Public vs Private Blockchain: Similarities, Difference & Example (2024)

At its core, blockchain is a distributed ledger. But many people commonly regard it as a single technology, without being aware that there are majorly different types of blockchain: public, private, and hybrid. When we try to understand public and private blockchains, it is important to notice that the terminology often gets improperly stated. I'll be providing clarification over the same in this post. Also, here's a video,

Public Blockchain

A public blockchain is permissionless. That is, anyone can join the network and read, write, or participate within the blockchain.A public blockchain is also decentralized, and that's why it does not have a single entity that has complete control of the network.

And while many people doubt it, Data stored on a public blockchain is secure as it is not possible to modify or alter data once they have been validated on the blockchain.

For example, Bitcoin and Ethereum.

Private Blockchain

A private blockchain is a permissioned blockchain. That is, it works on the basis of access controls. Due to which we can restrict the people who can participate in the network.Generally, there are one or more entities that carry control.

Here, only the users participating in a transaction will have knowledge of it, but others will not be able to access or see it.A good example of it includes Hyperledger Fabric of Linux Foundation.

Differences Between Public And Private Blockchains,

1. The simplest difference is that a public blockchain is decentralized, whereas a private blockchain is more centralized.
2. The order of magnitude of a public blockchain is less. Whereas, in a private blockchain, the order of magnitude is more as compared to the public blockchain.
3. Consensus algorithms such as Proof of Elapsed Time (PoET), Raft, and Istanbul BFT can be used only in the case of private blockchains, and do not apply to the public blockchains.
4. A public blockchain is more secure due to decentralization and active participation. Due to the higher number of network nodes, it is nearly impossible for ‘bad actors’ to attack the system and gain control over the consensus network. On the contrary, a private one is more prone to hacks, risks, and data breaches. And thus, it is easier for bad actors to endanger the entire network in an instance.
5. In a public blockchain, anyone can take part by verifying and adding data to the block in the chain. On the other hand, in private blockchains, only authorized entities can participate and control the network.
6. TPS (or Transactions per second) are lesser in a public setup when compared to a private one. Why? As the number of authorized entities is less in a private blockchain, and that's why it can process hundreds or even thousands of transactions per second.
7. A public blockchain cannot compete with a private blockchain in terms of scalability issues as it is slow. Hence, it can process transactions only at a slow pace. But, in a private blockchain, as only a few nodes need to manage data, transactions can be supported and processed at a much higher pace & speed.
8. Public blockchains are trustless, and in a private blockchain, participants must not trust one another. Simply because with a private blockchain, the validity of records cannot be independently verified as the integrity of a private network relies on the credibility of the authorized nodes in the network.
9. In a private setup, there is no chance of minor collision. Each validator is known and carry suitable credentials to be a part of the network. But in a public setup, no one knows who each validator is and this increases the risk of potential collusion or a 51% attack (where, a group of miners who control more than 50% of the network’s computing power).
10. A public blockchain consumes more amount of energy than a private blockchain as it requires significantly advanced resources to function and achieve network consensus. On the contrary, a private blockchain consumes a lot less energy and power.
11. In a public blockchain, it is important to grant access to a centralized authority to monitor the entire network. Thus, making it private at this point. Instead, in a private blockchain, anyone who is monitoring the network can alter, change or modify any transactions according to their needs.

Similarities Of Public And Private Blockchains

• Both function as an append-only ledger. That's why the records can be added but cannot be altered or deleted in the network. Hence, these are called immutable records.
• Both setups rely on numerous users to authenticate edits. Thus, helping in the creation of a new master copy that can be accessed by everyone at all times.
• In both, the validity of every existing record is verified & valid. Thus providing a considerable level of immutability, until the majority of the participants agree that it is a valid record and reach consensus. This helps in preventing tampering with the records from hackers.
• Every network node in both these blockchains has a complete replica of the primary ledger.

Conclusion

Lastly, do remember as security measures for public blockchains become stronger, their value will further increase, in turn making the use of private blockchains less essential.

However, whenever there is a requirement of having more control and the ability to restrict access to specific individuals, private blockchains can’t be beaten. In the end, the choice of whether to use a public or private blockchain for business lies with each organization that utilizes it and their respective use case. Further, if you are some who is searching for the best blockchain certification program, I'll recommend you to go through the EC-Council's certification. Why? Simply because it's not just a course, but an accredited certification that helps you to boost your chances of career success and is curated by industry experts across the globe.

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