With the rising popularity of cryptocurrency came the increased interest in blockchain technology. Organizations saw how Bitcoin and similar services utilized the unique network and began using it themselves.
While blockchain can have many advantages, the type of system used will change what benefits and challenges organizations see. Many people talk about public blockchain networks, but private networks can be a better choice for companies.
The main difference between the two types of blockchain systems is how they are governed. Public networks are controlled by a group of nodes, with no entry restrictions. Anyone can access or manage the networks.
Without complete authority, no single entity can add or edit a transaction. Every node on the network has to agree that the entry is valid for it to be added.
While public systems offer high levels of security, transparency, and anonymity, companies may want other features out of their blockchain system. They may want to consider using a private network instead.
Private blockchains are designed to complement existing business processes rather than reinvent them. Because they do not expose the record of transactions to every user, private blockchains offer more confidentiality.
With only a few nodes allowed to manage the network, entrants to the network require permission to read, write or audit the information. The various levels of access and encryption help ensure data security.
How Companies Can Benefit From Private Blockchains
Private blockchains offer companies more benefits than public networks. They are easily controlled with a clear governance structure, and the network authority can change protocol if necessary.
With fewer nodes on the system, it operates more efficiently. Additionally, companies can limit the number of users to avoid overloading the network.
Because of the higher levels of control and monitoring, companies can feel more secure with a private network. Users cannot be anonymous, and blockchain’s automatic verification allows the network authority to easily track who is doing what.
Blockchain technology can help modernize existing business processes. However, to receive the full benefits of blockchain, companies have to decide if a public or private blockchain would be better for them. Private networks offer more control and confidentiality, which helps companies protect their data and users.
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