There are numerous ways to build blockchain networks as each type is made to serve a particular purpose and applicability.
Blockchain protocols can be public, private, accessed with user permissions, or built by a consortium.
Public Blockchain Networks
Public blockchains are typically decentralized and accessible to anyone who wants to join and participate, such as Bitcoin. Limitations to public blockchains can involve a lower level of anonymity, average security, and substantial computational costs.
Private Blockchain Networks
A specific organization generally governs a private blockchain network that can control, can participate, execute changes within the network, and administer the recording of data in the digital ledger. Private blockchains are used by private businesses.
Permissioned Blockchain Networks
While applicable to private blockchains, permission attributes can also be adopted by public blockchains, meaning that there are specific restrictions on means of participation.
For instance, public exchanges like Coinbase or Binance, must abide by local legislation, depending on the country they operate.
Therefore, they have specific requirements and restrictions with respect to users from a particular country, as well as other aspects such as Know Your Customer (KYC), where users must prove their identity in order to benefit from more various functionalities of a public blockchain.
Consortium Blockchain Networks
Consortium blockchains consist of multiple organizations sharing the responsibilities of maintaining the network. These pre-selected organizations determine who may submit transactions or access the data. A consortium blockchain is ideal for business when all participants need to be limited with permissions and have a shared responsibility for the blockchain.
Private Blockchain vs. Public Blockchain
Do you know what are the main differences between a Public and a Private #Blockchain?
— Energi (@energi) April 9, 2022
Can you name any other differences? pic.twitter.com/X4eFIATHq0
A public blockchain is also known as an open or permissionless blockchain. Anybody can join the network freely and establish a node. Because of its open nature, these blockchains must be secured with cryptography and a consensus system like proof of work (PoW). However, newer cryptocurrencies have developed various blockchain protocols, such as Proof of Stake (PoS), Delegated Proof of Stake (DPoS), or the Byzantine Fault Tolerance (BFT), to name a few.
A private or permissioned blockchain, on the other hand, requires each node to be approved before joining. Because nodes are considered to be trusted, the layers of security do not need to be as robust.
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