Public vs Private Blockchain: Which is Right for Your Business?
Over the last years, blockchain has been through that classic migration made by most technologies: from the fringes of a niche interest, into something every established business feels it should be thinking about. In an increasingly digital world, the question isn’t “Should we adopt blockchain?” but rather “Which type of blockchain is best for us?” For most businesses, the decision boils down to two options: public or private blockchain.
Both have their appeal, and both come with their own set of challenges. The key is understanding the differences but also understanding what problem you’re trying to solve. Let’s dive in.
Public Blockchain: The Case for Openness
Public blockchains—like Bitcoin and Ethereum—are the original instances in the blockchain world. What makes it different is being fully decentralized. No one controls it; rather, it’s open to all participants. For me, this type of blockchain is the only really global public good. It is like the internet in its early years: chaotic, a bit slow, but full of potential and promise.
I remember that in the early days of Ethereum, there were all sorts of people contributing to the network: developers of all nationalities with totally different incentives, working together in this extremely open and transparent system. This is how public blockchains work: any person with a computer and internet can join, validate transactions, and access the shared ledger.
But here’s the thing: with openness, there comes a cost. Transactions can be slow because every single participant in the network must validate them. Think of it like trying to get 10,000 people to agree on where to go for lunch. Sure, you’ll get consensus, but it won’t be fast. And as more businesses use these public networks, fees (often called “gas fees” on Ethereum) can spike. In 2021, we watched gas fees go as high as $70 for a single transaction on Ethereum. That’s great for miners but not good for everyday users.
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Pros
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Cons
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Decentralization means no one single point of control.
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Because a global consensus is needed, the transaction speed is low.
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Every transaction is visible to everyone.
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High fees during periods of high network usage.
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A private security: It is more secure when it has a larger network.
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Public nature may not work for businesses needing privacy.
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Private Blockchain: Speed and Control
Now, let’s flip the coin. Private blockchains are a completely different beast. Instead of being open for anyone to participate in, they are permissioned networks, meaning that access is restricted to a select group of participants. The best analogy I can think of is a corporate intranet—closed off from the public internet but perfect for internal use.
A few years back, I had a conversation with someone in the banking industry. They were interested in blockchain but couldn’t wrap their heads around opening up their transaction records for anyone to see. This was one idea where a private blockchain made more sense. They could thus gate off the network, make transaction times faster (because there were fewer participants), and keep sensitive data private.
But the trade-off here is centralization. In a private blockchain, there is always someone in charge—be that a single company or a consortium of organizations. This reduces the decentralized trust model that public blockchains thrive on. Now, however, picture a few major players in the supply chain business running a blockchain. Of course, it would be efficient and, from their standpoint, secure. At this point, though, how can small participants trust that the major players do not manipulate the system to their advantage?
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Pros
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Cons
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Faster and more efficient: fewer nodes need to agree so transactions are processed quicker.
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Introduces trust issues—a participant has to trust the entity controlling the network.
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Greater control over who can participate.
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Potential for manipulation by the governing authority.
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Ideal for privacy-focused industries, like banking and healthcare.
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Lacks the transparency and open participation of public blockchains.
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Key Considerations for Your Business
Here’s where things get tricky. Choosing between public and private blockchain is more than a technical decision—it’s a philosophical one. Do you value transparency above all else? Or is privacy and control more important?
A classic example that I always think about is supply chain management. Say you run a large corporation that sources materials from all over the world. A public blockchain could provide end-to-end transparency, allowing anyone to verify the origins of each material, which is great for building trust with consumers who care about sustainability. But if you are more concerned with protecting your trade secrets, maybe a private blockchain that involves only trusted suppliers could be the way to go.
And here is another interesting data point: in 2020, Deloitte surveyed senior executives, and it turned out that 55% of them declared that blockchain represented a critical priority for their business; of this group, only 23% had implemented blockchain in their operations. Why the discrepancy? Part of the issue here is understanding which blockchain is the right fit for your business model. Most businesses start with a grand idea of transparency and openness, but really soon after, they find out they need more control than what’s offered in a public blockchain.
Ask yourself:
- Does your business need full transparency, or does privacy worry you more?
- How much control do you need over your network?
- Are you willing to pay a higher price for decentralization, or do you value speed and efficiency?
Hybrid Solutions: The Best of Both Worlds?
If neither public nor private blockchain seems like the perfect fit, you’re not alone. In fact, hybrid blockchain solutions are starting to gain traction. These systems combine the best features of both public and private blockchains.
Now, imagine a network that conducts core operations on a private blockchain to ensure control and efficiency, but verification processes and audit trails are taken care of on a public chain to ensure transparency. For example, the IBM Food Trust system. It employs a private blockchain to trace the products’ journey through the supply chain but uses the public features of a blockchain to enable consumers to verify the data’s veracity. So, it can be said that this will allow companies to have their cake and eat it too—efficient private operations with public trust.
Conclusion: Finding the Right Balance
In the end, the choice between public and private blockchain comes down to your business’s priorities. If you’re worried about transparency, decentralization, and global trust, then a public blockchain is the way to go. If what bothers you is speed, privacy, and control, a private blockchain might be the answer. And increasingly feasible solutions for businesses that need some of each: hybrids.
There is no denying that blockchain is here to stay. Its impact will only grow as more businesses figure out how to harness the potential of the technology. The trick, of course, is how you get your blockchain strategy in line with your business goals—public, private, or hybrid—and be prepared to answer some of the philosophical questions that come with it. In reality, what the future holds for blockchain is not only about technology but trust, control, and striking the right balance between both.”
