All You Need To Know About Private Blockchains


Blockchain technology has been called the greatest invention in the history of mankind since the introduction of the internet. The world has moved on from the monarchy form of government and has evolved into a democratic system. However, when it comes to the economy, the state still enjoys a monopoly over the financial sector and the legal tender. Therefore, many academics, thinkers, and philosophers opine that Blockchain can be the next big step in the evolution of mankind.

What is a Blockchain?

A blockchain is a type of digital ledger that is used for keeping records of all the financial transactions that have occurred on the network. It is worth noting that most blockchains allow an exchange of value in the form of their native coins or tokens that are called cryptocurrencies. The users who wish to make any transactions on a blockchain must first acquire these digital currencies from a cryptocurrency exchange and open a digital wallet account or have a digital wallet address to manage their crypto reserves.

How does Blockchain Work?

A blockchain is a computer program that can create a digital record or ledger of all the data transfers or transactions that it facilitates. It is important to note that all the transactions on a blockchain are added to a single block. As soon as the maximum number of transactions is filled on one block, it is sent for verification.

PoW blockchains like Bitcoin use miners to verify a blockchain, while PoS blockchains use smart contracts for the same task. When a block is decrypted, it is also verified and added to the existing network of data that is called a blockchain as a whole.

Types of Blockchain

There are several different types of blockchains based on their functionality, parameters, and core programming. Some of the most basic types of blockchain classifications are listed under:

Public Blockchain

Public Blockchains are the types of blockchains that are open to everyone who wishes to participate. These blockchains allow users from every part of the world to join the blockchain network and make transactions performing as a node in the network.

Public blockchains are also referred to as permissionless networks since they do not require any approval or registration process before interaction. The node validators or the miners who are working to verify the transactions on the Blockchain may or may not get rewards for their decryption efforts.

Some examples of Public blockchains are Bitcoin, Ethereum, and others. The security of a public blockchain is immutable while it operates with low efficiency and is wholly decentralized.

Semi-private Blockchain

A Semi-private Blockchain is a type of digital transactions network that is operated under the supervision of a private organization and can sometimes be under the management of a dedicated community of contributors. A semi-private blockchain has a public part where all the users are free to join to make transactions; however, the decision-making powers are reserved with a selected or nominated management.  Most semi-private blockchains show high efficiency, are partially centralized and can get security-related updates.

Private Blockchain

A Private Blockchain is a type of network that is under the use of organizations on both management and user levels. Only the users who can fulfill the terms and conditions on the network can join the network and make transactions.

The node validators are very few, and all the decisions regarding the blockchains are made by the organizational hierarchy. The private blockchain management can invite any new user for the sake of fulfilling organizational tasks. It also has high operating efficiency and the ability to upgrade.

Consortium Blockchain

A Consortium Blockchain is based on a type of consensus model that is reserved for only a select few individuals. This type of Blockchain is also called a permission private network. The block verification does not bear any rewards, and the number of total nodes on the network is relatively smaller, which also makes for a faster approval time. Deutsche Boerse and R3 are some good examples of Consortium blockchain networks.

Consensus Models

Consensus models are the type of node validation or transaction verification method on a blockchain. Some PoW or Proof-of-Work consensus model networks require the services of miners who set up mining machines to solve the encrypted puzzle of every new block on a blockchain network and earn rewards such as Bitcoin and Ethereum.

On the other hand, there are PoS or Proof-of-Stake blockchain networks that employ smart contracts for transaction verification and have a much higher transaction speed as well as lower transaction fees in comparison to PoW.

Blockchain technology has been around since the introduction of the Bitcoin blockchain in 2009. However, since then, blockchain technology has witnessed thousands of new renditions and editions. Despite being around for more than a decade, blockchain networks are still considered to be in their nascent phase.

However, there are some noteworthy additions to the blockchain infrastructure, such as Hyperledger Fabric and Corda, that have expanded the usage of blockchains beyond their cryptocurrency-related utility. To this end, there are several new industries in addition to the financial sector that has started to adopt blockchain technology like supply chain, civil engineering, project management, etc.

What is a Private Blockchain?

While reading about the types of blockchain networks, the reader has already got the basic idea about a private blockchain. It is worth noting that private blockchains use closed or predefined parameters and are mostly reserved for commercial usage. A private blockchain also can process a large amount of data to support the global data ecosystem of a business. Private Blockchains are usually fully permissioned and require special approval for entry.

Only a permitted or approved consortium of organizations can be present in a private blockchain network as a user. Furthermore, the core developers or the operators of a private blockchain can grant different users different roles depending on their clearance level or responsibilities.

Node validators on a private blockchain can be divided into different categories for updating the ledger, running the consensus model, and performing node allocation, among other tasks.

Fundamentals of a Private Blockchain

There are many different types of blockchain networks, and the readers need to understand the fundamentals of a Private Blockchain to ensure that they can identify the Blockchain from a network of different users. Here are some of its most basic components:

Fully Private Network

A private blockchain is fully privatized, and it means that without approval from the management or the core developer of the network, everyone can’t participate in the network performance. A private blockchain is under the operations of a private organization, and it means that all the rules and the terms are decided and created by the management, and it may or may not require any consensus from all the users of the network.

Transaction Speed

Public blockchains take a longer time to confirm transactions since they are fully decentralized and self-operated. However, private blockchains offer a faster transaction speed since they are under the management of a company or a group of organizations. Since the users are not coming in from all parts of the world, it means that there are fewer nodes on the network that allow it to keep working faster and more efficiently than the public networks.


Scalability is the quality of the blockchain network to process the maximum number of transactions in a second. It also means that a blockchain network can get updated, and it would allow the users to make sure that core developers can send and create updates and upgrades on the mainnet. There are some public networks like Bitcoin that are immutable and face a lot of difficulty in processing updates.

Architectural Integrity

The architectural integrity of a private blockchain is usually higher in comparison to that of public blockchain networks. It means public blockchains since they are under the supervision of a private network of organizations. To ensure data privacy these organizations make sure to conduct regular technical audits and invite the top blockchain consultants. The private blockchain networks are also under the diagnosis of top cyber security firms who are working with their managing organizations.

Commercial Usage

Public blockchains are reserved for the use of masses that are trying to make cryptocurrency trades on the network. However, Private Blockchains are dedicated to performing private functions. The operators of private blockchains can also be salaried employees, freelance workers, or consultants who are trying to upgrade the existing correspondence networks or data management software for these entities.

Advantages of Private Blockchains

There are so many advantages of a private blockchain network. Here are some of the most important vantage points listed as under:

Health Care

The Health Care industry is full of flaws that need the arrival of the latest technology to make it more manageable and useful. Some big hospitals in the world are using Private Blockchains to grant due credentials to their surgeons. In the same manner, private health care blockchains are also useful for filtering out unwanted counterfeit drugs.

In the same vein, private blockchains are required to make sure that the hospitals can keep their patient information private and secure. It is especially important since hacking groups have threatened the hospitals by taking over their private servers and releasing all data regarding the patients.

Financial Services

Financial services are one of the most fundamental utilities of a private blockchain. It means that the organizations that switch on to a private blockchain can perform their financial settlements at many times higher speed. Furthermore, these services also offer privacy for their consumers to make sure that the sensitive data of the organization remains out of the hands of hackers or invaders. Additionally, these investors are also able to enjoy increased efficiency in the blockchain network.

Global Trade

A private blockchain is an ideal network for facilitating a global trade network. The international trade network is used to improve the transparency and trust of its providers. In the same manner, there is an additional amount of control over the different functions of the business for the manufacturers, who can get rid of any possible data manipulation or misreporting.

With private blockchains, businesses can perform international businesses on account of reduced paperwork and also experience smaller costs. 

Real Estate

Real estate is the main sector where a private blockchain is useful in real estate. Using a digital space for setting up a shop or an advertising place will reduce the investment in real estate by many folds. The blockchain-based real estate also allows the owners to participate in fractional ownership of real property. In many ways, it also improves the scalability for the real estate stakeholders.


A private blockchain creates better insurance and backup for all the related data and archive files to make sure that it does not have a lengthy and unmanageable paper trail. Using a private blockchain, financial institutions can settle insurance claims faster since they can fetch the data quicker and also rapidly process all the requirements for insurance claim verification.

Government Services

Government services can also be transferred to a private blockchain network. It means that the blockchains can also perform several digital administrative tasks automatically. It means that governments can ensure better data security for their consumers. It also means that governments can make the election system more universal and transparent. Furthermore, blockchain technology is useful for creating a digitized national identification for every citizen with relative ease.

Retail Sector

The retail sector can adopt private blockchain networks to dismiss the production of counterfeit products. The manufacturers can quickly check the product specification using the Blockchain by getting sample inputs from all parts of their distribution areas.  Retail products and service providers can also increase the efficiency and performance of their luxury goods line by backing it up and tracking it with Blockchain.

Furthermore, it can also reduce the threat of stolen goods that can be quickly recovered using private blockchain-based geo-locators.

Supply Chain Management

Supply Chain Management can become more accessible and manageable using private blockchain technology. The business enterprise can use this technology to trace its global network of logistics more efficiently than before. At the same time, this technology is also useful for creating logistic-based processes such as data management and real-time data sharing. The use of the supply chain within the global network ensures that the corruption and foul play in the sector are reduced many folds.

Limitations of Private Blockchains

Just like there are several important use cases of a private blockchain, it also suffers from some limiting points given as:


Centralization is one of the most important issues surrounding private blockchains. The private blockchain networks are usually centralized, and it means that they are in line with all the financial regulations of the state. It also means that federal authorities have access to all the data that is present on a private blockchain. Therefore, it is considered one of the biggest downsides of the adoption of private blockchain networks in more commercial enterprises.


There is also a big question of credibility around private blockchains. In this manner, these blockchains can ensure that they can manipulate data by way of controlling the main node validators. In a private blockchain, there is a limited number of node validators.

If these validators wish to manipulate data personally or are approached by threat actors, the credibility of the entire network can be compromised. Since the transactions present on the network are not verified or cross-checked by any other community member, there is a greater risk of easy falsification of data.


The security of a private blockchain network is something that has been a consistent issue for private blockchain stakeholders. The hackers can easily find a technical blind spot due to the presence of a limited number of node validators. Despite the massive technical audits and other important security installments, private blockchains are less secure in comparison to the public blockchain networks.


Private blockchains are one type of decentralized financial sector that is gradually transforming and evolving. The developers are working diligently to ensure that the stakeholders can make better use of the private blockchains and introduce new updates that allow them to take the nascent industry one step closer to mainstream adoption. produces top quality content exposure for cryptocurrency and blockchain companies and startups. We have provided brand exposure for thousands of companies to date and you can be one of them too! All of our clients appreciate our value / pricing ratio. Contact us if you have any questions: Cryptocurrencies and Digital tokens are highly volatile, conduct your own research before making any investment decisions. Some of the posts on this website are guest posts or paid posts that are not written by our authors (namely Crypto Cable , Sponsored Articles and Press Release content) and the views expressed in these types of posts do not reflect the views of this website. Tokenhell is not responsible for the content, accuracy, quality, advertising, products or any other content posted on the site. Read full terms and conditions / disclaimer.