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Public blockchains can be used by anyone. Users can participate in their consensus mechanisms provided they meet certain requirements. Bitcoin, Ethereum, and BNB Chain are all examples of public blockchains that tend to be transparent and decentralized.
Controlled blockchains are available by invitation only. They are usually used in private business and are designed for specific tasks. These blockchains are governed by a small group of validators who make the majority of decisions on the network. Also, in controlled blockchains, transparency may be limited, but network update time and scalability are often at a higher level.
Introduction
Have you ever wondered what type of blockchain you use, beyond the division into Proof of Work (PoW) and Proof of Stake (PoS) mechanisms? All blockchains can be divided into public and controlled. Understanding their differences will help you learn more about the characteristics and flexibility of a particular blockchain.
What are permissioned and public blockchains?
There are several types of blockchain. Among other things, they can be divided into controlled and public. Most likely, you have already come across public projects that anyone can use and manage. In this case, any user can also participate in validation. Examples of such blockchains are Bitcoin, BNB Chain and Ethereum.
Controlled blockchains are accessible only with permission. Such blockchains are commonly used by private organizations and businesses. For example, a company can use the Hyperledger Fabric framework to create a controlled blockchain within its supply chain. To participate in such a network, you will need an invitation from the administrator.
A Brief History of Blockchain
Blockchain technology was described by Satoshi Nakamoto and in the technical documentation for Bitcoin. It was a public blockchain in which independent users reach consensus. Subsequently, the Bitcoin model gave rise to many similar blockchains. Bitcoin and its successors are public, public blockchains.
However, blockchain is also suitable for private use. Its immutability, transparency (in some aspects), and security have motivated developers to create access-controlled blockchains.
This is how controlled frameworks or custom blockchains emerged for use by third parties. Hyperledger Fabric was one such initiative. Private business entities also provide Quorum, MultiChain and Ethereum Geth.
Main characteristics
The characteristics below may not necessarily apply to every public or permissioned blockchain. However, most of them correspond to the archetypes presented.
Advantages and disadvantages
Public Blockchains: Benefits
Potential for decentralization. Not every public blockchain is decentralized, but they generally have the potential to be highly decentralized. Anyone can participate in the consensus mechanism or use the public network if they have the resources to do so.
Group consensus. Participants can influence changes in the network. Validators and users participate in voting, and unpopular changes can lead to forks.
Easy access. Any user can create a wallet and join a public network, as such networks are completely open and have a relatively low barrier to entry.
Public Blockchains: Disadvantages
Scalability is limited. A public blockchain must handle large user bases and high volumes of traffic. But for changes to improve scalability to be accepted, they must be approved by the community.
Attackers. Since anyone can join a public blockchain, there is always a risk of attackers in such networks.
Excessive transparency. Much of the information on a public blockchain can be viewed by anyone, which can lead to potential privacy and security issues.
Controlled Blockchains: Benefits
Scalability. A controlled blockchain is usually managed by an organization that has some control over the validators. Accordingly, changes are quite easy to implement.
Easy setup. A controlled blockchain is created for specific tasks and effectively performs its functions. If the tasks change, the blockchain can be easily reconfigured.
Controlled degree of transparency. An access-controlled blockchain operator can choose the appropriate level of transparency for the network depending on its use case.
Entry is by invitation only. Controlling who can and cannot participate in the blockchain.
Controlled Blockchains: Disadvantages
Centralization. The network is usually controlled by a central authority or a small group of validators chosen by the owner of the blockchain. This means that not all stakeholders are involved in decision making.
Vulnerability to attacks. Regular blockchains typically have fewer validators, so their consensus mechanism is more vulnerable to attack.
Risk of censorship. There may be a risk of censorship due to collusion or updates made by the blockchain operator. If enough participants agree, the information on the blockchain can be changed.
Which blockchain to choose
The answer to this question is quite simple. If you want to create a service for everyone, you need a public blockchain. It does not necessarily have to follow a standard set of principles and goals. For example, your blockchain can be centralized and public at the same time. You can also add more privacy elements if you wish.
If you want to use blockchain privately, for example, for business or government, a controlled blockchain is more suitable for you. Again, you can tailor its features to suit your needs: for example, it can be completely transparent and open to public viewing.
In conclusion
While public blockchains are more common among cryptocurrency traders and investors, it is useful to understand how they differ from controlled ones. The distributed ledger we are familiar with corresponds to the transparent, public and decentralized model of cryptocurrencies. However, these parameters may change: many private enterprises use controlled blockchains that do not meet the generally accepted characteristics of such blockchains.
Recommended reading
Complete guide. What is blockchain technology?
Public Blockchain
How does blockchain work?
