality.
Private blockchains allow organizations (companies) to use distributed registry technology, while eliminating the possibility of data leakage or publication.
However, the above means that private blockchains lack an important feature – decentralization. Some critics believe that private blockchains are not blockchains at all, but centralized databases that simply use a distributed registry.
Private blockchains are faster, more efficient and more economical than public blockchains, which require a lot of time and energy to verify transactions.
How secure are blockchains
In a private blockchain, access to information is controlled by users, but it is less secure than public.
The public blockchain is a completely transparent registry. Since it is decentralized, the information in it is encrypted and stored on many devices. This is what makes hacking impossible. The more participants the public blockchain has, the more secure it is.
Public blockchains are often called uncensored, and they are especially resistant to DDoS attacks.
Data in a private blockchain, in turn, can be changed by its owner, and it is more vulnerable to hacking.
While blockchain is a fairly new technology, it has the potential to bring significant changes for the better to the world of finance and business.