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In this article, we’ll see what a private blockchain actually is and how it works. Almost every piece of content about the private blockchain brags that it is completely decentralized. Many people believe that decentralization is a move to keep consumers safe from money-hungry companies and government entities. If you’re willing to learn about blockchain in depth, maybe it’s about time you learn about private blockchain as well.

As the alleged creator of bitcoin and blockchain, Satoshi Nakamoto is praised around the globe. He made one of the most significant inventions of modern times, and that is blockchain technology. However, Satoshi is usually known for Bitcoin.

Blockchain is basically a public ledger on which all of the transactions carried out in the crypto market are recorded. After being saved in a chronological manner, transaction data is saved for future use and is unalterable.

There are two main types of blockchains. There are public blockchains, and then there are private blockchains, the main topic of today’s article. While both of these types of blockchains are decentralized, they do have a few basic differences.

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Unlike the public blockchain, private blockchains are owned and managed by a central authority. The central authority has control over the mining permissions and also over the consensus. The central authority also decides who gets to join the private network and has control over all the nodes in their private blockchain.

We know that the central authority thing makes the private blockchain concept sound a bit less decentralized. That’s because only selected members are authorized to read, write and make other changes on the blockchain. Also, the authority in charge of the private Blockchain can also delete or override anything they want to.

Many experts rename the private blockchain’s public ledger a “distributed ledger,” which is only accessed by a specified group of people. However, the cryptographic codes are still intact in private blockchains, and no one can take a look at your finances. Therefore, the soul of Blockchain is still there.

Here are some of the main characteristics of a private blockchain.

  • Immutable nature.
  • Nodes of the whole blockchain are viewed and accessed by only a few selected entities.
  • Has decentralization and Peer to Peer transactions are supported.
  • Only specified persons can review and audit the private blockchain.
  • The mining process is also controlled by the central authority. Usually, crypto coins of a private blockchain are pre-mined.

Why Private Blockchains?

Blockchain technology, as we know it, has the potential to change the financial and other sectors around the globe forever. This technology has become a necessity, especially because of all the hacking attempts and failures of the current financial industry to keep its customers safe from monetary losses.

Since many companies have understood the potential of Blockchain technology, they have started investing heavily in their own private Blockchain projects. Some have already developed private Blockchain projects and are reaping the benefits.

However, one might think that large corporate organizations would use this technology to their own benefit and take away the decentralized nature by introducing a private Blockchain.

A short answer to this question is no. No one can mess with the decentralized nature of the Blockchain, even if it is private. In addition, the private blockchain solves a lot of different problems which might arise when companies use the public Blockchain.

Let’s see how private blockchains can prove to be helpful for us.

Saving Power

At this point, we all know that mining bitcoin and other cryptocurrencies take a lot of power. This is the main reason why many countries are on the verge of going through a power crisis.

So, private blockchain technology fixes this problem by introducing pre-mined coins. Therefore, private Blockchain technology is much more environmentally friendly compared to public Blockchain.

Helps Us Collaborate

Private blockchains have opened the opportunity for banks and companies to work directly with individuals. Not only will this help in improving the Blockchain technology, but it will also make the Blockchain technology usable. Smart people from around the globe can now finally sit together and work for the betterment of Blockchain technology.

Empowers Companies

The private blockchain network is proving to be very helpful for enterprise companies. This technology helps us think about the benefit of the whole company rather than focusing on just one person.

Due to the collective efforts and transparency promoted by private Blockchain, companies are bound to make fast progress in the future. As the technology improves, more companies will be able to benefit from it.

Decreased Volatility

Despite its huge progress, many experts still suggest that bitcoin is a risky domain. That is, unfortunately, correct to some extent. This is mainly because of the high volatility rate of this cryptocurrency and many others like this.

On the other hand, private blockchains tend to be less volatile just because the central authority controls them on a daily basis.

Prevents Illegal Activities

By using private blockchains, we can completely prevent illegal activities from happening. On the other hand, completely decentralized cryptocurrencies, like bitcoin, have high rates of illegal activity because of their unregulated nature.

Private blockchains are very selective about who has access to their vital features and nodes. This way, only authorized personnel is allowed to enter the platform, and chances for any illegal activity to go unnoticed are practically zero.

Public Vs. Private Blockchains

Let’s take a close look at the key differences between public and private blockchains.

Private Blockchains

Private blockchains are used for internal networking between different individuals within the same business. The main difference between a public and a private blockchain is in the way it is managed. Unlike their public counterparts, private blockchains are actually controlled by a central authority. Therefore, every user must seek authorization from the central authority before joining a private Blockchain.

The central authority can determine how their private Blockchain will function. Moreover, they can also decide which parties have access to the transaction data. A person without authorization to access a specific private transaction won’t be able to see it on a private blockchain.

Benefits of Private Blockchains

Let’s take a look at some of the most well-known benefits of private blockchains.

Impeccable Security

It is very important for every company to protect its private data and the data of its customers. Therefore, using Blockchain is one of the safest methods of ensuring security for any company around the globe these days. Any type of data stored within a private Blockchain cannot be tampered with or changed without exclusive permissions. It provides one of the safest and the most secure platforms for businesses around the globe to store their data and transaction history.

Since Blockchain technology is always working in the background of private blockchains, the permission control system and transparency provide the user with an extra layer of security. When a business uses a private blockchain, they are able to set the rules and regulations for every new participant. Anything that is added to the ledger cannot be deleted or tampered with. This helps in auditing and keeping the data safe in the long run.

Since central authority can approve or deny the entry of new participants into their private blockchain, the access control, and hack-proofing is impeccable with private blockchains. When you have specific nodes which are allowed to process and verify the transactions, you can avoid unnecessary access.

So, as an administrator of a private blockchain, you will be allowed to manage access and sharing of data across the network. This is a perfect way to safeguard valuable private information related to your company.

Peak Performance

Just because the number of participants on a private Blockchain is very low, every transaction can be processed instantly, and the performance is great. These blockchains do not depend on gas/ fees like public blockchains. Moreover, since the consensus algorithm used in private Blockchain is way different from public Blockchain, the use of energy in the whole transaction agreement process is very low.

The Hyperledger also uses smart contracts and its unique data model to keep the private running. You can easily automate transactions with the help of smart contracts, and this is one of the best features which increases the performance and speed of transactions. This is one of the best uses of Blockchain technology and the trust people put into it.

Centered Around Businesses

If you are a business and would like to take advantage of Blockchain technology to its fullest, you should definitely try using a private Blockchain network. The private Blockchain model is very flexible and is perfect for businesses looking for the right balance between control and transparency within their business functions. All of the features of private Blockchains are centered around businesses.

There are lots of companies out there that have already started using a private blockchain, and you can do the same as well.

Ensures Data Privacy

As we already know, the owner of a private blockchain has the final say in allowing or denying new participants on their private blockchain. This way, businesses can understand who they are dealing with and can easily avoid unauthorized access to their private data.

Unless the owner of a private Blockchain provides you with special access to their private data, you won’t be able to access it by any means. Data privacy is one of the leading reasons why more businesses are starting to trust and use private blockchain technology than ever before.

Easily Scalable

As a business, you should only be interested in useful technology, which you can easily scale in the future if your business grows beyond a certain point. Therefore, the same problem arises for the private Blockchain technology as well when it enters the business domain.

You can easily scale the private Blockchain ecosystem as much as you can, depending on the needs of your business. This technology is on the list of technologies that you can easily scale.

Drawbacks of Private Blockchains

While private blockchains are perfect for businesses around the globe, they limit the idea of decentralization to just a few market players. That is because just a few companies will have power over their own private blockchains and will act as third parties to process transactions within businesses.

Benefits of Public Blockchains

Let’s go through some of the best benefits provided to us by public blockchains.


Public blockchains are famous for having impeccable security across the board. There are lots of security protocols implemented in public blockchains, which keep them away from any type of hacking attempts. This is the main reason why many banks and individuals are now starting to trust the public Blockchain system completely.


The anonymous nature of public blockchains is another reason why technology has become so much popular around the globe. You can make any type of transaction without the fear of being traced by federal authorities or by any other fishy players. This way, no one has the authority to track anyone’s transactions or history within the public Blockchain network.


Decentralization is one of the biggest features enjoyed by the public Blockchain network. Decentralization is absent in private blockchains since they are controlled by individuals. Every person using the public Blockchain has a copy of the whole public ledger saved on their device. This eliminates any chances of the public ledger being tampered with. Every node takes part in the maintenance activity, and the integrity of data is protected at all costs.


As you might already know, immutability is another great feature of a public blockchain. Every transaction done on the blockchain is saved on the public ledger, and lots of transactions are compiled into a block of data. Once a block is saved on the blockchain, it can’t be altered or tampered with.

So, immutability means that the public blockchain network can’t be manipulated. A whole new chain will be needed if a user wants to change a block.

Open Nature

Being open to everyone is one of the key features of public Blockchain. Since a reliable Internet connection is all you need to access the Public Blockchain network, you can join it, regardless of the type of device you have. The sign-in process is very simple and straightforward, and no one can keep you from reaping all the benefits of the public Blockchain.

Zero Regulations

There are literally zero regulations on the public Blockchain system. That is because of the absence of central authority. Unlike the private Blockchain, public blockchains are not limited to internal networking, and anyone can join the network to see the activity without any restrictions.


Since the public Blockchain relies on a shared network system, it is the most transparent system in the world. Once a transaction is saved on the public ledger, it is visible to literally everyone present on the platform. Users can access the ledger and see every transaction at any time.

The transparency provided by public Blockchain ensures that no one does any type of corruption or manipulation on the platform.

Empowers Users

In traditional finance, and even in private blockchains, every user is bound to follow a set number of rules and regulations put forward by a third party. On the other hand, since there is no central authority in the case of public blockchains, participants are provided with complete freedom in their actions.

Drawbacks of Public Blockchains

Just like private blockchains, public blockchains also have a few disadvantages.

One of the first disadvantages of public blockchains is the fact that they are not regulated. This means that they are not a good choice for internal use within specific businesses. No central authority can put forward any type of criteria for a specific project.

Moreover, the anonymous nature of public blockchains can allow criminals and other illegal actors to easily get away with their illegal actions on the platform.


After going through a detailed analysis of a private blockchain and reading the benefits of a public blockchain, we can agree that both of them are good for specific tasks.

For example, a public blockchain is a great platform for anonymous transactions. The immutable nature of this platform prevents any third party from sabotaging or tracing a transaction or project. Add transparency makes sure that every person using the public blockchain has undisputed access to the public ledger. This makes the public blockchain a perfect tool for decentralized cryptocurrency and other valuable financial services with the benefit of transparency, immutability, anonymity, and tons of other features public blockchain has to offer.

On the other hand, a private blockchain is great to use for internal networking and transactions within a company. It enables a central authority to approve or decline the requests of new individuals willing to join the network. This type of blockchain makes sure that no unwanted person is allowed to access the private data saved by a company. Therefore, you can choose between public and private blockchain according to your specific needs.

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Larry Wright

By Larry Wright

Larry Wright is a Pulitzer Prize-winning journalist and author. He is known for his insightful reporting and his ability to delve into complex issues with clarity and precision. His writing has been widely acclaimed for its depth and intelligence.