Differences and advantages of public and private blockchains

Now everyone is talking about bitcoin, blockchains, its impact on the world economy, etc.. We can find lots of articles on the internet telling us when blockchain first appeared, the way blockchain works, its perspectives for the future. In my article I tried to look deeper and analyze different types of blockchains, their advantages and applicability.

Pros of public blockchains


Another advantage of a public blockchain is that no one individual or company is able to control the information which is contained on the blockchain or the rules governing the blockchain. It is not possible for the “owner” of the blockchain to change the rules of the blockchain at his own wish. The information about the transactions is authenticated by means of some form of agreement between the users of the blockchain.
Thus, the users of a public blockchain do not have to place their trust in a third party in order to use the blockchain. Instead, any user of a public blockchain can trust the blockchain itself.

Security out of publicity

Although it is common to hide the actual identity of all associated participants on them all data on public blockchains is public. The security is obtained by their very publicity, where every participant can see all account balances and the info re all transactions. This method still causes distrust as this approach is so new to us. Nonetheless the fact speaks for itself: in seven years of bitcoin’s existence nobody has found any possible loopholes to overcome that security.

Security out of cryptoeconomics

Cryptoeconomics is a mix of cryptography and economic incentives. Since different organizations and users have varying objectives for their networks, one method could hardly prevail against the other. Both have their niche, although it is still common for their niches to be misunderstood, so the question of their value is the subject of ongoing debate.


Bitcoin, Ethereum, Hyperledger and other public blockchains were created to be available by anyone with having a computer and access to the internet in their disposal.

Pros of private blockchains

The transaction speed

The transaction speed of a private blockchain is generally faster than public blockchain. The speed can even be the same with the speed of a normal database that is nott a blockchain. This is because there are not many cross-points all with high trust levels. There is no need for every cross-point to verify a transaction.


If such a need arises, a company running a private blockchain can easily change the rules of a blockchain, revert transactions, modify balances, etc. Of course, one can argue that one can do this on a public blockchain by giving the government a backdoor key to a contract; the counter-argument to that is that such an approach is essentially a Rube Goldbergian alternative to the more efficient route of having a private blockchain.

Cost of transactions

The cost of transactions in private blockchains are generally not very expensive, they can even be free. If a company is in charge of all transactions a and processes, it does need to change the cost of work. And even if the transaction processed by multiple entities, such as competing banks, for instance, the transaction fees can still be very small for the same reasons that they can be so fast. Complete agreement between nodes isn’t required, so fewer nodes need to do the work for any one transaction.

A chance to survive

The last and probably the most important advantage of private blockchain is that choosing a private blockchain can help banks to protect their fundamental product from destruction. Banks and governments are interested in seeing their product, the national fiat currency that they trade, remain valuable. A public blockchain consolidates new, nonnational currencies. Thus it threatens their main profit stream and the institution itself and so it should be avoided by all means.

Thank you for reading! I will be happy to know your thoughts about perspectives for private and public blockchains, feel free to leave your comments below.