Due to the transparency of a blockchain and the need to involve a community of computers in order to bring the blockchain to consensus, companies and governments have introduced the idea of private blockchains. This section will explore the differences between public and private blockchains and what types of problems each are suited to solve.

Differences between public vs. private blockchains boil down to the participants of the network. Public blockchains allow anyone to take part in block creation as long as they adhere to the network’s protocol. Private blockchains only grant the power of block creation to a set number of participants. Public blockchains maintain protocol specification and decentralization with consensus algorithms like proof of work, while private blockchains could have a single entity responsible for syncing the blockchain. When specific nodes are given the authority for the creation of new blocks, this is consensus mechanism is called proof of authority.

We see that enterprises are adopting the idea of private blockchains more quickly than they are public blockchains. Private blockchains alleviate concerns that businesses have around making their data transparent and reliant on a community of incentivized individuals to create new blocks in the chain. In order for a blockchain to be able to handle the requirements of their business, they are more comfortable with a private blockchain where the business controls the nodes submitting transactions and creating new blocks.f you are interested in deeper technical differences you can read more on Vitalik Buterin's personal blog.

If you would like to read more on public and private blockchains, we recommend reading Public and Private Blockchains: Enemies or Allies? Why the Enterprise Ethereum Alliance will prove the latter by R. Tyler Smith, and we found the following quote quite relevant:

"One thing that blockchains do extremely well is allow entities who do not trust one another to collaborate in a meaningful way. This is one reason people see so much potential in this immature technology".

So it stands to reason that eventually we will begin to see large scale deployments of the technology attempting to do exactly that, connect groups such as businesses, governments, churches, and the like. Public blockchains can already make this claim, however they currently fall short of particular requirements such as privacy and scalability. Private blockchains can provide solutions for these short falls and enable greater privacy and transaction throughput because all the nodes are strictly controlled. However, there is a trade-off, they do so at the cost of their ability to connect any and all to the network.

While it may seem like private blockchains are the better choice between the two, public blockchains have many benefits. Because of the large volume of participants on the public blockchain, participants are often protected from engaging in activities on the blockchain that they have no authority to do. Public blockchains are also open and benefit from gaining a variety of participants. We believe that adding more participants adds more value to the public blockchain, as each participant increases opportunities for peer-to-peer interactions and innovations to arise. Bitcoin and Ethereum both have a public blockchain (referred to as Bitcoin mainnet and Ethereum mainnet) that anyone can participate in.

With a consortium blockchain, the consensus mechanisms of this blockchain are controlled by a limited set of nodes. The right to access the blockchain can either be restricted to the predetermined set of nodes or to the public (or to a mix of these rights). Considering these possibilities, consortium blockchains can be thought of as partially decentralized.

While public blockchains are typically advertised as completely decentralized, private blockchains have more tightly controlled permissions while still maintaining the decentralization principles that classic blockchains provide users with.

Given the nature of a private blockchain, attacks would come from validators that are known to the network, since only validators with permission to participate are able to. Therefore, there is a reduced reliance on crypto economics to create incentives and disincentives for validators, as they were specifically granted access to the network. Private blockchains also have the capability to blacklist certain users. Additionally, the predetermined controllers of the network can very easily make changes to the blockchain if needed. Due to the smaller number of contributors to the network, transactions are often not as energy intensive, process faster, and faults within the network are more easily rectified. The tradeoff is the lack of transparency and decentralization