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Jun 08 • 27 mins

Private vs Public Blockchain


The advent of blockchain technology has revolutionized various sectors, from finance to supply chain management, by offering decentralized and transparent solutions. However, when delving into the world of blockchains, one encounters the intriguing dichotomy of private and public blockchains. Understanding their fundamental differences is crucial for individuals and enterprises seeking to harness the potential of this transformative technology. This guide aims to demystify the private vs public blockchain debate. We will explore the distinct characteristics, use cases, and advantages of each type, shedding light on their implications for security, scalability, consensus mechanisms, governance, and accessibility.

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What is Blockchain

At its core, blockchain is a distributed ledger technology that enables the secure and transparent recording of transactions and data across a network of computers. Unlike traditional centralized systems, where a central authority validates and maintains the ledger, blockchain operates on a decentralized network of nodes. Each node maintains a copy of the ledger, ensuring that all participants have access to the same information.

The blockchain’s structure consists of blocks, which are containers for storing transactional data, and a chain that links these blocks together chronologically. Each block contains a unique identifier called a cryptographic hash, which ensures the integrity of the data. Once a block is added to the chain, it becomes virtually immutable, making it extremely difficult to alter or tamper with past transactions.

One of the key features of blockchain technology is its ability to achieve consensus among network participants. Various consensus mechanisms, such as proof-of-work (PoW) and proof-of-stake (PoS), are employed to validate transactions and ensure the agreement of all nodes on the network. This consensus mechanism adds an additional layer of security and trust to the system.

Why Do We Need Different Types of Blockchain

The diverse landscape of blockchain technology has given rise to different types of blockchains, each tailored to address specific needs and use cases. While the underlying concept remains the same, the variations in blockchain types accommodate varying requirements of security, scalability, privacy, governance, and accessibility. Here are some key reasons why different types of blockchains are necessary:

  1. Different industries and organizations have varying security requirements. Some may require high levels of transparency and security, which can be provided by public blockchains. Others may prioritize privacy and restricted access, necessitating the use of private or permissioned blockchains.
  2. Different use cases may demand different levels of scalability. Public blockchains face challenges in scaling due to their decentralized nature, while private blockchains can often achieve higher transaction speeds and scalability by employing more centralized mechanisms.
  3. Governance structures and regulatory compliance vary across industries. Public blockchains often operate with decentralized governance, making it difficult to adapt to specific regulations. Private blockchains allow organizations to establish governance rules that align with their unique requirements and compliance obligations.
  4. Different sectors have specific use cases that require customized blockchain solutions. For example, supply chain management may benefit from a private blockchain to ensure traceability and accountability among trusted participants. Healthcare might leverage blockchain for secure patient data management, necessitating privacy-focused solutions.

Types of blockchains

Public blockchain

Public blockchains are open and decentralized networks accessible to anyone. They allow for transparent and permissionless participation, enabling anyone to join the network, validate transactions, and contribute to consensus. The most notable example is Bitcoin, where transactions are recorded publicly, ensuring transparency and security through the consensus mechanism. 

Public blockchains offer high security, immutability, and resilience due to their distributed nature. They are suitable for use cases that prioritize decentralization and where trust among participants is paramount, such as cryptocurrencies, decentralized applications (DApps), and global remittance systems. Public blockchains also foster innovation, as anyone can develop applications and smart contracts on these open networks.

Private blockchain

Private blockchains, also known as permissioned blockchains, restrict access to a select group of participants. They provide more control over data privacy and operations compared to public blockchains. Private blockchains are often used by enterprises and organizations that require greater confidentiality, security, and scalability. These networks can be operated by a single entity or a consortium, where access is granted only to approved participants. 

Private blockchains offer faster transaction speeds and higher scalability compared to public blockchains, as they can use consensus mechanisms like proof-of-authority (PoA) or proof-of-stake (PoS). These blockchains are suitable for industries where sensitive information needs to be shared among trusted participants, such as financial institutions, supply chain networks, or internal enterprise systems. Private blockchains also allow for more efficient governance and decision-making processes, making them suitable for consortia or organizations that require a higher degree of control.

Consortium or Federated Blockchains

Consortium or federated blockchains are a hybrid approach that combines elements of both public and private blockchains. In this model, multiple organizations or entities form a consortium to collectively govern the blockchain network. Consortium blockchains offer controlled access and governance, ensuring that only approved participants can validate transactions and maintain the blockchain. Unlike public blockchains, where anyone can participate, consortium blockchains are limited to a predefined set of trusted participants. 

These blockchains are particularly useful in scenarios where multiple organizations collaborate while maintaining a certain level of trust and control. They are commonly employed in industry-specific consortiums, where participants share sensitive data or collaborate on shared processes. Consortium blockchains provide benefits such as improved efficiency, reduced costs, and increased transparency among consortium members while retaining the benefits of decentralization and immutability.

Hybrid blockchains

Hybrid blockchains combine the features of different types of blockchains, including public and private blockchains, to achieve a specific purpose. They aim to strike a balance between transparency and privacy, allowing for controlled access and public visibility when necessary. Hybrid blockchains provide flexibility by allowing certain parts of the network to be public while keeping other sections private. This enables customization based on the needs of the specific use case or organization. 

Hybrid blockchains are suitable for use cases that require varying levels of transparency and confidentiality, accommodating different participants’ needs and regulatory requirements. For example, a supply chain management system might utilize a hybrid blockchain to maintain public visibility of product provenance while keeping sensitive pricing information private. Hybrid blockchains offer the advantages of interoperability, customization, and tailored privacy features, making them suitable for industries that require a balance between public trust and data confidentiality.

Public blockchain

Public blockchains, known for their open and decentralized nature, have gained significant attention and popularity due to their unique advantages. They offer transparency, security, and inclusivity, but they also come with certain drawbacks. Moreover, public blockchains have found diverse applications across various industries


  • Transparency: Public blockchains provide complete transparency as all transactions are recorded and visible to anyone on the network. This feature ensures trust among participants, as transactions cannot be easily tampered with or manipulated.
  • Security and Immutability: Public blockchains employ consensus mechanisms like proof-of-work (PoW) or proof-of-stake (PoS), making them highly secure. The decentralized nature of public blockchains adds an extra layer of protection against malicious attacks. Once a transaction is added to the blockchain, it becomes nearly immutable, making it extremely difficult to alter historical records.
  • Decentralization and Trust: Public blockchains operate on a network of nodes distributed across different geographic locations. The decentralized nature eliminates the need for a central authority, allowing for trustless interactions and reducing the reliance on intermediaries.
  • Global Accessibility: Public blockchains are open to anyone who wants to participate, making them accessible to individuals and organizations worldwide. This inclusivity fosters innovation, as anyone can develop applications or contribute to the network’s growth.


  • Scalability Challenges: Public blockchains face scalability challenges due to their consensus mechanisms and the need for all nodes to validate transactions. This can result in slower transaction processing times and limited throughput compared to private or consortium blockchains.
  • Lack of Privacy: Public blockchains prioritize transparency, which means that all transaction details are visible to anyone on the network. While this is advantageous in terms of trust, it poses challenges for industries that require confidentiality, such as sensitive financial or personal information.
  • Governance Limitations: Public blockchains often have decentralized governance models, making it difficult to adapt to specific regulations or changes in the network. This lack of centralized control can present challenges in decision-making and implementing upgrades or changes.
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Uses of Public Blockchain

  • Cryptocurrencies: Public blockchains, such as Bitcoin and Ethereum, have revolutionized the world of cryptocurrencies. They enable peer-to-peer transactions and the issuance of digital assets without the need for intermediaries.
  • Decentralized Applications (DApps): Public blockchains provide a platform for building decentralized applications. DApps offer various services, including financial applications, decentralized exchanges, gaming platforms, and identity verification systems.
  • Supply Chain Management: Public blockchains are being used in supply chain management to enhance transparency, traceability, and efficiency. They enable participants to track and verify the provenance of goods, ensuring authenticity and reducing fraud.
  • Voting and Governance: Public blockchains can be utilized for secure and transparent voting systems. The decentralized nature of public blockchains ensures trust in the voting process and reduces the risk of tampering or manipulation.
  • Intellectual Property Protection: Public blockchains offer a secure and immutable way to protect intellectual property rights. By registering digital assets on the blockchain, creators can prove ownership and establish a verifiable record of creation.

Private Blockchain

Private blockchains, also known as permissioned blockchains, offer distinct advantages and considerations compared to public blockchains. They prioritize privacy, control, and scalability, making them suitable for specific use cases. 


  • Enhanced Privacy: Private blockchains provide restricted access, ensuring that only authorized participants can view and validate transactions. This feature is critical for industries that handle sensitive data, such as financial institutions, healthcare organizations, or government agencies.
  • Increased Scalability: Private blockchains often exhibit higher scalability compared to public blockchains. They can leverage consensus mechanisms like proof-of-authority (PoA) or practical Byzantine fault tolerance (PBFT), enabling faster transaction processing and improved throughput.
  • Controlled Governance: Private blockchains allow organizations to establish governance rules and consensus mechanisms that align with their specific requirements. This centralized governance model facilitates decision-making, upgrades, and maintenance, offering more control over the network.
  • Customized Features: Private blockchains can be tailored to meet the specific needs of organizations. They can incorporate additional security measures, permission levels, or data privacy features to align with regulatory compliance obligations.


  • Reduced Transparency: Unlike public blockchains, private blockchains limit visibility to a select group of participants. While this enhances privacy, it can lead to a lack of transparency and potential trust issues among participants who cannot independently verify transactions.
  • Reliance on Trusted Nodes: Private blockchains often rely on a smaller number of trusted nodes or validators to validate transactions. This centralized approach can introduce risks if the trusted nodes are compromised or collude maliciously.
  • Limited Decentralization: The centralized nature of private blockchains reduces the level of decentralization compared to public blockchains. This can undermine the benefits of immutability and censorship resistance that are inherent in decentralized networks.
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Uses of Public Blockchain

  • Financial Services: Private blockchains are widely adopted by financial institutions for applications such as interbank transactions, settlements, and trade finance. These use cases require fast, secure, and confidential transactions among trusted participants.
  • Supply Chain Management: Private blockchains are utilized in supply chain networks to enhance data sharing, traceability, and transparency among selected participants. They enable real-time visibility into the movement of goods and help streamline processes, reduce fraud, and ensure compliance.
  • Enterprise Solutions: Private blockchains find applications within large organizations or consortiums, where multiple entities collaborate on specific projects. They facilitate efficient data sharing, streamline workflows, and enhance collaboration while maintaining data privacy and control.
  • Healthcare: Private blockchains are deployed in the healthcare sector to securely store and share patient records, ensuring data privacy and integrity. They can streamline data exchange between healthcare providers, improve interoperability, and enhance patient care coordination.
  • Government Applications: Private blockchains are used in government sectors for applications like land registry, identity management, and voting systems. They enable secure and transparent record-keeping, reduce fraud, and enhance efficiency in public service delivery.

Private vs Public Blockchain

When comparing private and public blockchains, several key factors come into play, including control, accessibility, transaction charges, consensus mechanisms, transaction speed, data control, system efficiency, immutability, vulnerability to attacks, and energy consumption. Understanding these differences is crucial for selecting the appropriate blockchain type for specific use cases.


Private Blockchains: In private blockchains, control is concentrated in the hands of a limited number of trusted entities or a single organization. They have the authority to set rules, govern the network, and make decisions regarding upgrades and modifications.

Public Blockchains: Public blockchains, on the other hand, are characterized by decentralized control, where decisions are made collectively by participants. There is no single governing entity, and the rules of the network are determined through a consensus mechanism agreed upon by the majority of participants.

Who can access

Private Blockchains: Access to private blockchains is restricted to a select group of approved participants. These participants are typically known entities or organizations, and they require permission to join the network and participate in transactions and consensus activities.

Public Blockchains: Public blockchains are open to anyone who wishes to participate. There are no restrictions on access, and anyone can become a node on the network, validate transactions, and contribute to the consensus process.

Transaction charges

Private Blockchains: In private blockchains, transaction charges are typically lower or non-existent, as the network is controlled by a limited number of participants who can verify transactions without the need for monetary incentives.

Public Blockchains: Public blockchains often require transaction fees, which serve as an incentive for network participants, known as miners or validators, to process and validate transactions. These fees can vary depending on network congestion and the desired transaction speed.


Private Blockchains: Private blockchains often employ consensus mechanisms like proof-of-authority (PoA) or practical Byzantine fault tolerance (PBFT). These mechanisms allow for faster transaction confirmations as the validation process is conducted by trusted entities or a predetermined set of validators.

Public Blockchains: Public blockchains traditionally use proof-of-work (PoW) or proof-of-stake (PoS) consensus mechanisms. PoW requires miners to solve complex mathematical puzzles, while PoS relies on validators who hold a stake in the network. These mechanisms provide a high level of security but can result in slower transaction confirmations.

Speed of transaction

Private Blockchains: Private blockchains generally offer faster transaction speeds and higher throughput compared to public blockchains. With a limited number of participants and a more centralized architecture, private blockchains can process transactions more efficiently.

Public Blockchains: Public blockchains, due to their decentralized nature and the need for consensus among a large number of participants, often experience slower transaction processing times and lower throughput. However, scalability solutions and technological advancements are being developed to address these limitations.

Data control

In private blockchains, participants have greater control over their data. They can define access permissions, implement encryption measures, and determine the level of data privacy and confidentiality.

Public blockchains prioritize transparency and openness, which means that all transaction details are visible to anyone on the network. While public blockchains provide transparency, they may not be suitable for applications that require strict data control and confidentiality.

System efficiency

Private blockchains typically exhibit higher system efficiency due to their centralized nature and the ability to select consensus mechanisms that prioritize speed and scalability. They can handle a higher volume of transactions with lower latency.

Public blockchains, with their decentralized architecture and consensus mechanisms, may face challenges in terms of system efficiency and scalability. However, advancements such as layer-two solutions and off-chain transactions are being explored to improve the efficiency of public


Private blockchains can offer a certain level of immutability, but since control is concentrated in the hands of a limited number of participants, it may be easier to modify or reverse transactions if necessary.

Public blockchains provide a high degree of immutability. Once a transaction is added to the blockchain, it becomes nearly impossible to alter or tamper with the records, ensuring data integrity and trust among participants.


Private blockchains are generally considered less susceptible to certain types of attacks, such as 51% attacks, as they require a significant amount of computing power and control to compromise the network. However, they may be more vulnerable to insider threats or collusion among trusted participants.

Public blockchains are designed to be highly secure, but they may be more susceptible to 51% attacks, where a single entity gains control of the majority of the network’s computing power. However, the decentralized nature of public blockchains adds an extra layer of security and makes them more resilient against attacks. 

Energy consumption

Private blockchains tend to have lower energy consumption compared to public blockchains. With a smaller number of participants and more efficient consensus mechanisms, the energy requirements are generally reduced.

Public blockchains, especially those that rely on proof-of-work consensus mechanisms, have received criticism for their high energy consumption. The computational power required for mining and validating transactions can be resource-intensive, leading to concerns about environmental impact.

Which is better?

Determining whether private or public blockchains are better depends on the specific requirements and objectives of the use case. Each type has its own strengths and weaknesses, and the suitability of either option varies based on factors such as data privacy, control, scalability, transparency, and accessibility.

Private blockchains excel in scenarios that prioritize data privacy and control. They offer restricted access, allowing only authorized participants to join the network and view transactions. This makes private blockchains suitable for industries such as finance, healthcare, or government, where confidentiality and compliance with regulations are critical. 

Private blockchains provide a higher level of control over the network’s governance, making decision-making and upgrades more manageable. They also tend to have faster transaction speeds and higher scalability, as the consensus mechanisms can be tailored to meet specific requirements. However, private blockchains may lack the transparency and decentralization associated with public blockchains, which can be a drawback for certain use cases.

Public blockchains, on the other hand, prioritize transparency, inclusivity, and decentralization. They are open to anyone, allowing for permissionless participation and verification of transactions. Public blockchains are well-suited for applications that require a high level of trust, immutability, and resistance to censorship or single points of failure. 

They have proven their effectiveness in the world of cryptocurrencies, enabling secure peer-to-peer transactions without the need for intermediaries. Public blockchains also foster innovation and community involvement, as anyone can contribute to the network’s growth and development. However, public blockchains can be slower and less scalable compared to private blockchains due to the consensus mechanisms and the need for validation by a large number of participants.

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The choice between private and public blockchains ultimately depends on the specific requirements, objectives, and priorities of a given use case. Private blockchains excel in scenarios where data privacy, control, and scalability are paramount. They offer restricted access, faster transaction speeds, and centralized governance, making them suitable for industries that handle sensitive data and require compliance with regulations.

On the other hand, public blockchains prioritize transparency, inclusivity, and decentralization. They offer open access, immutability, and resistance to censorship, making them ideal for applications that require a high level of trust and community involvement. Public blockchains have proven their effectiveness in the realm of cryptocurrencies, facilitating secure peer-to-peer transactions without intermediaries.

Both private and public blockchains have their own strengths and weaknesses. Private blockchains provide enhanced privacy and control, while public blockchains offer transparency and decentralization. It is essential to carefully evaluate the specific requirements of a use case to determine which type of blockchain is better suited for the task at hand. So if you have not taken the decision yet, contact our blockchain consultants to learn more. 

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    About the author

    Dmitry K.

    CEO and Co-founder of ND Labs
    I’m a top professional with many-year experience in software development and IT. Founder and CEO of ND Labs specializing in FinTech industry, blockchain and smart contracts development for Defi and NFT.

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