What Are The Private Blockchains ?

While talking about blockchains we generally heard the terms like decentralization, consensus, transparency and many more things which mainly empowers society but these are the features of public blockchain. Many of you might haven't heard or encountered with the term private blockchains. So in this article we will discuss private blockchain - its features, why it's necessary and it's future.

So let's dive in.....!!

What are the public blockchains ?

Before getting into private blockchain let's take a quick look at public blockchains so it will be easy to differentiate between private and public blockchain.

Bitcoin has a public blockchain, which means that anyone can be a node and all the data i.e transactions and other data is accessible to everyone, this means that public blockchains are completely transparent.

If you want to read more about public blockchain check this out.

What are the private blockchains ?

Private blockchains are the distributed ledgers which are controlled by a centralised entity. This means that the whole blockchain network is controlled by a single entity, that single entity decides who can mine, use and see the blockchain data. This refers that the private blockchains are not completely transparent.

What are the problems with public blockchains ?

Now you might think why businesses don't use public blockchains, why do they create their own private blockchain ? So the answer for that question is that the businesses who wants to use the blockchain technology might don't want to show there data publicly and want to keep it secret.

There's also a problem with public blockchain which you might heard recently the 51% attack, in this type of attack the miners can collaborate and completely alter the blockchain network itself, which is definitely very damaging for the businesses.

What are the pros ?

So as now we have idea about private blockchains let's check out its pros from the business point of view

1) Control 🕹️

The owner of the blockchain network can add, delete or edit the transactions and other data into the blockchain which might be necessary for the data protection regulations.

2) Low Fees 💲

The transactions over that particular blockchain is cheaper as it has to be confirmed by few high processing computers instead of hundreds of smaller ones.

3) Quick Transactions ⚡

By high processing computers the blocks are mined faster to make quick transactions, this feature is very useful in businesses specially larger ones.

4) Low Energy (Electricity) 🔌

In the private blockchains mining new coins is completely unnecessary. So the nodes don't use the large amount of electricity associated with proof of work.

5) Safe 🔒

As the company or business uses nodes which are trustworthy then there is nothing to worry about the 51% attack which can happen in case of public blockchain.

Future Of Private Blockchain

As the blockchain technology came into mainstream, many of the small as well as large companies are adopting blockchain technology this includes IBM, Linux Foundation's Hyperledger Fabric and many more giant players. Some of the use cases of private blockchain are as follows :

Private blockchains could be used to monitor the entire supply chain of a product creation right from the beginning of the manufacturing to the end product, this monitoring and product tracking could help in better product creation as it provides the greater oversight over the whole manufacturing process. The extension of the same product tracking can be used until the product reaches the retailers or the end users for better services and for better understanding of sales & consumer behaviour.

Another use case of a private blockchain is that the creation of Global finance payment systems on which the IBM has already working with its "Blockchain World Wire" which runs a private blockchain on steeler platform. This system could facilitate easy and cheaper cross border payments.

Although the many other public blockchains like Bitcoin and Bitcoin cash are similar to the IBMs "Blockchain World Wire" project but since many of the financial institutes and the Global businesses likes to keep the data secret are looking towards the private blockchain.

It is clear that the financial and business world are more into private blockchains but on the other hand the common people, the community and the society is looking towards the more decentralized and transparent institutions i.e public blockchains. It is impossible to say at this moment which one of them gets abandoned but it is likely to see both the public as well as private blockchains sustain together or in future we might see a third player bridging between these two types of blockchain.

This is it from my side hope you enjoyed and found this article informative. If you are interested in Crypto and blockchain and like to receive notification for my future articles then subscribe me @Ashma

Thanks for your time !!