Blockchain technology is an emerging technology that combines cryptography, data management, networking, and incentive mechanisms to support the checking, execution, and recording of the block between the parties. The core component of blockchain technology is a decentralized database. This decentralized nature of the blockchain means that no one has to know or trust anyone else. Each node in the network has a copy of the exact same data in the form of a distributed ledger. If any member ledger is corrupted or altered then it will be rejected by the majority of the members in the network.
Public Blockchain
Public blockchain, as the name indicates, is the blockchain for and of the public. There is no one in charge, and anyone can take part in the process. These types of blockchains are open and transparent. Since there is no one in charge, decisions are made through a decentralized consensus mechanism.
Characteristics:
- It is an open network where nodes can join and leave without the permission of anyone.
- All nodes in the network can verify a new piece of data added to the network.
- This blockchain includes a protocol of incentive mechanism that aims to ensure the correct operation of the blockchain system.
- This public blockchain is said to be permissionless as anyone can access it without any kind of permission, and the ledger is shared and transparent.
- It is secure to the 51% rule.
- There is no need to use your real name, or identity, everything can be hidden.
- In any network, the user has to follow rules that might not even be fair. But not in public blockchain networks.
- No regulation hence no limit to how one can use the platform for betterment.
- It offers anonymity, no one can track your transaction back to you.
Implications:
- Everyone can change current business models through the reduction in the use of middlemen.
- It is not necessary to maintain servers or system administrators. Hence there is considerable cost reduction for the businesses.
Advantages:
- Transparency: Public blockchains are transparent and open for everyone to access. This makes the ledger accessible to all, eliminating chances of corruption and ensuring transparency.
- Security: Public blockchains are designed to operate with maximum security. The decentralized nature of the network makes it difficult for hackers to compromise the system.
- Empowerment: Public blockchains empower all participants to validate transactions without any central authority overlooking their actions.
- Immutability: Public blockchains are immutable, meaning no one can tamper with the system, ensuring that transactions are secure.
Disadvantages:
- Power Consumption: Public blockchains require a lot of computational power due to their decentralized nature. This increases energy consumption and can be detrimental to the environment.
- Scalability: With more users on the blockchain, the network becomes burdened with more transactions, leading to scalability issues.
- Conspiracy: The decentralized nature of public blockchains means that no one knows who validates the transactions, increasing the risk of potential conspiracy.
- Transactions: Public blockchains can be slow due to the time it takes to process all transactions on the network.
- Acceptance: Due to the openness and transparency of public blockchains, it can be difficult for governments to accept them as they are not controlled by authorities.
The most known public blockchains are the bitcoin blockchain and the Ethereum blockchain.