Many types of blockchain have evolved over the last few years and the terminology is sometimes misunderstood. Currently, there are different types of blockchains, such as public and private, which although different, have some similarities to each other:
Both are decentralized peer-to-peer networks, in which each participant maintains a replica of a shared ledger (node). What varies from one to another is the level of decentralization;
Both keep replicas synchronized through a protocol known as consensus.
Both provide certain guarantees about the immutability of the ledger, even when some participants are defective or malicious.
So how do they differ?
One of the main differences between a public and a private blockchain relates to who is allowed to join the network, execute the consensus protocol, and keep the book shared. A public network is completely open and anyone can join it (like the Bitcoin blockchain, for example). The network typically has an incentive mechanism to encourage more participants to join the network.
One of the disadvantages of a public blockchain is the substantial amount of computational power required to maintain a large-scale distributed book. More specifically, to gain consensus, each node in a network must address a complex and feature-rich cryptographic problem, called proofing, to ensure that everyone is synchronized.
Another point regarding the public network, which can be considered an advantage by some and a disadvantage by others, is that it is open, ie all transactions / movements that occur in the network can be verified by anyone.
A private blockchain network requires an invitation and must be validated by the network initiator or a set of rules established by the network initiator. Companies that set up a private blockchain often set up a permissible network, that is, only people with permission can join that network, making it much less decentralized than a public blockchain and closer to the centralized information logging models already in place. existing.
The access control mechanism of a private blockchain may vary: existing participants may decide future participants; a regulatory authority could issue licenses for participation; or a consortium could make the decisions. Once an entity joins the network, it will play a role in decentralized maintenance.