Demystifying Private Blockchains: Enhancing Security and Efficiency | The Payments Association (2024)

by Savan Padaliya, Senior Fullstack Blockchain Developer at VE3

Blockchain is a peer-to-peer distributed ledger that is cryptographically secured, append-only, immutable & updatable only via consensus or agreement among peers. There are two types of blockchain: public blockchain and private blockchain.

In a public blockchain, validators and developers are welcome to join as validators or develop a product and deliver it on the public blockchain. Which will be managed by public validators, and decisions will be taken on a consensus basis. Ethereum and Bitcoin are the most used and known public blockchain to date.

In a private blockchain, some groups of people can access this type of blockchain with permission. There will be limited numbers of validators who can maintain this blockchain with restriction and need permission to register as validators. Only limited applications will be hosted in private blockchain as it has predefined use cases with niche products hosted.

As we discussed, private blockchain provides enterprise solutions and is used widely forhealthcareand supply chain industries. As these solutions require managing data among trusted parties and want a decentralised solution for transparency, a private blockchain is the best fit.

Supply Chain is important for our daily life. There are local, national, and international trades all over the world to meet the requirements of consumers. To manage authenticity and check where it was built and which materials were used from which corner of the world, private blockchain helps us with this.

An Italian cheese maker uses blockchain-enabled microchips to track their product and see material information used in the process, such as which grade milk was used from which vendor was supplied. These microchips also help in finding the authenticity of the product. This allows consumers to find authentic products as many replicated products are available.

Healthcare is another one of the best real-time use cases for private blockchain. Organisations maintain patient records on a decentralised ledger between permissioned organisations. One can’t expose patients’ records publicly in health care, so private blockchain is the best fit.

While there are numerous advantages of a private blockchain, there will be many more challenges as well. One of the biggest challenges is centralisation, as there are limited permissioned validators that control the network. This will raise a question about the decentralisation that blockchain technology underpins, and the closed nature of private blockchain may limit collaborations and innovations that public blockchain networks encourage.

Organisations must carefully assess consensus mechanisms, control, scalability, network design, governance, collaborations, data privacy, and more. Collaborative efforts among participants are crucial in shaping the network’s success, functionality, and alignment with organisational requirements.

Private blockchains can be appealing solutions to enterprises seeking to join hands with the power ofblockchain technologywhile not taking control over data privacy and operations lightly. These networks offer enhanced faster transactions, security, and a customisable governance model that makes it more suitable for various solutions.

The evolution of private blockchains is on a trajectory of continuous growth and innovation. Astechnologyevolves continuously, we can see further improvisation, advancements, and innovation in private blockchains. A private blockchain can reshapedigital transformationin the supply chain, identity management, or optimising financial transactions. By leveraging the strengths ofblockchain technologywhile addressing its limitations, private blockchains are paving the way for a more secure, efficient, and interconnected future.

VE3 is a pioneering player in the blockchain arena and has been at the forefront of shaping the trajectory of private blockchains. Through our innovativesolutionsand commitment to advancing the technology, we actively participate in the continuousgrowthand refinement of private blockchain ecosystems. We offer & capabilities to manage your blockchain networks securely, from node deployment and management to smart contract development and deployment. Leverage our extensive network support with our decentralized network infrastructure that eliminates the need for a server or central authority, enabling users to send transactions over a network connected via blockchain. We provide a platform where users can build applications that are secure, transparent, and tamper-proof, making it suitable for a variety of use cases.

Article by VE3

PrevPreviousWeb3: What is it and how will it impact the payments sector

NextThe Reliability Revolution: Transforming Operations Through Site Reliability EngineeringNext