Private blockchains are currently very popular with businesses. Anxious to surf the blockchain fashion, many firms are deploying their own closed infrastructures. Despite undeniable advantages, these solutions suffer from several disadvantages compared to public networks like Bitcoin. Will private blockchains meet the same fate as the famous Minitel?
Two distinct categories of blockchains
Blockchain , the technology for storing and transferring information behind the Bitcoin Investor, allows information to be recorded in an ultra-secure manner in a decentralized ledger. Still too little known, the blockchain promises to upset a host of different sectors in the years to come, including online voting , the Art market , insurance, finance and even the agrifood industry .
Currently, there are basically two types of blockchains : private blockchains and public blockchains . They obviously share many common points: peer to peer operation, better data traceability or even data immutability. On the other hand, they are distinguished by their level of decentralization .
Public blockchains are indeed accessible to anybody. Concretely, anyone can participate in the network set up. This is particularly the case of Bitcoin, which is also the first public blockchain in history. Anyone with a computer is theoretically able to mine BTC.
This is not the case with private blockchains. These blockchains are reserved for a handful of users . Members with access to the register are sorted by a central authority. De facto, the mining of private blockchains is much more centralized than that of other blockchains. Each private blockchain is managed by an authority that concentrates most of the power on the network. In this case, the register is not accessible to the public.
Private blockchains are very popular with businesses
Given their closed nature, private blockchains are mainly popular with businesses and governments . Closed blockchains allow these entities to take advantage of the benefits of blockchain technology without jeopardizing the privacy of their data. According to a study by Forrester Consulting published in November 2019 , most companies still favor private blockchains over public solutions, such as Bitcoin, Ethereum or Litecoin.
“Two-thirds of the companies surveyed chose to create their own network rather than participate in networks that already exist,” says Forrester Consulting.
Many groups are now pushing blockchain-based technologies. This is particularly the case of the JP Morgan bank (which deploys a licensed version of the Ethereum, Quorum blockchain), Accentur, R3 CEV (Corda), Microsoft, Alibaba or even IBM.
Moreover, the interest of large groups has given rise to a real war of patents linked to the blockchain . By filing patents, companies are seeking to seize ownership of blockchain technology, which is essentially open source.
The advantages of a private blockchain
Private blockchains are not lacking in strengths compared to public solutions. First of all, private networks are faster and more efficient than publicly accessible iterations. These solutions make it possible to obtain a faster consensus , because there are far fewer authorized members, explain Dimitri Nitchoun (Business Developer & Legal Counsel) and Bilal El Alamy (CEO of Equisafe, a Parisian fintech) in a post on Medium. . Mathematically, a private blockchain always allows faster transactions.
„The implementation of a private blockchain means that efficiency is your main objective, not decentralization“, declared Brian Forde, lecturer specializing in blockchain at MIT and former adviser in new technologies at the House. -White in an interview in 2018.
Private solutions are thus better protected against the congestion problem that affects many public blockchains. This phenomenon occurs when the network is overloaded with transactions. Each transaction then takes an increasingly long time to confirm. This is currently happening on the Ethereum blockchain. As the price of Ether skyrockets, the Ethereum network becomes congested, leading to inflation in transaction fees.