There is a fundamental difference between a public and a private blockchain. Private blockchains tend to be controlled by a single organisation or group whereas public blockchain blocks can be placed onto the chain by any miner who wins the right to process the block.
But as data on the public blockchain is secured with a public and private key pair and a hash of the data contained within the block, it is equally as secure as data stored on the public blockchain.
So, what features of the private blockchain could make it attractive to organisations wishing to use the blockchain for apps?
There are several perceived advantages of using a private blockchain for enterprise activities.
The advantages of a private blockchain
- Private blockchains are completely private to the outside world and centralised.
- They can scale to the business requirements of the organisation as there are fewer nodes on the network.
- With sufficient investment of highly available hardware, private blockchains can mine and process blocks more quickly than some public blockchains.
- There is no cost to place blocks onto the private blockchains owned and managed by an organisation – although a significant investment in hardware infrastructure is necessary.
- Access to the blockchain can be restricted to authorised users and permissioned groups.
Disadvantages of a private blockchain
There are some issues when using a private blockchain for anyone who wants to make sure they are participating in a trusted network. Can the blockchain be guaranteed to be safe?
- Users must trust a private blockchain which is centralised and controlled by a central entity.
- If a bad actor tries to gain control over the network, the entire blockchain could be compromised and switched to an outsider’s control. Unlike the public blockchain which has many nodes across the network which each have a full copy of the chain, the fewer nodes in a private blockchain could very well lead to it being compromised. This single point of failure negates the primary value proposition of a blockchain.
- As the private blockchain is centralised, then authentication and validation is controlled by a central authority. If this is compromised, the entire blockchain can be at stake.
- A centralised authority might place rules and restrictions on what can be placed onto the blockchain. If this happens then the users cannot do anything to remedy this.
- The blockchain ledger entries can be modified or changed by the central authority at any time – without any consensus from the miners or participants.
The BSV blockchain offers the best of public blockchain
Having the ability to modify what is supposed to be an immutable ledger where data is placed on-chain and remains on-chain in perpetuity is an issue. Entries on the public BSV blockchain are placed there and cannot be altered. The protocol was set in stone in the Bitcoin White Paper written by Satoshi Nakamoto and cannot be changed. This immutability demonstrates faith and trust in the original blockchain protocol.
Some organisations may want to use the public blockchain for the majority of their activities but want to do certain activities ‘off chain’. These activities do not involve a public and a private blockchain. Rather, they involve taking a portion of the activities away from the main blockchain, completing them off-chain, and placing the results back onto the public ledger. However, it is not necessary to perform any activities off-chain as the original blockchain was designed for each activity to occur on the BSV blockchain itself.
These digital agreements, known as smart contracts, are rules defined by a software developer in the code to form a digital agreement which is stored on-chain. The software can be run at any time to validate these agreements. Specific activities can all be stored on-chain so there is no need for these activities to happen off-chain. Once created, the contracts are copied to all nodes so are distributed and unmodifiable once deployed. They can only be executed when the smart contract’s public key is used, and the output is used automatically.
There is a massive amount of investment needed in both hardware, and software development to create a private blockchain. The risks of using a private blockchain built and operated by another company might be a step too far for some organisations, and the investment in infrastructure might be beyond the reach of the budget.
By placing your trust in an immutable public blockchain which already has the security, authentication and availability that you need – you get access to the infrastructure at a far lower cost than a private blockchain. In the case of the BSV blockchain, you’ll pay per KB data stored on-chain, not forking out a cent for the infrastructure or management of the system.
Benefit from an enterprise-scale public blockchain
The benefits certainly outweigh the risks and the public BSV blockchain will certainly scale to your requirements – and more.
To learn more about how BSV’s enterprise-scale public blockchain can benefit your enterprise, download your free copy of our eBook to learn more.