Private blockchains differ from public ones in a couple of different ways. This raises the question about the database and in this article, we take a look at both sides.

What does a public blockchain mean?

The public blockchain, used by Bitcoin, is a place where the data is accessible and everybody could be in the position of a node. The entire conducted transactions are accessible with block explorer using.

Why this is not a good thing?

If a company decides to use a blockchain one of the things to consider is the public accessibility of the data and by this, it risks violation of the law on data protection or even disclosure of business secrets.

The risks of a public blockchain arise from the possible collaboration and altering of the blockchain. This phenomenon, that can hurt the business is called an attack of  51%. The possible damage comes from the blockchain holding assets that can be stolen or erased.

Have you heard?

Ethereum miners made changes to a blockchain applying DAO hack for the purpose of rewriting history that we do not want to be repeated. Some people have a feeling that the principle of immutability is broken and for this reason, they opted for Ethereum Classic.

What does a private blockchain mean?

Private blockchains are ledgers that are distributed and one single entity monitors them. This entity monitors the entering in the blockchain and decides on the ones who are able to mine, use or see it.

They are known as permissioned blockchains.

What are the pros?

There are many pros of private blockchains that refer mainly to the usage in business. Some of them as follows:

🛃 Surveillance – The entity which owns the blockchain is able to impose changes on it. These changes are in the context of editing and adding new transactions if required for legislation of protection of data.

🕵️ Private – Transactions are unavailable for the public which is an advantage for companies that want to keep their data private.

💸 Cost-efficient –  Transaction is verified by a number of computers with high-processing. This means lower fees for transactions.

🛁 Cleaner – There is no need to mine new coins. Therefore, a node does not use huge quantities of electricity referring to evidence of work.

🔒 More secure – If the nodes of the company are reliable, there is no need of worrying that public blockchain will be attacked by attack 51%.

🏃 Quicker – Transactions are verified very fast and thus we have faster block times.

What might be possible problems?

What are the cons? Surely there are some:

🤷 Not necessary – Public blockchains are to be operated in an environment that is trustless. It is easier and more affordable to apply the database when there are trusted nodes.

🤝 Reliability – Public blockchains run based on the fact that everyone can confirm its trade. Third parties might not anticipate a private blockchain since it might have been altered or handled by the proprietor.

🔘 Centralized – When a private blockchain has some stronger nodes it means that there are fewer options for points of defaults. In the public blockchains, there are a thousand nodes that signify no downtime.

Why not database?

There are a number of advantages when we compare private blockchains to databases for cases that are for special use :

📚 Accountability – It enables tracking of the entry of data until the start of the blockchain.

👨‍👩‍👦‍👦 Partnerships – Private blockchains can be used by a number of companies and each of them can verify transactions without having the need of making the data public.

🔠 Standardization – Instead of an attempt to join various systems of businesses collectively, they could each incorporate with a single system based on a blockchain.

Who uses private blockchains?

Hyperledger Fabric is a framework that grants permission to blockchain developed by Linux Foundation. It represents protocol based on open source that is used to deliver blockchain for exchange of a business service on the platform of IBM Blockchain.

Corda Enterprise has been developed by the R3 consortium by Blockchain. Its use is best applied in welfare industries, finance, and insurance. It also supports oracles.

According to Adriana Corrieveau who is part of the IBM team for Blockchain when you apply the basic framework you can change the net in accordance with the needs of the business and at the same time giving approval to the ones that require it and rejecting permission to the ones which do not.

What is next

We can use private blockchains to follow a product throughout the chain of supplies for a number of various organizations. This provides a more secure product design because it enables bigger surveillance of the entire process.

They may also be utilized to get an international fund payments program, as IBM expects using its Blockchain Wire that operates private blockchains on the platform Stellar. It will allow much more affordable and quicker payments cross-border. This may be achieved by exploring public blockchains but companies might ask for the larger control and supervision offered by private blockchains.