This content originally appeared on Level Up Coding - Medium and was authored by Henrique Centieiro
Public blockchains such as Bitcoin, Ethereum and many more allow anyone to participate with a node contributing to the consensus mechanism or issue transactions. What about private blockchains?
Public blockchains such as Bitcoin, Ethereum, Monero, and many more allow anyone to participate with a node contributing to the consensus mechanism or issue transactions. Etherum also allows the creation of smart contracts that are distributed across thousands of nodes. DeFi is also inherently public-blockchain based.
Public blockchains are also typically known as permissionless, considering that anyone can join without needing permission or a membership certificate. These blockchains are in nature completely decentralized with no ownership or centralized governance. Users/nodes in public blockchains have access to all the data and uphold a ledger copy, except in some DLT cases. In most public blockchains, they reach consensus through proof of work or proof of stake consensus mechanisms. For example, we will later in the book deploy an Ethereum node and synchronize with the blockchain, which is something any person can do.
Public blockchains usually have a significant number of participants, and they basically rely on these participants to run nodes that will keep the blockchain resilient against attacks. In public blockchains, the network security and resiliency increase with node count. The bigger a blockchain is, the harder it is to be successfully attacked. The consensus mechanism used also includes some incentives for the nodes, also known as miners, to maintain the blockchain and validate transactions. Bitcoin, for example, incentivizes miners rewarding them with 6.25 BTC (as of 2021), every time a miner creates a new block. This way, people have an incentive to contribute to the network.
One of the big advantages of public blockchains is that they are also very secure precisely because they have a lot of nodes participating. If a blockchain has ten nodes only, a hacker needs to control at least 6 of the nodes to control the network, which may not be very difficult. However, if a blockchain has 100 000 nodes (which is the Bitcoin case), a hacker would have to gain control of more than 50% of the network nodes, which would be practically impossible, unless the hacker can spend billions of dollars in equipment and electricity. Really not worth it.
Thanks to the decentralized nature, encryption, and consensus mechanism, participants are incentivized to keep the ledger trustworthy. Bitcoin and most of the major cryptocurrencies are probably the most secure IT systems in the world.
Public blockchains are not a paradise, though. There are also some disadvantages: the slow processing time and latency — a transaction may need a few minutes to be settled — low throughput and sometimes the transaction cost.
So as we can see, in public blockchains, anyone can join a public blockchain, download the entire ledger, read historical transactions, write new transactions (but never change existing transactions) and participate as a node/miner. Public blockchains are totally transparent, and anyone can see everything and contribute to the consensus.
On the other hand, private blockchains are usually permissioned, which means that participants need to get permission to participate. Private blockchains typically have a smaller number of participants. These participants can be a group of people, companies or organizations who share some kind of business process. Usually, private blockchains are by invitation blockchains, and the participants are connected to their real-world identity — name, company name, etc.
In public blockchains, users are pseudonymous. They are not linked to a real-world identity, whereas the user’s identification is not nameless in private blockchains.
Private blockchain technologies such as Hyperledger Fabric, Quorum, Multichain and Corda, allow different kinds of configurations so that participants may have different permissions and capabilities in the blockchain. Private blockchains are usually more scalable when comparing to public blockchains, allowing high throughput, fast transaction speed and low latency. Private blockchains generally have a smaller number of users; thus, it’s easier to broadcast the data among them and reach consensus. Some private blockchains allow up to thousands of transactions per second.
One of the main disadvantages of private blockchains is that they tend to be more centralized and miss decentralization advantages. More centralization may allow better throughput, better governance and compliance with regulations, but it comes at the cost of additional security concerns. Considering a smaller number of nodes are involved, it is easier for a lousy node to manipulate or try to take advantage of the system.
Semi-private blockchains are blockchains can also be kinda hybrid, meaning that they are partially private and partially public. On the public side of hybrid networks, anyone can join (for example, write new transactions), while some functions may remain private (for example, a validating node). Ripple and EOS can be seen as semi-private blockchains. On EOS, validating nodes, known as block producers on EOS blockchain, are 21 selected nodes. Users have access to the network and can issue transactions in a public manner. On the EOS case, a delegated proof of stake mechanism is used to nominated the 21 block producer nodes that will forge the blocks. We will later read more about EOS delegated proof of stake consensus mechanism.
? Follow me and also check my ? blockchain book and course:
? Unblockchain Book — Kindle and Paperback
Disclosure: views expressed are purely personal and do not reflect any organisation’s views or thoughts the writer of this article may be affiliated or associated with. This is NOT financial advice and I’m not recommending anything. This article is only for educational purposes.
Public Blockchains vs Private Blockchains was originally published in Level Up Coding on Medium, where people are continuing the conversation by highlighting and responding to this story.
This content originally appeared on Level Up Coding - Medium and was authored by Henrique Centieiro
Henrique Centieiro | Sciencx (2021-04-24T00:21:25+00:00) Public Blockchains vs Private Blockchains. Retrieved from https://www.scien.cx/2021/04/24/public-blockchains-vs-private-blockchains/
Please log in to upload a file.
There are no updates yet.
Click the Upload button above to add an update.