How do… private vs public blockchains work?
As blockchain remains a hot topic in adland and beyond, Fraser Gordon provides an explainer on the differences between public and private versions of the technology. A PhD in advanced mathematics is not required.
There are a lot of articles written about blockchain, many by people who are so clever that if you don’t have your PhD in advanced mathematics, you could struggle to keep up. I’m not one of those people.
While the use of blockchain is often associated with cryptocurrency and the technology has been touted as the solution to improved transparency and security in other areas, there are in fact two different types of blockchain networks. Only one of them is likely to have the capacity for widespread use outside of cryptocurrency.
Public blockchain
Private blockchains are pointless and are no better than a database. Unfortunately, this is another misinformed article touting “blockchain technology” that completely misses the boat. Blockchains have value because they are decentralized, secure, and immutable. We don’t need thousands of private blockchains – just like we don’t need thousands of internets. In time you will see uninformed arguments like this fall by the wayside. Separate the hype from the reality. #bitcoin
Yes, a private blockchain is basically just a database. It has none of the benefits that the blockchain delivers. The entire benefit derives from it being public. Please stick to what you know.
The point of the article is to highlight differences/pros and cons between the two, conversations we have with clients every day. There are currently hundreds of billions of dollars being spent globally on permissioned and private blockchain projects. With literally thousands of use cases as to why public cannot and will not work for commercial applications. The fundamentals of the technology – audit, tracking, transparency, etc are still equally as valid in permissioned or private blockchains as they are in public. The technological developments being made currently in the private/permissioned space are actually really exciting. Private/permissioned blockchain isn’t going anywhere.
I think the comments are a little harsh. The writer in my opinion is stating that the CURRENT useful application of Blockchain tech stops at private chains. I think that’s a fair conclusion. The reality is that public anonymous chains have no practical, commercial use case today.. why? Because they rely on anonymity for privacy.
The reality is that commerce demands identity, confidentiality and compliance.. how can businesses transact in an environment where participants are anonymous, transaction data is public and compliance is non-existent or weak at best? This is why so many blockchain applications on anonymous public platforms like Ethereum are failing. Businesses simply WILL NOT risk transacting in a non-compliant environment, where money is 3 clicks away from disappearing into the dark web.
It’s easy to sling mud but the more useful discussion would be how do we resolve mainstream adoption of decentralised public blockchain? This is where the magic lies.
I believe the answer is resolving the conundrum of delivering compliance (a centralised concept) on a decentralised chain. When that is resolved, businesses will pour in driving innovation and consumer adoption.