As I mentioned in one of my episodes on Web 3.0, not all blockchains are public. There are also private and authorization blockchains (to fully understand the nuance between public, private and authorized blockchains, find my episode by clicking here). In this article, as you can imagine, we will focus on a private blockchain.
The private blockchain
To put it simply and quickly, players operating on a private blockchain don’t all have the same rights. Unlike a public solution, only individuals who have received an authentic verified invitation from an administrator will be able to take up their duties.
In this sense, validation by the network operators (which are already in place) is required. These operators can be the creators of the blockchain or entities already established on the solution. These actors, thanks to the private blockchain, can control access to it and have privileged rights such as modifying, authorizing or rejecting certain transactions.
- The network is only accessible to a limited number of people and new entrants must be validated in advance by the network operators, in other words, by a central decision-making body.
- Data accessibility can vary from node to node, or from individual to individual depending on the access rights defined by the operators.
Concretely, in the context of the private blockchain, the quality of authority resurfaces but with blockchain technology. Not everyone can participate, transact and authenticate changes made on this type of blockchain.
Difference between public blockchain and private blockchain
The most widely used blockchain framework at an enterprise level is the Hyperledger Fabric solution.
IBM’s solution was developed in 2015 and is now available on all clouds: Google Cloud, Amazon’s AWS, Oracle and SAP. Its adoption has been massive thanks to the modular architecture enabled by the solution and which fits a wide range of use cases. Fabric allows organizations to keep their information confidential by releasing only the data they wish to share with certain blockchain stakeholders.
Although the blockchain is private, Hyperledger Fabric is open source, which means it allows all developers to build on what they have already created, making the solution scalable and adaptable. This modularity is one of the most valuable features from a business point of view. In addition, the IBM solution implements the proof of concept (Theoretical verification in the Anglo-Saxon version) which allows companies to test the technology in order to verify that it is profitable and that it works as expected in the company’s operations before subscribing to the solutions offered by IBM.
Hyperledger Fabric offers a rich authorization system that allows organizations to efficiently allocate read and write access to transactions on the blockchain network at will. Authorized parties are then offered public and private keys so that they can interact with the blockchain only when they are authorized to do so.
In concrete terms, it is possible, for example, to authorize only some members of a supply chain to have access to the visibility of transactions.
In the case of the supply chain, with the Fabric network, companies with authentication to access the blockchain can access the data of previous transactions automatically and transparently (not negligible time savings). This also makes it possible to limit interference between actors and to eliminate counterfeiting or attempted fraud among stakeholders. Real-time updates on product manufacturing and shipping are sent to Fabric’s solution. A simple, fast and effective follow-up.
The advantages granted by Fabric:
Free access: The solution is open source, i.e. accessible to the public, and is made up of an active community of developers. All community members can view, edit and contribute to the code as they see fit.
Privacy: Unlike a public blockchain, where all operators hold the same information and where none of it can be censored, a private blockchain can provide a level of access control that allows members, who are all clearly identified here, to limit disclosure of private information to other entities so that it can only be viewed by related parties. An essential feature in some industries such as banking and insurance, for example, where customer data must remain private.
Performance: A public blockchain, such as Bitcoin, requires validation of transaction blocks by all network operators around the world. In the context of a private blockchain, such as the Hyperledger Fabric structure, the number of operators is much smaller, which greatly improves the transaction speed and results in better performance.
Finally, we easily understand that companies are turning to this type of structure to develop businesses using blockchain technologies. Modular, confidential, controllable and more efficient solutions than public blockchains. Controlling new entrants, managing access controls, managing disclosed information or even forcing transactions is now possible, unlike a blockchain like Bitcoin. The slowness and cost of Bitcoin’s operations are the price of its decentralization, security and transparency. Although the stakes are different between public and private blockchains, if we put ourselves in the shoes of a company, where the management of private data and the cost of operations are determining factors to ensure business continuity, to take an interest in private blockchains , compared to public blockchains, is easily understood, at least for now.
The second most used blockchain by companies is this time a public blockchain: Ethereum. We will very quickly analyze the facets of the platform which is in vogue for both crypto-investors and the business world.