Blockchain, the underlying technology behind Bitcoin, is slowly gaining popularity in the digital space. More and more reputed companies are adopting this new technology for their daily operations. But before you jump on to private and public blockchains, here is a small introduction on what is blockchain?
Blockchain is a database that has a decentralized structure with no point of failure. The data stored on the Blockchain is not just tamper proof, but the details of transfer and storage are visible to everyone who is connected on the network. There are two types of blockchain, Public Blockchain & Private Blockchain.
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What is Public Blockchain?
Public Blockchain allows any user to read or write the data that is stored on the Blockchain. If the user becomes a member on the Blockchain network and downloads the required software on the device, then the user can easily store, receive or send data. This blockchain is completely decentralized as reading and writing permission on the blockchain is shared equally by all the connected users. These connected users come to a consensus before any data is stored or updated in the database.
Bitcoin and Ethereum are the best examples of a Public Blockchain that allow users from various backgrounds to come on a common platform to make transactions. It eliminates the need of a third party vendor and makes all the transactions direct between the users.
Is Public Blockchain hack-able?
This decentralized blockchain is mathematically very hard to hack and it rather makes the cost of hacking very high for any system. In public blockchain, if a hack is discovered, the value of the hacked coins diminishes exponentially, thus leaving hacker with huge losses. In addition to this, a hacker might also need to invest heavily on the hardware to overtake the network hashrate. This is the reason that public blockchain provides military grade security, thus making it nearly impossible to hack.
However, every transaction is verified by thousands of users, which makes the transaction verification process very time consuming and costly. Users end up paying hefty transaction fee, when compared to permissioned and private blockchain.
What is Private Blockchain?
In a private blockchain, an organization that is trusted by other users, provides the permission to read and write data onto the blockchain. As public readability is not necessary in most cases, so the organization may or may not allow the users to read data. However, in certain situations, the organization requires public to audit the data. The restricted read permissions given in private blockchain provide a great level of security and is an added advantage over public blockchains.
This organization also holds the power to change the rules of a Private blockchain and sometimes, might cancel transactions based on the changes made in rules. However, the transactions in private blockchain are comparatively quicker and users pay lesser transaction fee, as only few members verify the transactions. All the devices are well connected in private blockchain, so any faults in the network can be fixed and approved by the users.
What is the Differences Between Private and Public Blockchain?
Private and public blockchain are both decentralized chains that use P2P network. Both the chains provide immutability and maintain a replica of the ledger at each node that is updated with consensus. However, there are many differences between the two, like:
- The owner of the private blockchain is a single entity or an organization that is trusted by all the users. But in public blockchain, reading and writing permission is shared equally by all the connected users, who come to a consensus before any data is stored or updated in the blockchain.
- Public blockchain is open-source and decentralized. Conversely, private blockchain, in its true sense, is not decentralized, but is a distributed ledger that is secured with cryptography.
- On a public blockchain, like Bitcoin or Litecoin, anyone can run BTC or LTC full node and start mining. However, in a private blockchain, like bankchain, not everyone can run a full node and start mining.
- In a public blockchain, anyone can make transactions on BTC or LTC and can even review or audit. But in a private blockchain, not everyone can make transactions, review or audit the blockchain. It requires special privileges and accesses to carry out these functions.
Public blockchains are more self governed and decentralized which ensures that it remains tamper resistant. However, the same does not stands true for private blockchains. Despite of all the differences and similarities, both the blockchains have the potential to disrupt multiple industries and revolutionize the world.