Private Blockchain: Its Meaning, Features and Importance

private blockchain

Since the creation of Bitcoin, blockchain technology has rapidly evolved in terms of both its functionality and applications. The need for blockchain development technology has increased across a wide range of new industries. This prompted the switch from web2 to web3 of the internet. Businesses are looking into the various uses of blockchain technology and how they might use it to address their concerns. Let’s start with the fundamentals: there are two main types of blockchains: public blockchains and private blockchains. Additionally, the use of private blockchains for dApp development has grown recently.

You might be wondering why you wouldn’t put your dApp on a public blockchain at this point. Public blockchains have numerous advantages over other types of blockchains, but they also have certain drawbacks because they are on a common network and therefore more vulnerable to malevolent users. In order to meet regulatory standards, private blockchains give an additional layer of security and protection to the data recorded on the blockchain. This alone may be the primary motivating reason for many people who decide to create private blockchains. Furthermore, private blockchain implementations provide companies total control over who has access to the chain, what tasks they can carry out, how dApps may be developed and maintained, and where nodes are physically placed.

What is a private blockchain? Find out in this article. Let’s briefly discuss the fundamentals of blockchain, though, before going any further.

The Blockchain

A peer-to-peer distributed ledger technology called blockchain is used to keep transparent and unchangeable records of digital assets. It operates independently and doesn’t need a third party. Because it may effectively lower fraud and dangers, this innovative and developing technology is receiving a lot of attention. How is blockchain, a distributed and decentralised P2P network, superior to a centralised network is now the question. Decentralized networks have a number of benefits over conventional centralised networks, including improved privacy and stability. Additionally, these networks have no single points of failure and are simpler to scale. Due to its shared communication and distributed processing, blockchain is dispersed.

The P2P architecture of blockchains has several advantages and is safer than conventional client-server networks. Due to the requirement for majority consensus in their distributed P2P networks, blockchains are shielded from malevolent operations.

Key Characteristics of Blockchain

Distributed Ledger Technology

All network participants have access to the distributed ledger, which has an immutable record of all transactions. Due to the shared ledger, transactions no longer need to be recorded more than once, as is the case with conventional corporate networks.

Permanent Records

Once a transaction has been added to the shared ledger, it cannot be changed or tampered with by another member. A transaction record that has an error in it needs to be rebuilt. The results of both transactions will then be shown.

Smart Contracts

To expedite transactions, a set of guidelines known as a smart contract is stored on the blockchain and automatically carried out. The criteria of transactions can be specified using smart contracts.

Blockchains: Public versus Private

To grasp what a private blockchain is and how it works, we must first comprehend the basic operating principle of public blockchains.

Public Blockchain

Everyone can utilize public blockchains because they don’t require a permission to use them. Anyone can sign up for the network and participate in its main functions. Each user has an equal right to view and confirm the blockchain’s most recent actions. This is what enables a public blockchain to function autonomously. Among the public blockchains, Litecoin, Ethereum, and Bitcoin are only a few examples. On these networks, any user can sign up to become a node. These nodes keep a copy of the distributed ledger and confirm transactions.

Private Blockchain

These are controlled centrally, yet they resemble public blockchains. Who is allowed to use the network, validate transactions, and manage the shared ledger is decided by this authority. Because of the restricted public access to these networks, they are not entirely decentralised. While some organizations see the benefits of blockchain technology, others could function without its openness and visibility. Because of this, private blockchains with a closed, secure database make more sense to businesses.

Key Characteristics of Private Blockchain

  • The network’s nodes are only visible to a select few people or things.
  • There is no public access to the mining prospect. Even some cryptocurrencies allow for pre-mining.
  • Few individuals have the authority to evaluate and audit.
  • Decentralization makes P2P transactions possible.
  • They are largely unchangeable.

Why Should You Build A Private Blockchain?

The creation of a private blockchain has a number of advantages:

Energy Efficient

Private blockchains provide pre-mined money, whereas mining bitcoins demands a lot of computer power. Therefore, it uses less energy than the open blockchain.

Less Volatile

Public blockchain cryptocurrencies are dangerous since it is impossible to anticipate when the price will increase or decrease. Private blockchains are less volatile since their owners constantly control them.


Users of many private blockchains can collaborate with banks and other financial organizations. As a result, technology is more usable and accessible.

No Illegal Behavior

Private blockchains’ ability to limit criminal activity—which is prevalent for cryptocurrencies like Bitcoin—is one of its most significant advantages. Private blockchains are quite choosy. This implies that the platform can only be accessed by authorized users. This reduces criminal activity.

Empowering Businesses

Typically, the private network is utilized to empower businesses. A reliable blockchain consulting firm places greater emphasis on the success of the company as a whole than on specific employees. It is clear that such a strategy boosts a business’s overall growth and raises revenues. Additionally, it can be utilized to create business blockchain platforms.

Increased Security

Private blockchains are permissioned, meaning users must have authorization to join and use these networks. It lessens the chance of disclosing sensitive information to the public.

Lower Operating Expenses

Working directly with other firms without the use of an intermediary is made feasible by private blockchains, which considerably lowers expenses.


On the private blockchain, both people and organizations may view everything. You can also make some users, like patients, anonymous if your business model permits.

Data Integrity and Performance

Depending on how many transactions are being processed at once and how much each user is willing to pay, blockchain transactions can take up to 30 minutes or even several hours. Concerning private blockchains:

  • The guidelines for transaction fees, if any, are up to you.
  • Transactions can be completed more quickly and at a lesser cost with fewer participants.
  • Dynamic data integrity

A public blockchain makes it nearly hard for someone to alter data without controlling 51% of the nodes. Private blockchains can be altered, nevertheless, by giving all members the means to consent to a change or by introducing logic to their behavior. This makes it possible to change data and alter a blockchain’s logic.

Bottom Line

Because they may be utilized in a variety of industries, including retail, insurance, healthcare, financial services, and more, private blockchains are in demand. They provide businesses very secure, scalable, and reliable database services. Private blockchains give companies a clear perspective of flaws and aid in reducing waste since they give them a better understanding of their supply chain. More significantly, the organization is the only party with access to these facts. Additionally, they require less management because they have a smaller network with fewer users and less downtime. Additionally simple in a private blockchain ecosystem is compliance management. In general, private blockchains effectively support the growth and scaling of businesses.



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