Private Blockchain

A private blockchain is a type of blockchain mainly used by enterprises where access to it is restricted to only employees or invited guest users.

These types of blockchains are not open to the public, and they are usually controlled by a company that has complete control over the network.

The network owner can do whatever it wants to the data on the blockchain, including editing or deleting it.

Private blockchains still use cryptography to secure the blockchain, but they’re less focused on identity protection and transparency, as the blockchain already controls who has access to it.

Private blockchains are still concerned with running a distributed ledge that can’t be altered, as it’s used across different sensitive business units including payroll, accounting, and logistics where keeping data secure and accurate is important.

Due to their centralized nature, private blockchains inherently are more exposed to security threats and breaches.

Private blockchains generally have fewer nodes managing security on the blockchain than more popular and heavily used chains, as they cater to a smaller audience of users. This reduces not only the number of miners or validators available to validate transactions but also means there are fewer nodes transmitting, receiving, and verifying network communications.

Being that the network is owned and operated usually by an enterprise, private blockchains are not decentralized. This creates potential issues for the network, where malfunctions with the centralized nodes

Related Terms

Full Node

A type of node that participates in a blockchain network, performing some function for the network, like securing the network or validating transaction data. A full node stores a complete copy of the blockchain data. Information about every block and the recorded transactions within each block is available in the full copy of the blockchain.

Distributed Ledger Technology

A database that is used to record transactions across a network of devices, usually computers or servers. “Distributed” refers to how the nodes (or computers or servers) of the network are designed architecturally, and where they are located geographically. “Ledger” in this context, and traditionally, simply refers to a centralized database that is used to store financial records, such as a company’s financials, liabilities, revenues, owner’s equity, and other financial information. Now, combine the two ideas and you have a ledger that is distributed across many devices, instead of one device, in many different locations, possibly around the world. Even if one of those locations disappears, or a computer or server goes down, the ledger is still intact, still secure, and the data stored within the ledger can still be processed, validated, and authenticated to.

Blockchain

Blockchain networks are at the heart of cryptocurrencies. A blockchain is a database, or digital ledger, made up of a series of interconnected blocks containing transaction data created on the network over some period of time. Each block in a blockchain also contains a unique identifier unlike any other block in the chain called a hash. Think of the hash as a fingerprint identifying that block for all other blocks. Distributed ledger technology (DLT) is another name frequently used in relation to blockchains.

Polkadot (DOT)

Polkadot (DOT) is an open-source blockchain protocol for cryptocurrencies, dubbed the “blockchain of blockchains”, that allows different, incompatible networks to communicate with each other and share data, using a multichain design.

Public Blockchain

A network that is globally accessible by anyone anywhere in the world. Another name for a public blockchain is a permissionless blockchain. Bitcoin and Ethereum are the most popular decentralized public blockchains in the world.