The concept of blockchain was first proposed back in 2008 as the basis for the cryptocurrency Bitcoin. In 10 years, it has spread and gone beyond cryptocurrencies. Blockchain has attracted the interest of large companies and states. Today, blockchain is used in many areas of daily life. The technology is also being used in private projects.
A blockchain is a distributed database. It stores encrypted records with copies on each node. You can sell eth and study the Ethereum platform to get a better understanding of how things work. It is a technology that allows anyone to become part of it, store, make changes, verify transactions, and open or close new blocks.
Types of blockchain
Initially, the blockchain was a decentralized network where a community handled all issues. It has no priority node, and all participants are equal. This definition only applies to public blockchains. It serves as the basis for cryptocurrencies. But there is another network: the private one.
What is a public blockchain?
The network has two main types: public and private, also called open and closed.
The public (open) one is a decentralized network that anyone can join to record, update, and read data. All transactions are encrypted with keys and use the PoW or PoS (Proof of Work or Proof of Share) encryption protocols.
There is no supervisory authority, and even the developer does not have sufficient rights to make unauthorized changes or rewrite the code. The clearest example of a public blockchain is any known cryptocurrency.
What is a private blockchain?
A private blockchain is a private project with priority nodes that are centralized. It is often used by a company or business as an alternative to a database.
A private network is not available for public use. One can only become a node by obtaining its address and an invitation or permission. It is most often used by medical, legal, or financial institutions. It is designed to keep information private.
Each user has his own access rights with the ability to view or make entries and edit them. The rights can be allocated permanently or temporarily.
Sometimes it is difficult to know whether a blockchain is open or closed. In that case, it must be determined whether anyone can join the network, create records or access important data. A negative answer means that the project works with private technology.
The benefits and functionality of a private blockchain
Blockchain is a technology that differs significantly from conventional databases regarding functionality, capabilities, and security. Nevertheless, an open blockchain has one significant disadvantage: the inability to roll back a transaction. A closed blockchain, on the other hand, does not have this problem. All transactions are regulated by one or more nodes and can be changed.
A private blockchain has other advantages:
- Transaction costs are low;
- excellent customizability (for example, you can change the TPS—the number of transactions per second;
- control of the entire system by a priority node (in some cases, this is necessary);
- No PoW (proof of work) is required, although it often works with this protocol to provide better protection.
A closed network has more capabilities and functionality. It can have its own token, wallet, exchange, all available for using a certain circle of people. However, the cryptocurrency of such a network cannot be very valuable. Nevertheless, you can store such coins on a trastra card.
How to make a private blockchain?
Many companies working with databases have begun to move to their own private networks. This has contributed to the emergence of organizations writing software code and developing private blockchains. In 2018, there are two ways to open a private network: turning to such a specialized organization or doing it yourself. The second method is suitable if you have programming skills (Python, C++).
A private blockchain is a way for every small company or organization to run its business transparently, with full control of the business. Private blockchain is just gaining popularity, but more and more states are switching to it, which means that the future is in it!
