Blockchain technology is a super hot topic right now - with every business from big banks through to small businesses wondering how they can leverage this new technology to help get ahead in the tech stakes and one-up their competition. But what exactly is blockchain, other than a method of providing immutable proof of a transaction over a network?
To delve a little deeper into the specifics of blockchain, particularly as it relates to business-purposes, we need to outline the differences between a public blockchain and a private blockchain.
What is a blockchain?
A blockchain is a digital, distributed ledger than lists related transactions been parties, in order, since the beginning of the transaction types’ history. Due to the way that each new transaction is added, this history cannot be changed.
It might amuse you to liken it to an accounts ledger, carved in hulking stone.
Except this ledger exists on in the digital form, across a number of computers keeping track.
Blockchain’s typical use is cryptocurrency - which allows holders of digital coins to conduct near-instant transactions, anywhere in the world, through the power of the internet. However cryptocurrency is only just the beginning of blockchain’s usefulness.
Blockchains may also be used to:
- Provide a record of movements of stock across a logistics network
- Create binding transfer of goods contracts between two or more parties
- Automate insurance payouts
- Plus many more applications
These types of applications are generally what’s known as smart contracts. If these smart contracts are deployed on the Ethereum blockchain, they’re known as dApps.
What are public blockchains?
Public blockchains are those like the Bitcoin blockchain, where anyone can become a participant in the network: either by doing transactions, or by starting their own node of the blockchain, and keeping track of the distributed ledger. With these blockchains, it means that all transaction details are public.
For instance, all Bitcoin transactions are public. You can see the sender’s wallet address, the amount of the transfer, the recipient’s wallet address, and the transaction time. In fact, should you wish, you could look up every Bitcoin transaction ever made to date.
What are private blockchains?
Obviously, for privacy purposes, businesses or individuals may not want the details of a transaction disclosed for anyone to look up, forever, regardless of whether the two parties engaged in the transaction manage to be anonymised by a number or single-use user name in the blockchain.
This is where private blockchains come into play.
Private blockchains are invite-only affairs - only approved machines can join in and take part in the ledger process, and only approved transaction types allowed on the chain. The blockchain is run by a singular institution.
This makes private blockchains the best choice for businesses who want to keep transactions and transaction history private, as well as determine which types of transactions are allowed via the blockchain.
How can I use a private blockchain?
There are a few different ways in which you can implement your own private blockchain and start developing private blockchain apps that are only available to your specified network.
You can either:
- Fork a public blockchain project, like Ethereum or Bitcoin, and alter the code to make it your own private blockchain
- Use a blockchain framework to build your own, private, unique blockchain
- Or use a platform for private blockchains, which may be easier for a solutions with lowered technical barrier
Each of these solutions has its strengths and weaknesses; evaluating your options thoroughly before deciding on which one to use it key.
When to choose a public blockchain
There are plenty of instances where you would want to use a private blockchain to develop apps, whether you’re a business or an individual. The biggest reason to use a public blockchain is instant transparency in transactions.
For instance, if a government department wanted to provide transparency in where funds were being allocated, they could commit all outgoings to a blockchain.
Public blockchains and private blockchains are the same technology - just with a different focus on each one. Public blockchains value transparency for all across transactions, whereas private blockchain value privacy of transactions to prevent misuse of information.
If you are interested in getting the ball rolling with a blockchain project and you’re on the hunt for developers to help out, then make sure to reach out. At CodeFirst, we can help hone blockchain application ideas and put those plans into action - and code.