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Know More About Private Blockchain

Know More About Private Blockchain

Private blockchain are also known as Permissioned blockchain. They are totally opposite of public blockchains. Unlike public blockchain, one cant read, write or audit the blockchain anytime unless the one has the permission to do so.

The private blockchain is divided into three primary levels.

  • Fully Public : As in public blockchain, anyone can access the blockchain and contribute as a user to the working of the network.
  • Consortium : It has some control over the consensus like who can be a part of the consensus network. This means, specific nodes control the full network and the transactions that are taking place. Through this blockchain, there is certain level of access provided to the user to read and write in the blockchain.
  • Fully Private : This is a fully centralized database and one entity has the full control over the network. This a very different concept then of Bitcoin which actually makes it different.

They give the whole control to the owners, they also enjoy a high level of flexibility and can modify the rules as they fit.The rules can be adjusted as they see fit to, including but not limited to: Different permission levels, The level of public exposure, Who can be members, How often to implement updates,Run blockchain as a stand-alone or integrate into the existing system.

As the whole control lies with the owners, the owner can either be an individual or an enterprise, they can override any command on the blockchain if needed. That is the main reason you cannot call the private blockchain as decentralized. It can rather be called distributed ledger or database which uses cryptography to secure it.

In comparison to public blockchain, private blockchain is much cheaper and one does not have to spend huge amount of energy, time and money to reach the consensus.

In this type of blockchain there are limitations such as : Not everyone can run a full node and start mining. Not everyone can make transactions on the chain. Not everyone can review/audit the blockchain in a Blockchain explorer.

Wherein public blockchain does not require trust and operates in a trustless environment as a default setting. On the other hand private blockchain requires high level of trust among-st their members. This later helps to choose among-st the consensus protocols and benefit from the greater blockchain speeds.

An example of where this private blockchain be used is Healthcare. Private blockchain ensures the data is immutable but available for doctors and their patients only.

There is a special kind of private blockchain, which is called “Consortium”. It supports the enterprises an option to share the data with another party. Some of them have already recognized the potential and the value of these blockchains and utilize this blockchain type to share advertising data with each other. Some of them are Media corporations Comcast, Disney, NBCUniversal, and others.

Use Cases

  • Private blockchain can be used to serve in many sectors of which few are mentioned.
    Settlement layer for inter-bank which deal in currencies and securities. (with restricted access)
  • “Balance Sheet” for corporations that keep track of sensitive data like security authorizations and financial records without any one department being in authoritative control of the records.
  • For the issue of sales coupons, gift cards, loyalty points etc. a platform can be used.
    For private equity, debt, and other liquid agreements, a private tracking tool can be made.


  • Rule Changing

As we have discussed before, in a private blockchain the rules can be modified or changed at any point of time. As the private blockchain is not decentralized, the changes to modify the blockchain can be made.

  • Cheaper Transactions

Since the transactions are to be verified by few nodes that can be trusted to have a really high processing power and there is no need to be verified by thousands of devices, that is the reasons the that makes the transactions cheaper.

  • Privacy

By now we know that private blockchain stands for privacy. Its feature of asking for permission to enter a blockchain to read, write or audit the blockchain tells us that it follows the term privacy. It helps to keep the data known to only the users who have acquired the permission.

  • Well-Connected Nodes

Private blockchain has the nodes that can be trusted and well connected. If there are any faults in the blockchain, they can be fixed by manual intervention, allowing the use of consensus algorithms which offer finality after much shorter block times.

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