Private Blockchains

Blockchain technology went mainstream after the launch of Bitcoin in 2018. It has been gaining traction in various industries, especially in finance, healthcare, and supply chain management.In this article, I take a deep dive into private blockchains better known as permissioned ledger technology and explore the numerous use cases for this revolutionary technology that is changing the way we conduct business.

A private blockchain is a type of blockchain network that restricts access to its participants. Unlike public blockchains such as Bitcoin, Ethereum and Solana, private blockchains are not open to the public and are typically operated by private companies or organizations. The operators of the blockchains dictate the consensus algorithm that the private blockchain uses and? restrict who can access the network, and if they can be able to just view, or create data on the blockchain.

Features of Private Blockchains.

• It is private? and only a few individuals have access to the network's nodes.
• They are immutable.
• They are not decentralized.
• No outside participation allowed
• Transaction speeds are fast since they are not dependent on external validators.
• Low transaction cost unlike public blockchains.

Advantages of Private Permissioned Blockchains.

Privacy: One of the main advantages of private blockchains is the ability to maintain the privacy of data and transactions. As the network is restricted to a set of participants, sensitive information can be stored securely without the risk of it being disclosed to unauthorized parties.

Scalability: Private blockchains are not subject to the scalability issues that public blockchains face, such as network congestion and high transaction fees. This is because private blockchains are usually operated by a limited number of participants, allowing for faster and more efficient processing of transactions.

Consensus Mechanism: Private blockchains can implement custom consensus mechanisms that are specific to the needs of the consortium. This allows for a more efficient and secure validation of transactions, compared to public blockchains that mainly use proof-of-work or proof-of-stake algorithms.

Robust Network regulations: Due to the controlled nature of private blockchains, It is highly improbable that any illegal activities can happen on the private blockchains.

High transaction speed: Transaction speeds for private blockchains are faster than normal blockchains, this is because the blockchain trilemma does not apply for private blockchains and decentralization has been sacrificed so the speeds are faster and scalable.

Disadvantages of Private Permissioned Blockchains.

Centralization: As private blockchains are typically operated by private organizations, they are centralized, which is something that we avoid in blockchain and Web3 space.

Limited Accessibility: Private blockchains are not open to the public and restrict access to their participants. This can limit the potential for innovation and collaboration within the network.

Security Concerns: Since very few nodes are available as node validators, It is easy for hackers to gain control of the network,the 51% attack,which might lead to double spend or data manipulation in the blockchain.

Cost: The cost of setting up and operating a private blockchain network can be high, especially for small organizations.

Private Blockchain Platforms Providers.

1.0 Enterprise Ethereum.

This is an Ethereum wing that helps organizations set up their private blockchains based on Ethereum technology, the Enterprise Ethereum Alliance (EEA) is the driving force behind this . It enables organizations to adopt and use Ethereum technology in their daily business operations.

Some of the members of the EEA include Accenture, Banco Santander, BlockApps, BNY Mellon, CME Group, ConsenSys, IC3, Intel, J.P. Morgan and Microsoft.

Enterprise Ethereum modifies already existing Ethereum clients according to the needs of the company. Essentially private blockchains on Ethereum Enterprise are separate blockchains anchored to Ethereum mainnet but executing transactions off-chain with its own consensus mechanism for block validation. organizations get a fully private network with all of the best features of the public Ethereum mainnet.

2.0 IBM Blockchain.

This is a solution by IBM to help organizations create private blockchains. They have ready blockchain supply chain Applications and the IBM Food trust that benefits network participants for a more sustainable food ecosystem.

3.0 Hyperledger?

Hyperledger is a blockchain ecosystem that mainly specializes in enterprise grade blockchain technologies.? The two prominent Hyperledger projects are Hyperledger BESU and Hyperledger Fabric. Hyperledger BESU is an Ethereum client with an extractable EVM implementation that is designed for companies.

It includes several consensus algorithms? that are consortium friendly. Hyperledger Fabric on the other hand is a native solution for Hyperledger that is intended for development of applications and solutions with modular architecture.

4.0 R3 Corda.

This platform is mainly used to create private permissioned blockchains for Finance.

Private Blockchain Use Cases.

Financial Services: Private blockchains can be used in financial services in a number of ways:

• Payment Processing: Private blockchains can be used to process secure and fast payments between financial institutions and their clients.
• Asset management: Private blockchains can be used to manage and track assets such as stocks, bonds, and commodities, ensuring secure and transparent record-keeping.
• Trading platforms: Private blockchains can be used to create secure and efficient trading platforms, reducing the time and costs associated with traditional settlement processes.
• Securities lending and borrowing: Private blockchains can be used to automate the securities lending and borrowing process, improving the overall efficiency and reducing the risk of errors and fraud.

Healthcare: Private blockchains can be used in healthcare in a number of ways such as:

• Medical Records Management: Private blockchains can be used to securely store and manage electronic medical records (EMRs), ensuring that sensitive patient information is kept confidential and secure.
• Clinical Trials Management: Private blockchains can be used to manage and track clinical trials, reducing the risk of fraud and improving the accuracy of trial data.
• Drug Supply Chain Management: Private blockchains can be used to manage and track the supply chain of drugs and medical supplies, improving the overall efficiency and reducing the risk of counterfeit products entering the supply chain.
• Health Research: Private blockchains can be used to securely store and manage health research data, improving the accuracy and reliability of research findings.
• Patient Consent Management: Private blockchains can be used to manage patient consent for the use of their health data in research and other purposes, improving the overall transparency and accountability of the process.

Supply Chain Management: Private blockchains can be used in supply chain management to track the movement of goods, from production to delivery, while maintaining the privacy of sensitive information.

Conclusion

Private blockchains offer a viable solution for organizations that require the security and privacy of blockchain technology while also addressing the limitations of public blockchains.?

While private blockchains have their disadvantages, such as centralization and limited accessibility, they can still provide significant benefits in certain use cases.?

As blockchain technology continues to evolve, the development and implementation of private blockchains will play an important role in the future of technology.