Feel totally at sea upon hearing the words “private & public blockchain”? We’re here to help you understand the basics.
The blockchain is a distributed ledger system that records all the transactions that happen between users in a particular chain. The two types of blockchain are – Public and Private.
A Public Blockchain is an open network that allows users to download the protocol and participate in the network. It is a decentralized and distributed network where all the transactions are stored as blocks and linked like a chain. Every new block that is created must be registered with a timestamp and authorized by all other nodes in that network before becoming a part of the chain. Examples of a public blockchain are the ones used by cryptocurrencies. A public blockchain is transparent which limits its usage with sensitive information.
A Private Blockchain deals with sensitive and confidential information. It is governed by a single entity and sends out invites to users who need to be a part of the network. A user who wants to be a part of the private blockchain requires access permission to participate in the network activities. A private blockchain has different levels of access and data is encrypted and shared based on the access given to the user. Organizations that follow private blockchain can deploy ledgers in a distributed network without displaying data publicly. This feature, however, makes it more like a distributed ledger on a centralized database.
Private blockchains are fast, efficient and less costly than public blockchains that require more time to validate data. That being said, public blockchains are more secure owing to the fact that the data is encrypted and stored across multiple devices making it nearly impossible to hack. More the members of a public blockchain, more secure it is. Public blockchains are also resilient against distributed denial-of-service (DDoS) attacks whereas in a private blockchain the owner can alter the data making it more susceptible to attacks and hacking.