Private vs. Public Blockchain: Which One Should Your Business Use?

Blockchain technology is changing how things work in many industries, providing fresh ideas and innovations as the digital world keeps developing. As businesses look into using blockchain in their business processes, they face an important choice: deciding between public and private blockchains. This guide discusses the differences between these two types of blockchains, their advantages and disadvantages, and offers insights to help you choose the best option for your business requirements.

This in-depth guide will help you understand the main differences between private vs. public blockchains and choose the one that works best for your business.

Understanding Blockchain Technology

Blockchain is a decentralized ledger that maintains records of activities on an entire network of computers. To dive deeper into how this technology works, check out our guide, "What is Blockchain Technology and How Does it Work?". Additionally, explore real-world applications of blockchain in supply chains by reading "Blockchain in Supply Chain Management." Every transaction is protected with cryptographic hashes, which help keep the data precise and transparent. Blockchain is independent, which means it doesn't need middlemen. This builds trust and makes many processes more efficient. Now you know what blockchain technology is; now let's understand the difference between private blockchain vs. public blockchain and which one is better for your business.

1. Public Blockchain

A public blockchain is an open network in which anyone can participate without getting prior permission. Public blockchains play an important role in decentralized finance (DeFi), making platforms like Bitcoin and Ethereum ideal examples. To understand their growing influence, read our beginner's guide on "What is Decentralized Finance (DeFi)?" or explore "Top DeFi Lending Platforms" that are transforming the financial industry. All interactions in these networks are transparent and can be seen by anyone. Blockchain offers numerous benefits for businesses particularly in creating transparent and secure systems.

➤ Advantages of Public Blockchains:

Decentralization
The network is not run by a single organization, which lowers the risk of corruption or failure in one place.

Transparency
Everyone can see all transactions, which helps build trust among those involved.

Security
Because there are so many nodes and miners, it is very hard for malicious individuals to change the record.

➤ Disadvantages of Public Blockchains:

Scalability Issues
When there are a lot of transactions, it can take longer to process them, and fees can go up.

Energy Consumption
Consensus mechanisms such as Proof of Work need a lot of computing power, which results in high energy consumption.

Lack of Privacy
All information about transactions is visible, which might not be ideal for businesses that need to keep things private.

2. Private Blockchain

A private blockchain, on the other hand, works within a closed network that only certain individuals are allowed to view. This makes it ideal for industries like healthcare and banking, where privacy and control are important. Learn more about its specific sectors by reading "Blockchain for Healthcare" or "Blockchain Technology in Banking.” Businesses often use private blockchains for internal tasks. Benefits of smart contracts can improve these internal processes by offering additional automation and security.

➤ Advantages of Private Blockchains:

Enhanced Privacy
Access controls make sure that only people who are allowed to see private information can see it.

More Control
Organizations can customize the network's regulations and authorizations according to the needs of their company.

Improved Efficiency
Private blockchains can handle transactions and reach consensus more quickly because they have fewer participants.

➤ Disadvantages of Private Blockchains:

Centralization Risks
Having a central authority can make things more vulnerable by creating single points of failure.

Limited Transparency
Other people may worry about the integrity and trustworthiness of the data if access is limited.

Limitations on scalability
Private blockchains work well for smaller networks, but they might have problems when they try to grow to fit bigger ecosystems.

Difference Between Private vs. Public Blockchain

It's important to know the differences when deciding between public and private blockchains. Here’s an easy overview to help you in making a choice:

1. Access Control

Public Blockchain:

Anyone can join the network, take part in the process that decisions are made, and see the records of transactions.

No permissions are required to add or validate transactions.

Private Blockchain:

Only authorized users are allowed to access. People who want to join the network need to receive permission from the people in control.

Only specific people are allowed to validate transactions or take part in processes of decision-making.

2. Decentralization

Public Blockchain

The network is not controlled by any one organization. All participating nodes have governance and validation responsibilities.

Develops trust using community-focused consensus methods such as Proof of Work (PoW) or Proof of Stake (PoS).

Private Blockchain

One organization or a group of organizations are in control.

This centralization decreases the chance of conflict, but it can compromise trust if transparency is compromised.

3. Transaction Speed and Scalability

Public Blockchain

Typically slower due to the large number of participants and complex consensus techniques such as PoW.

For example Bitcoin's network can handle about 7 transactions every second, which can cause delays when there is a lot of activity.

Private Blockchain

Transactions are handled faster because there are fewer nodes and the consensus processes are easier to understand.

Private blockchains are made for internal use and can be grown to meet the needs of the business without slowing down the network.

4. Security

Public Blockchain

Highly secure because of its wide distribution and use of encryption methods. The large network makes it extremely difficult for attackers to take control (a 51% attack is not helpful in big networks).

Public blockchains can be vulnerable to external risks, such as DDoS attacks, if the network isn't sufficiently secure.

Private Blockchain

The central authority manages security and can implement severe rules, such as role-based access controls.

However, the small number of nodes can make it easier for hackers or people who aren't supposed to be there to get into the network.

5. Transparency

Public Blockchain

Every participant can see every interaction. It makes people more accountable and builds trust between users.

Ideal for uses such as cryptocurrency, where transparency is important.

Private Blockchain

Only people who are allowed to can see transactions. This protects privacy, so it can be used in sectors like healthcare and banking.

While this improves privacy, there may be issues regarding hidden action.

6. Cost and Maintenance

Public Blockchain

It is costly to keep running because it needs a lot of computing power for consensus methods like Proof of Work.

Participants have to pay transaction fees, and the network uses a lot of energy.

Private Blockchain

It's affordable because it works in a regulated environment with fewer nodes.

The network doesn't use high energy consensus methods, so it costs less to maintain.

7. Immutability

Public Blockchain

Once a transaction has been confirmed, it can't be changed. This keeps the data safe and stops anyone from changing it.

Ideal for situations where you need to keep accurate historical records, like legal documents or tracking assets.

Private Blockchain

How immutability works depends on how the government is set up. Authorized users may be able to change data if they need to.

This flexibility is helpful for fixing mistakes, but it causes worry about data manipulation.

8. Governance and Decision Making

Public Blockchain

Governance is handled by the community, with decisions made by agreement among those in the network.

Changing the protocol usually needs a lot of people to agree, which can take time but makes sure everyone has a suggestion.

Private Blockchain

Decisions are made by the main group or organization in control.

This makes it easier to make changes quickly, but it could end up in decisions that not everyone agrees with.

Choosing the Right Blockchain for Your Business

Understanding blockchain interoperability can help businesses choose the most adaptable solution. Choosing between a public and private blockchain depends on several factors:

• Business Objectives: Find out what your goals are and whether privacy or transparency is more important.

• Regulatory Compliance: Think about the laws that apply to your business, particularly those that deal with privacy and data security.

• Scalability Needs: Think about how many transactions you're expecting and pick a blockchain that can grow with your business.

• Resource Availability: Look to see if your company can keep up with and support the selected blockchain technology.

For guidance, our enterprise blockchain development services ensure tailored solutions that align with your business goals. Whether you need a public or private blockchain, we specialize in customized blockchain development to meet your unique business needs.

Conclusion

Whether you choose a private or public blockchain depends on the needs of your business, regulatory environment, and how you run your business. Private blockchains give you more control over speed, customization, and security, which makes them good for business use and industries that need to follow rules. Public blockchains are perfect for apps that need trust and a lot of people to be involved because they are open, decentralized, and can reach users across the world.

You might want to start with a smaller pilot project to try the solution you want to use before putting it into full use. Keep in mind that blockchain technology is always changing, and what is effective now may require changes as your business develops and technology progresses.

Whether you select a private or public blockchain, assure that it works with your long-term business plan. As blockchain technology continues to evolve, staying informed about upcoming trends is crucial. Learn about the key developments shaping the industry in "Top Blockchain Trends for 2025: What Businesses Need to Know."