Private and Public Blockchain- Differences, Similarities, B2B, B2C Use Cases, Examples

Updated: Nov 16, 2018

Do you use public transport or a private car? What do you like the most - speaking publicly or a private conversation? The choices are hard, and so is the fact that each option has its one merits and demerits. Analogous to that are the private and public blockchain network that helps a musician to keep the ownership with him but broadcast it to the public or a crypto enthusiast to experience crypto shopping. Both Private and Public Blockchain have a part to play but which one to choose and when? What are the different private and public blockchain available in the market? Would they serve for B2C and B2B simultaneously? To explore many such questions, read our post –

What is Private and Public Blockchain?

Before jumping onto Private and Public Blockchain concept, lets first understand “What is Blockchain?”

What is Blockchain?

Blockchain a distributed, decentralised database is a transparent and secure technology used for storage and transmission of data from point A to B. It can store, process a list of records and transactions that are mechanically protected against tampering or amends by storage in nodes via its decentralised timeline.

Blockchain, a database can help to improve security for cloud storage, i.e., while cloud helps you in accessing data from anywhere combining it with blockchain technology helps in tracking how, when and where this data has traveled or who have accessed it?

Blockchain could also be combined with Open API helping in offering transparency and security to customers while they provide consent to data sharing.

What is a Public Blockchain?

A Blockchain is Public when an open community dictates the governance. In a public Blockchain, all participants can read and get involved in verifying the transactions or participating in the process of creating the consensus. Under a Public Blockchain network, the nodes of the network validate the choices before integrating the proposed modifications.

Examples of Public Blockchain – Bitcoin, Ethereum, Litecoin

What is Private Blockchain?

As the name suggests, a blockchain is referred to as Private when a predefined and limited number of participants dictate the governance.Only the group has access to read and write the data.The verification or “reaching onto consensus” is done by a set of nodes.

Examples of Private Blockchain – Monaco, Hyperledger Fabric, Bankchain,

Apart from the Public and Private Blockchain, there is the third category known as Consortium blockchains: they are open to the public to view/read the data, and the group controls on how and what type of data they could access. Blocks are validated based on pre-set rules and individual’s rights differ hence Consortium blockchains are partly decentralised.

Examples of Consortium Blockchain – an R3 consortium

Difference Between Private and Public Blockchain

Let's take a look at the differences between the two –

Similarities Between Private and Public Blockchain

While the two Public Blockchain and Private Blockchain are different, their base is the same, lets quickly explore the similarities between the two –

  1. Both are decentralised P2P networks

  2. Both networks maintain the replicas in sync via a protocol referred as consensus.

  3. Both offer a certain degree of immutability to the ledgers.

Private or Public Blockchain - What is the right choice?

Blockchain offers a secure environment for shared facts. However, it is vital to know that it is associated with a bit of risk. There are known issues, to name a few, “eclipse attack,” “selfish miner” and hackers’ exploitation of unforeseen quirk in a smart contract lead to a loss of 80 million dollars. Also depending on which encryption algorithm is used, you may be at high risk when quantum computing reaches to its full potential and encryption could be decrypted easily.

Hence it is essential that enterprise architectures leveraging blockchain must validate present and future risks associated with sharing data in public blockchain and pick the appropriate blockchain for the use-case.

I would be inclined to use a Public Blockchain for B2C use cases and Private Blockchain for B2B use cases. For enterprises, however, with multiple parties and complicated workflows most of the times a hybrid or a cross chain model is appropriate.

B2B Use Cases of Private Blockchain

For a B2B that could be a technology provider or supply chain to another firm, they are in dire need of a database that provides them encryption [ to save/hide clients details from competitors], and inclusive, i.e. allows simplified payments across the globe. So, when a transaction is shared between an agreed set of businesses, there is no need for the transaction data to be publicly accessible, for such cases private blockchain is best suited.

One of the prominent use cases where transactions shared are agreed between a set of businesses and are inclusive, i.e. simplified payments across the globe is Trade Finance. Its one of the area that allows global trade to happen with multiple participants like banks, importers, insurers, exporters, credit agencies and other service providers. For international trade to happen one of the party say Bank issues a letter of credit that dictates or guarantees that the buyer needs to make a payment to the seller. However, with a physical paper, lack of processes and transparency it takes 5-10 days for actual settlement to happen.

With a private Blockchain all parties could be boarded onto one network including the buyer and seller, so as soon as a Bank issues a letter of credit [in digital form] the related parties say insurer, exporter are informed about the trade, and trade could be settled in a day. R3 Corda in a pilot run tested an end to end flow conducted using HSBC’s blockchain-enabled finance platform VoltronOne. In the transaction, a letter of credit was issued using Corda by HSBC to ING, with the two banks acting on behalf of the different Cargill entities. The transaction’s smooth and speedy completion demonstrated that blockchain is commercially and operationally viable as a solution to trade digitization

B2C Use Cases of Public Blockchain

What’s the worst part of being creative? Plagiarism. Thanks to the internet that could make your content go viral, it also helps many aspiring musicians, writers, artists, fashion designers, advertisers to put their label on something they haven’t created.

A public blockchain is a right answer to the creators that help them in labeling their name on the masterpiece[they crafted] for eternity and also makes it available for others to read, nudge, appreciate and feel about it.

Taking an example of the music industry, once a tune/song is sold to a music firm the musician does not know how the product is digitally used? They never get insights into how many people listening or who has labeled it under his name. Locking the music digitally on a decentralized distributed database helps in dictating the ownership and bidding goodbye to piracy. Another issue faced by these musicians is receiving of the paycheck, while some music companies pay 20-30 % of the sale a tune made, it takes from months to years for the invoice to get clear. Smart contracts could be a savior in such cases. With autonomous smart contracts that are hosted on the blockchain, pays the artists at the point of sale within minutes.

In fact, Pitbull the famous musician after realizing the potential of blockchain tweeted about his potential .

Owing to the fact of Blockchain being in trend, we are witnessing new enterprises shaping with innovative solutions. Blockchain categories are evolving, and people building potential use cases, who knows the distinction that exists now for public and private blockchain seems redundant in future.

Both public and private chains could converge to a single chain where a transaction is partly shared in public and partly kept in private without any public (encrypted) copies, on a single one for all decentralised, distributed network.

Did you like our post? What are your thoughts about public and private blockchain? Do share your story in the comments below.


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