Blockchain has potential applicability in many industries, from accounting to agriculture. It’s basically a distributed ledger, which records transactions between every user in the chain.
The single difference between public and private blockchain is related to who is allowed to participate in the network, execute the consensus protocol and maintain the distributed ledger.
There are various types of blockchain: some are open and public and some are private and only open to people who are given permission to use them.
A public blockchain is an open network. Anyone can download and use the protocol and read, write or participate in the network.
A public blockchain is distributed and decentralized. Transactions are recorded as blocks and linked together to form a chain of blocks. Each new block must be timestamped and validated by all the nodes connected to the network before it is written into the blockchain.
All transactions are public, and all computers or nodes are equal. This means a public blockchain is changeless: once verified, data cannot be altered.
The most popular or best-known public blockchains used for cryptocurrency are Bitcoin and Ethereum: open-source, smart contract blockchains.
A private blockchain is an invitation to the only network governed by a single entity.
Participants to the network require permission to read, write or audit the blockchain. There can be separate levels of access and information can be encrypted to protect commercial confidentiality.
Private blockchains allow organizations to use distributed ledger technology without making the data public.
But this means they lack a defining feature of blockchains: decentralization. Some critics claim private blockchains are not blockchains at all, but centralized databases that use distributed ledger technology.
Private blockchains are quicker, more efficient, and more cost-effective than public blockchains, which require a lot of time and energy to verify transactions.