Glossary

Private Blockchain

Moderate

A private blockchain is a type of blockchain in which only a single organization has authority over the network.

What Is a Private Blockchain?

A private blockchain is a type of blockchain in which only a single organization has authority over the network. This implies that it is not open to anyone from the public to join. Existing private blockchain solutions all implement some form of authorization system to identify who is accessing the platform. Private blockchain solutions and platforms are typically developed for use in the internal networking system of an enterprise. The network model relies on trust and only the employees within a specific firm are able to be part of it.
Unlike a public blockchain, a private blockchain is not, therefore, decentralized. However, aspects of the system may in themselves be decentralized or distributed in their structure. Private blockchain platforms often involve regulations that public platforms do not have; for example, all of the nodes may need to abide by certain rules in order to ensure a proper workflow.

The upside of private blockchains is their high level of efficiency. This is in contrast to public blockchains, in which a large number of people use a lot of resources that the platform may not be able to support.

Another benefit is the higher level of privacy and discretion, due to the fact that fewer people have access to it.

Private blockchain solutions are useful for enterprises that need sophisticated and powerful technologies to back up their processes and facilitate their workflows. Implementation within the internal system of an enterprise thus remains the best use case for a private blockchain.

Private blockchain solutions are also known to be quite stable, as only a handful of people can initiate transactions, implying fewer delays and lower congestion.