Private chains versus public chains: the opposition between night and day

The popular explanation of private blockchains has always been inaccurate. Experts say that the difference between private chains (private blockchains) and public chains (public blockchains) is like day and night, with a sharp contrast and huge difference.

Blockchain technology is becoming more and more popular and is gradually being accepted by governments and institutions around the world, but the unique characteristics of private and public blockchains have led to differences. What determines whether a blockchain is private or public? What are the differences between them?

Description

Oleg Khovayko , the technical development lead for cryptocurrency Emercoin, has a clear description of public blockchains:

“A public blockchain is one in which everyone can participate and have equal status. In other words, a blockchain that anyone can read, transfer or mine is a public blockchain.”

Private blockchains do have certain restrictions. For example, only “designated miners” can mine. Unfortunately, many people think that the term private blockchain is too broad, and even if there is only one network node and no actual mining activity, it is considered a blockchain. For example, a well-known security technology company runs a system similar to a private blockchain for its timestamping service.

limitation

Oleg pointed out that one of the most critical characteristics of all private chains is that they cannot prove that there is no "hidden alternative blockchain", which is a big problem! Oleg gave an example, he said:

“For example, I set up a private blockchain as a ledger for the ownership of a piece of land. To operate the output of this land, some resources are always needed to support it. Imagine that I run a hidden alternative blockchain, and I add countless transfer records from the public private chain, so that some of my ‘friends’ are recorded as land owners. When I collect enough transfer records, I immediately stop mining on the public private chain and publish the interface of the hidden alternative blockchain, so that all network blocks are reorganized and replaced. As a result, all past land ownership records are attributed to my ‘friends’.”

戴维•蒙德鲁斯, a senior executive CEO at a high-tech e-commerce company, said:

“I think when people talk about private blockchains, they are actually mostly considered to be another alternative blockchain for the private chain provider, which keeps a transparent transfer record and has many independent nodes, otherwise it will be described as a distributed database with fantasy colors. We can only run it using the PoW proof-of-work mechanism until the PoW proof-of-stake mechanism is proven to be feasible. The blockchain using PoW proof-of-work must be strong enough to withstand double-spending attacks.”

Conditions

David went on to explain that under the current situation of Bitcoin, the total amount of funds required for a double-spending attack is more than 5 billion US dollars. Therefore, from an economic point of view, any attack revenue is lower than this amount, and the attack revenue is getting lower and lower as the Bitcoin computing power grows. There is no point in attacking the Bitcoin network.

He further explained that in a private blockchain, even a private blockchain with a PoW mechanism, the lack of hardware support behind it also means that it is not difficult to attack, and it is more likely to cause reverse transactions or double spending, which will affect the trust level of the private chain. In fact, a private blockchain can only trust its owners, and at the same time, the only reason to use a blockchain is "trust". Once you have an entity with a very high control rate in your hands, or a group of colluding entities, you will start to have problems.

According to David, the high cost of Bitcoin production can effectively prevent 51% attacks that generate double-spending transactions. However, on a small blockchain, a small amount of computing power can exceed 51% of the total computing power of the entire network, thereby conducting a double-spending attack. This is one of the reasons why the SHA-256 algorithm is not very successful. Of course, there are also problems such as power consumption, mining machine cost investment, and liquidity occupation.

In any case, the competition for miniaturization of mining equipment has led to the use of smaller and smaller nanoelectronic components, promoting the development of technology.

Original article: http://cointelegraph.com/news/private-public-blockchain
By Iyke Aru
Translator: namjar
Source (translation): Babbitt Information (http://www.8btc.com/pub-vs-pri)