Private Blockchains

• Michael Willson
• February 23, 2025

What are Private Blockchains?

A private blockchain is a permissioned blockchain. Private blockchains function based on access restrictions that limit individuals who may interact in the network.

In other words, it is a permissioned and restrictive blockchain that operates in a closed network. These are used mainly within an organization where only particular members are participants of a Blockchain network. These are best suited for enterprises and businesses that want to use Blockchain only for internal uses. The best part is that no one can enter this type of network without proper authentication. 

Recently such Blockchains have gained a lot of importance as they help in safeguarding companies’ sensitive information. If you want to learn more and become a Certified Blockchain Expert, get enrolled in Blockchain Council now!

How They Differ From Public Blockchains?

There has always been a battle between both types of Blockchains. Let’s briefly explain the differences between the two.  

Public blockchains enable anyone to write to the blockchain, and transactions are published to everyone on the blockchain.

On the other hand, private blockchains enable users to be sure who’s participating, and organization controls write access to the Blockchain. Thus, private Blockchain maintains complete privacy by restricting unauthorized users.

Another difference is that public Blockchains are completely decentralized, whereas private ones are partially decentralized.

To get a more clear picture, let’s distinguish both in a tabular form.

Features	Public	Private
Accessibility	Anyone	Single Person/ Central Incharge
Who can join?	Anyone	Permissioned and known identities
Consensus Mechanism	PoS/PoW	Voting or multi-party consensus algorithm
Transaction Speed	Slow	Lighter & Faster
Decentralization	Completed Decentralized	Less Decentralized

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Why Are They Gaining Momentum?

• Fees are lower

This network allows you to transact with the lowest possible fees, and most importantly, you may not even need a fee to start with most of the time.

• Efficient 

Such Blockchains are more efficient, and this is because they have fewer participants, meaning they can move faster.

• No Involvement of Unauthorized Parties

Private Blockchain does not offer any scope for any unauthorized/third party to enter the network, making it more secure and reliable.

Other benefits of such Blockchains are that they have higher transactions per second (TPS) and are highly scalable. 

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Use-Cases Where Private Blockchains are Applied

• Real Estate

The real estate market is unquestionably stressful due to fragmented operations, criminal activities, monotonous paperwork, money expenses, and the possibility of fraud. 

Private blockchain companies can help real estate sectors by offering people ownership, securing payment, and eliminating any underlying criminal problems.

• Insurance 

Insurance sectors deal with complicated agreement issues, deceitful claims activity, third-party transactions, and heavy data handling. Private Blockchains offer faster and better access that leads to smoother interaction between insurers and their customers. Moreover, technology can help automate the entire insurance claim process, saving the inconvenience of waiting in line.

• Healthcare

The healthcare sector suffers from fragmented data, delayed communications between the participating parties, and a lack of interoperability. Private Blockchain companies can help maintain patients’ confidentiality and offer doctors access with patients’ consent. Moreover, Blockchain technology can be efficient for assuring integrity in the drug supply chain, including tracking and tracing and provenance concepts.

Concluding Lines 

Private Blockchains such as Ethereum, Hyperledger, Corda, and Quorum are best suited for enterprises that want to take full advantage of Blockchain technology but don’t want to expose their critical data. 

If building on a private blockchain sounds interesting, you can enrol in the Blockchain Council and become a Certified Blockchain Expert. 

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