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Private Blockchain

Last Updated : 24 Apr, 2023
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Over the past years, blockchain has evolved in different sectors depending on their configuration. The contents stored on the block of the blockchain are performed by various participants on the network. There are different types of blockchains that exist, this article explains the concept of private blockchain.

Private Blockchain

As the name suggests private blockchain is like a private asset of the individual or an organization. Unlike, a public blockchain, a private blockchain has an in-charge who monitor important task and give access to read or block access. It is also known as permissioned blockchain as it has restrictions on who can participate in transactions and validations. The entities have been chosen in this network by the respective authority and the chain developers while building the blockchain application. This blockchain uses are internal to the company so companies will not want it to be accessible by the public.


  • By its nature, it performs better in database management and auditing in other fields.
  • Not everyone can run a full node and start mining.
  • Everyone cannot make transactions on the chain.
  • Not everyone can review the blockchain in the blockchain explorer.
  • A user has to be permitted by blockchain authority before he could access the network thus making it Permissioned Network.
  • Performance becomes faster as fewer nodes participate.
  • It is being able to give service on demand making it more attractive to the user.


  • Enterprises more often use a private blockchain to build a multi-party business.
  • Organization to get control over the network looking for this blockchain.


  • Security: Due to its immutable nature information cannot be altered. Private blockchain helps in preventing fraud. This blockchain uses identity to confirm membership and access privileges and typically only permit known organization to join.
  • Performance: Since the lesser number of nodes are there performance is increased as it takes less time to validate the block. This type of blockchain has higher throughput and lower latency become more significant as the number of transaction grow. Network and distributed system simulators are important tools on which the performance depends.
  • Scalability: A network that doesn’t host millions of users can easily implement the changes and features and hence can increase scalability. It is found to date by some research that at present this type of blockchain is scalable to a further extent. Several parameters are involved in the scalability process and are dependent on each other
  • Throughput: Since the number of users is limited this type of blockchain has higher throughput. This throughput gives a more advantage as the business needs faster transactions which are easily provided by the private blockchain.
  • Trust: Users on the private network are not anonymous this increases the level of trust in the private blockchain. Private Blockchain is best suited for applications where it required the truth that a company can achieve data privacy and control over data sharing.
  • Energy: Since the number of users in a blockchain is less there is less amount of energy and material used. A private blockchain is the most energy-efficient choice that can be made by businesses as the network are not as much bigger as the public blockchain.
  • Cost-effective: Private blockchains can be cost-effective for businesses because they don’t require the same level of resources as public blockchains. Private blockchains can be operated on existing infrastructure, which reduces the costs associated with setting up a new network.
  • Flexibility: Private blockchains are highly flexible and can be customized to meet the specific needs of a business. They can be designed to include only the necessary features and components, which makes them more efficient.
  • Control: Private blockchains provide businesses with greater control over their data and the blockchain network. Businesses can control who has access to the blockchain and can set rules and guidelines for how the network is used.
  • Privacy: Private blockchains provide greater privacy for businesses, as they can control who has access to their data and can ensure that sensitive information is not shared with unauthorized parties.
  • Regulatory compliance: Private blockchains can help businesses comply with regulatory requirements, as they provide a greater level of control and oversight over the data and network. This is particularly important for businesses in industries with strict regulatory requirements, such as finance and healthcare.
  • Collaboration: Private blockchains can facilitate collaboration between businesses, as they can be designed to allow multiple organizations to participate in the same network. This can lead to greater efficiency and innovation, as businesses can share information and resources more easily.


  • Lack of Trust: External players have to trust a private blockchain network without having control over the verification. These trusted parties would be responsible for communicating newly verified transactions to the rest of the network.
  • Centralization: With the presence of a few nodes it is possible that untrustworthy individuals gain control over the network. These blockchains are generally centralized as it is mostly used by business and enterprises. Although, blockchain is made to avoid centralization private blockchain inherently becomes centralized.
  • Integrity: Integrity depends on the standing authorized user/participants. It is necessary to trust in order to validate the transaction. Confidentiality alone is not sufficient to ensure the participant trusts the private blockchain. It also requires integrity to get confidence in private blockchain
  • Control: With fewer participants, it is easier for the hacker to take control of the network and manipulate the data on it. It can happen when two minors are calculating the hash of the block at the same time and get the same result. As a result, the blockchain will split and users have two different blockchains.
  • Limited network effects: Private blockchains are limited in terms of network effects. Since they are only accessible to a limited number of participants, they may not have the same level of network effects as public blockchains. This can limit their usefulness and potential for growth.
  • Interoperability issues: Private blockchains may have interoperability issues with other blockchains, including public blockchains. This can limit the ability of businesses to interact with other networks and may result in the need for costly and complex integrations.
  • Cost: While private blockchains can be cost-effective in some cases, they can also be expensive to operate and maintain. Businesses may need to invest in hardware, software, and personnel to manage and operate the network.
  • Limited transparency: Private blockchains may lack transparency, as they are only accessible to a limited number of participants. This can make it difficult for businesses to demonstrate transparency and accountability to stakeholders.
  • Governance issues: Private blockchains may face governance issues, particularly if there are disagreements among participants over how the network should be operated. This can lead to delays and other issues that can impact the effectiveness and usefulness of the network.

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