Private or public blockchain?

When hearing the term blockchain, the default assumption is often a public blockchain. The cryptocurrencies that are currently much in the news all use a public blockchain. Therefore, this seems to be the obvious choice when implementing a blockchain. However, in addition to a public blockchain, there is also the possibility of using a private blockchain. In short: do you use a private or public blockchain? The differences and similarities are described below.


Before we start looking at the differences there are a number of similarities:
– Both are decentralized peer-to-peer networks in which each participant has a replica of the shared general ledger including digitally drawn transactions;
– Both hold the replicas in sync through a consensus protocol;
– Both give a certain degree of certainty about the immutability of the general ledger.


But what are the differences between a private and a public blockchain? The main differences are who can participate in the network, who can implement the consensus protocol and who can keep the general ledger. A public chain is completely open and anyone can become a member of the network. Some networks have an incentive mechanism to encourage participants to participate in the network. Bitcoin is one of the largest public networks today.

A disadvantage of a public chain is that a substantial amount of computer power is needed to be able to keep the distributed general ledger on a large scale (several solutions are now being devised to reduce this burden). Sometimes the openness of the public chain, which means that there is not the privacy of transactions at every level, is also undesirable. Both cases are important considerations for companies when applying a blockchain.

Implementation possibilities

When using a private blockchain within an organization, there are different implementation possibilities. The procedure for the admission of nodes within a private blockchain differs from that for a public solution. The consensus model also works in a different way. Before a private solution can be implemented within an organization, it is, therefore, important to have these choices clear and to define the route to be determined. In a next blog, I will discuss the choices and related considerations in more detail.

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