ALL ABOUT PRIVATE BLOCKCHAIN IN A NUTSHELL

Was it blockchain technology that brought bitcoin into existence or was it the other way around?

To be honest, this fact happens to be as debatable as the chicken vs egg question. Nevertheless, both blockchain and bitcoin have done a remarkable job this year with blockchain attracting more than $2 billion investment and bitcoin reaching its highest best of over $7000.

Few banking and IT gurus believe that blockchain is Satoshi Nakamoto’s real invention as blockchain can be used to solve a wide array of problems across different industries.

Blockchain has also been separated into different types of blockchain such as Public Blockchain and Private Blockchain. We have discussed more about Public Blockchain in one of our previous blog posts, and today we will be diving deep into the concept of Private Blockchain.

Private Blockchain Or Permission Blockchain

Typically known as permissioned blockchains, private blockchain as the name suggests are closed where no one can read, write, or audit the blockchain without the permission to do so.

Private blockchains are either owned by a single entity or an enterprise who has the ability to override/delete commands on the blockchain whenever necessary. For this reason, private blockchain cannot be considered decentralized. It is just a distributed ledger or database that holds cryptography for safety.

Nevertheless, when compared to public blockchains, private blockchains are much cheaper and faster. You don’t have to spend an enormous amount of time, energy, and money to reach a specific consensus.

On the other hand, it is also less secure and closed. The benefitting parties can decide when and how the private blockchain will be edited or written as they find appropriate. Furthermore, in a private blockchain:

Only certain parties can run a full node and start mining.
Only certain parties can make transactions on the chain.
Only certain parties can review/audit the blockchain in a blockchain explorer.

The Main Benefits of Private Blockchain

Faster Transactions – When the nodes are distributed locally, and fewer nodes are participating in the ledger, the performance will be faster.

Compliance Support – Every enterprise has to adhere to a certain set of compliance requirements. When you have control over the entire infrastructure, staying compliant to the requirements become easier.
Enterprise Permissioned – The enterprise that owns the blockchain has complete control over the resources and to the blockchain. Thus, the blockchain becomes private or permissioned.
Better Scalability - The ability to add nodes and services on demand offers huge advantages to the enterprise.
Consensus More Efficient (fewer nodes) - Private blockchains usually hold fewer nodes and thus have a different consensus algorithm like POW vs BFT.

Private blockchains can be used in a wide array of sectors and purposes including the maintenance of balance sheets, issue of sales coupons, gift cards, and for developing a tracking tool.

Private blockchains can save millions of dollars for different industries when behind the scene expenditures are automated.

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