A Public Blockchain is a permissionless blockchain. Anyone can join the blockchain network, meaning that they can read, write, or participate with a public blockchain. Public blockchains are decentralized, no one has control over the network, and they are secure in that the data can’t be changed once validated on the blockchain.
On the other hand, a Private Blockchain is a permissioned blockchain. Permissioned networks place restrictions on who is allowed to participate in the network and in what transactions.
When we talk about public and private, what we’re really talking about is who is able to write data onto that blockchain or onto that ledger.
The open versus closed brings in to consideration who’s able to read that data.
And so, we can talk about solutions which are public and open, public and closed, private and open, private and closed.
Public blockchain platforms like Bitcoin, Ethereum, Litecoin tend to get talked a lot right now, these are what we also refer to as permissionless blockchain platforms, meaning that they really strive to, by design, increase and protect the user’s anonymity.
If we don’t know who a user is, we really have no way of creating permissions, role-based access and controlling what data they can read or write.
In a lot of situations, this is desirable, this is why we see cryptocurrencies based on public blockchain platforms, because having that anonymity is important, it is one of the major benefits of using cryptocurrencies.
Well because, if a user has a currency, something of value, they should be able to exchange it and spend it, and do what they want with it, just like anybody else. We don’t want to treat any class of users differently than any others in those scenarios. So, for that, we have public blockchain, and that’s a very different creature from the private permission blockchain.
When we talk about private blockchain or when we hear people talking about private blockchain solutions, they tend to be talking about things on the private and closed end of the spectrum. We want to control who can write data to this blockchain, and we want to control who can read data from this blockchain. And in order to do that, the first step is identity. We need to know who is part of the blockchain network. If we don’t know who a user is, it becomes difficult, if not impossible, to define rules about what data they can commit to the ledger and what data they can consume from the ledger.
When we talk about private blockchain, think about a permissioned blockchain, which from the beginning has an idea of who you are. And this is very different from a public platform like Ethereum, in which the platform tries to protect and maximize anonymity. Which as said before, by design, don’t know who a user is.
Some of the benefits of public blockchains are:
Open Read and Write Anyone can participate by submitting transactions to the blockchain, such as Ethereum or Bitcoin; transactions can be viewed on the blockchain explorer.
Ledger Is Distributed The database is not centralized like in a client-server approach, and all nodes in the blockchain participate in the transaction validation.
Immutable When something is written to the blockchain, it can not be changed.
Secure Due to Mining (51% rule) For example, with Bitcoin, obtaining a majority of network power could potentially enable massive double spending, and the ability to prevent transaction confirmations, among other potentially malicious acts.
Some of the benefits of private blockchains are:
Enterprise Permissioned The enterprise controls the resources and access to the blockchain, hence private and/or permissioned.
Faster Transactions When you distribute the nodes locally, but also have much fewer nodes to participate in the ledger, the performance is faster.
Better Scalability Being able to add nodes and services on demand can provide a great advantage to the enterprise.
Compliance Support As an enterprise, you likely would have compliance requirements to adhere to, and having control of your infrastructure would enable this requirement more seamlessly.
Consensus More Efficient (fewer nodes) Enterprise or private blockchains have fewer nodes and usually have a different consensus algorithm, such as BFT vs POW.
So, in a corporate case scenario, blockchain for the business, blockchain for supply value chains, because we know who an individual is, what organization they’re associated with and what their role is, we also assume that they’re going to behave fairly, because if not, we know exactly who’s misbehaving, and they know that they’re gonna suffer the consequences for that.
However, when it comes to verifiability of credentials, a key element is that the access to verification remains free for everyone and forever, and this is undoubtedly where public blockchains do much better than private ones. Who would accept to receive credentials that may become non- verifiable one day? That is the exact reason why TIIQU's Veriif uses a public blockchain system.
Check out tiiqu.com for more info!