When many people start researching enterprise blockchain, they inevitably come across the questions of Public vs. Private Blockchain and which one is right for their use case. Noteworthy consulting firms such as the Harvard Business Review or McKinsey would lead you to believe that a private blockchain is the only viable option. Unfortunately, this means that the overwhelming majority of efforts are effectively “nothing more than cumbersome databases” and have either already failed or are doomed to fail.
But this “private only” conclusion is actually simply not true, and is what we like to label as one of the most significant and fundamental misconceptions about blockchain.
Building on the public blockchain is secure, fast, and best of all, cheap.
In this article, we’ll delve into the advantages of blockchain in general, explain how the public blockchain is actually very private, and cover why the public blockchain is the best solution for enterprise blockchain implementations.
The Advantages of Blockchain vs. Traditional Data Storage
In the most simple sense, blockchain can be understood as a transaction and storage medium, but it is one that is structured in a fundamentally way compared to traditional databases and data storage techniques. While the explanation of exactly how and why is beyond the scope of this article, it’s still worth quickly going over blockchain’s advantages.
At its core, the public blockchain offers the following advantages over traditional data storage methods:
- Permissionless. Access is available to anyone; there are no gatekeepers.
- Private. Transactions are anonymous (well, technically pseudonymous but we’ll go more into that later), encryption is integrated, and there are additional, further means of obfuscation available.
- Flexible. Data of any kind can be stored on-chain.
- Distributed. A worldwide network of professional data centers share the load, thus cost is low and uptime, speed, and network resilience are top notch.
- Secure. Immutable (unchangeable), permanent, and sole record of transactions of any type without a centralized point of trust.
Now that we’ve made a case for blockchain in general, let’s move on to discussing how the public blockchain is actually very private.
How The Public Blockchain Is Actually Very Private
Unfortunately, most discussions about public vs. private blockchain don’t get very far. However, the nexus of the argument that private blockchains are needed because “the public blockchain is public, duh!” is misleading at best and downright incorrect at worst.
Just because something is public does not necessarily mean that it is insecure.
Let’s use an analogy to illustrate.
Imagine that you are trying to deliver important, private, and proprietary information to one of your business partners. What many would like you to believe is that, if you do it on the public blockchain, that would be analogous to writing the message out in plain language and publishing it on a billboard in Times Square.
What it is more similar to however is if you were to write out your message on a piece of paper in an effectively unbreakable cipher, cut that message into dozens of tiny pieces, re-encode each of those pieces into its own, separate, unbreakable cipher, and then scatter those pieces at a public landfill where there are trillions of similar tiny, encoded pieces of paper.
Oh, and nobody in the public even knew you were doing it in the first place. Only the intended recipient would have the map of where to find the pieces and the code to the ciphers used.
So, yes, your message is technically public and theoretically crackable, but the amount of computing power required to identify, assemble, and decipher your message (which itself may even be something completely banal in the first place!) renders your message secure.
Furthermore, all sorts of transactions from other sources are running simultaneously, with the distributed independent validators (professional data centers) simply seeking to process the load as efficiently and accurately as possible. By the time any wannabe bad actor could theoretically identify a transaction to target, millions of transactions have already been written to the blockchain, further enhancing security.
The Public Blockchain: Private By Design
Privacy is something that was already addressed in the original Bitcoin whitepaper published by Satoshi Nakamoto back in 2008. He proposed that this security measure came through the anonymity of the two parties engaged in the transaction and that new “identities” be used for each transaction. While this starting point is still sufficient for a lot of use cases, nowadays we also have additional means of encryption and obfuscation at our disposal.
🚨 Nerd alert!
Technically transactions are pseudonymous, with each transaction ideally always using a new address for both the sender and receiver (ID strings associated with and based on a master ID). You can think of this like a standard bank transaction: Your name and bank account number don’t change for every transaction, but each transaction has its own unique identifier.
Though with blockchain, it’s even more obscure: The sender/receiver ID would only be identifiable to an outside party if the master ID was known to be associated with a given entity in the first place. Thus, since this information is generally not publicly known, the transactions are effectively anonymous. (Well, until they’re not, of course.)
This does mean that if the pseudonym is publicly known, the sender/receiver may be trackable to a certain degree. However, this information could be as good as useless when methods of encryption and obfuscation are effectively implemented.
As you can see, this gets quite complex quite quickly. We’ve opted for understandability over 100% technical accuracy throughout this article.
Any data published on the public blockchain can simply be encrypted or even multi-encrypted before publishing to the blockchain, thus enhancing the security. Additionally, the data can be fragmented at random in a way that can be effortlessly reassembled by the recipient. Each fragment can of course also be separately encrypted as well.
Thus, security can be maximized by means of obfuscation and data scrambling through:
- anonymization and constant re-anonymization,
- encryption, and
- fragmentation and possible fragment re-encryption.
But let’s walk through a list of increasingly unlikely, difficult, and expensive hypotheticals:
Even if the anonymous identity of one or both sides of the transaction was somehow found out, this would mean that the public would merely be able to see that some kind of interaction between Company A and Company B took place. But, due to encryption, the contents of that interaction would be unknown. Even if the encryption of the contents was somehow cracked, the data may be incomplete or even nonsensical without context.
Imagine toiling away for years, spending billions of dollars, dedicating petaflops of computing power just to finally see the contents of a single transaction between Company A and Company B… and all you get is the number “8”.
It may sound absurd, but that is just how secure the public blockchain can be.
Public vs. Private Blockchain: The Problems With Private Blockchains
In broad strokes, a lot of what we have covered already in this article apply to both private blockchains and the public blockchain. Nonetheless, the public blockchain still comes out as the clear winner in the battle of public vs. private blockchain due to private blockchain’s plethora of problems. Let’s tackle a handful of these head-on.
Expensive
Private blockchains are essentially “cumbersome databases”. The burden of server costs, IT staffing costs, and network infrastructure costs all need to be borne by the entity responsible for the private blockchain. Due to this, many initiatives are either consortium-based, thereby pooling resources from multiple companies, or spun off into separate companies that try to sell their proprietary technology to others within their industry.
Furthermore, the sheer expense makes this kind of private blockchain implementation simply out of reach for smaller and medium-sized companies, and untenable in the long-term even for major global players such as IBM and Maersk.
Slow
A private blockchain is generally significantly slower and much less scalable than the public blockchain. Compared to the public blockchain having specialised data centers competing over transaction processing, private blockchains rely on a limited number of partners for transaction processing and consensus.
To put some real world transactions per second (TPS) numbers to this:
- Private blockchains: up to 1,500 TPS
- The public blockchain: 50,000+ TPS (but theoretically unbounded!)
Proprietary
Building on proprietary technologies and/or a proprietary, private blockchain means that interoperability is generally financially nonviable. Therefore, companies are effectively locked into that specific technology, even if its cost increases exponentially, with their only options being to either (1) pay the price or (2) abandon their blockchain effort and painstakingly transfer the data back to a database or to a different proprietary, private blockchain, thus repeating the process anew at great time and cost expense.
Insecure
The purpose-built and exclusive nature of private blockchains actually render them more insecure than the public blockchain. Since both the sources of data and their validators are oftentimes within the same industry, all it takes is a bit of friendly collusion to completely rewrite the blockchain at will. Since the public blockchain is validated as quick as possible by numerous independent data centers all around the world, consensus is fast and data tampering is nearly impossible.
Intransparent
One common implementation of a private blockchain is as a means to improve consumer trust in industries rife with social and environmental issues. But, the gatekeepers in control of the blockchain are, at least in part, from the same company trying to get consumers to trust them in the first place. If the consumer trusts the company already, then the blockchain is superfluous. If the consumer doesn’t trust the company, offloading the point of trust to a different internal department certainly isn’t going to ease their concerns.
After all, in this expensive and time-consuming way of effectively saying “just trust me bro”, the company in control of the private blockchain could secretly alter the data they don’t like before it reaches consumers or “swap the books” before authorities can conduct a legitimate audit.
If both authorities and the company have an official shared reference of where the records are kept, then not only can they trust each other, but the public can trust them as well by extent.
The Best Solution: Building On The Public Blockchain With mintBlue
As should now be clear, the cost, responsibility, slow speed, and intransparency of a “cumbersome database” (read: private blockchain) are simply not needed when building on the public blockchain is sufficiently secure and private. Building on the public blockchain also comes with the additional benefits outlined at the beginning of the article as well: distribution, flexibility, immutability, and permanency.
What mintBlue brings to the table is a customizable SDK with an API that interfaces with the public blockchain. This allows you to fully leverage the public blockchain to fit your needs. For example: You can connect your current database right to the blockchain with minimal overhead. If you’re already on a blockchain platform, you can embed support for mintBlue or switch over entirely. These solutions can either be built by your company in-house or custom built for you by our expert engineers. And since the data or access controls are on the public blockchain, there are no interoperability issues with other solutions, now or in the future.
mintBlue on the public blockchain is the way forward for any company, small or large, looking to build blockchain solutions. We invite you to play around with our SDK & API or contact us today for a quote for your use case.
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