Public blockchain and private blockchain: what are the differences?

Reminder of what a blockchain is

First of all, let’s briefly recall what the concept of blockchain covers. The latter designates a technology that enables the storage and transmission of information at minimal cost, in a secure manner and with a certain transparency. By extension, it is a distributed register, a digital database containing the history of all the exchanges carried out between its users since its creation.

There are basically two types of blockchainnamely on the one hand the blockchains qualified as “public” and on the other hand the so-called “private” blockchains.

We will focus below on first outlining their common points and then identifying their differences.

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Commonalities of public and private blockchains

In terms of similarities, we can find the following three key points:

• They both operate as an “immutable ledger” to which we can only add data.. Indeed, in order to be qualified as a blockchain, a system needs to follow a chain structured in blocks in which each block is linked to the previous one;
• Both rely on a “peer network” where each participant in the network owns a copy of the blockchain. These participants or clients are called “nodes” in the jargon and they interact through a so-called “peer-to-peer” architecture;
• They work through what is called a “consensus mechanism” (or consensus protocol or algorithm) : a mechanism must exist for nodes to agree on the correctness of transactions broadcast through the network, in order to ensure that there is no false data being written to the blockchain .

Distinctions between public and private blockchains

Now let’s get to the heart of the matter, that is to say what differentiates a public blockchain from its private variant.

But before that, it seems useful to recall that this distinction is not based on a distinction between blockchain of public entities (like States, communities, etc.) and blockchain of private entities (such as companies, NGOs, etc.).

Public, decentralized or permissionless (or permissionless) blockchain

Historically, this is the first type of blockchain to emerge and this is based on a true decentralized system (open network) not requiring no trusted third party to work so that any user and network participant can submit a transaction. In this sense, a public blockchain is non-restrictive, does not require any authorization and is therefore “permissionless”. Like the Internet, it is accessible to everyone And pseudonyms are allowed.

A public blockchain has software (code) qualified as open source : each user and network participant can read, write or modify the database. For this last aspect, it should be noted that this is a modification outside the blockchain, on another network (fork), because as a reminder the blockchain is immutable. In this sense, we can consider in a way that public blockchains are to private blockchains what the Internet network is to Intranet networks.

The main advantage of a public blockchain is undoubtedly its transparency.. Furthermore, this one is more resilient and censorship resistant than its private form. It allows everyone to become a user and actor of the network by hosting a new node.

Nevertheless, it should be noted that his decisional process (with regard to the issue of updates in particular) may take longeror even lead to splits between the communities (fork) and the creation of parallel chains (the Bitcoin Cash blockchain being the result of a fork of the Bitcoin blockchain).

With regard to the transaction validation time, this is usually slower and therefore processes fewer transactions per second than a private blockchain.

As an example, the Bitcoin blockchain can process around 7 transactions per second (TPS) and Ethereum can process 15, while the Ripple blockchain (which is private) can process 1,500. However, various technologies and innovations are designed and implemented in order to significantly improve scaling, i.e. the adaptation and speed of transactions (like the Lightning Network of the Bitcoin blockchain allowing it to reach up to 1,000 000 GST in theory).

If a public blockchain is more secure that a private blockchain, however, it does not have the same flexibility as the latter.

To work, it requires the use of cryptocurrencies, because the nodes that participate in the proper functioning of the network are indeed remunerated in cryptocurrencies. This is a primary economic incentive for any public blockchain to endure.

Finally, with regard to the energy consumption of a public blockchain, we note that the consensus mechanism is more energy intensive than that used by a private blockchain.

We can cite, on a non-exhaustive basis, the following main use cases: everything related to payments, store of value and tokenization of assets.

Examples of public blockchains:

• Bitcoin;
• Ethereum;
• Monero;
• Tezos;
• and the vast majority of other blockchains known to date.

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Private blockchain (also called permissioned, authorization blockchain or enterprise blockchain)

Arrived after the emergence of its public nature, the private blockchain does not rely on a decentralized system. It is therefore based on a centralized system (closed network) and therefore requires a trusted third party.

It is only accessible to certain entities and, in order to be able to submit a transaction, you have to own the necessary permissions (in this sense it is called “permitted”). For example, a member of such a blockchain could only have the permission to read the information present on the database where another member would have the permission to execute operations on it. Pseudonyms are not allowed here. (and no anonymity is possible).

The source software (code) of a private blockchain is closed. As a result, its users cannot independently verify or confirm it. Its main disadvantage (for some people) lies in its lack of transparency (opacity), an approach desired by certain entities such as States or companies. Compared to a public blockchain, she is less resilient and resistant to censorship.

With regard to transaction validation time, it is faster and therefore processes more transactions per second than a public blockchain (we refer to you previously for numerical examples).

Moreover, here it is possible to simply switch from one consensus algorithm to anothera passage which for a public blockchain is much more complex to achieve, but not impossible (think for example of the event The Merge of the Ethereum blockchain operating the transition from the Proof of Work consensus mechanism to the Proof of Stake).

This type of blockchain also makes it possible to accept updates more quickly, because the decision-making process necessary for changes to the operation of the blockchain is faster and less extensive.

From a security point of view, it should be noted that due to the fact that it has fewer nodes, it is less secure than a public blockchain. This makes it much easier for a hacker to take control of the network and manipulate the data stored there. It does, however, have more flexibility compared to the latter.

To work, it does not always require the use of cryptocurrencies.

Finally, with regard to its energy consumption, we note that the consensus mechanism is less energy-intensive than that used by a public blockchain, because the number of nodes is extremely limited.

We can cite, on a non-exhaustive basis, the following main use cases: the supply chain, traceability or even decentralized identity (or DID in English).

Examples of private blockchains:

• Hyperledger;
• Ripple;
• certain future MNBCs.

Summary of the differences between public and private blockchains

In view of their specific characteristics on the basis of the criteria mentioned making it possible to distinguish between public and private blockchains, thus revealing in passing their usefulness/advantages as well as their disadvantages and defects, it will be up to each participant and/or user to choose the type of blockchain which establishes itself as best suited to achieve its given objectives, although the vast majority of blockchains accessible to everyone today are public.

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