Public vs. Private Blockchain

Public vs Private Blockchains.  This is seen as a critical dichotomy.

You are on one of the REAL public blockchains like Ethereum or you are working inside your corporate walls trying to capture some blockchain magic leveraging portions of the tech. Many idealists turn up their noses at these private blockchain projects as not just pointless (use a DB) but an offense to the very ethos blockchain solutions represent.

This dichotomy is both an oversimplification and, I believe, potentially damaging to realizing real long term value.  

The public vs private is a spectrum rather than an either/or. By examining it as a spectrum new ways of reaching de-centralized nirvana become available to the many industries interested in making a transition.

Lets start with a few (over) simplified definitions:

Public blockchains are those that are open-sourced and public to all.  No one is in charge (purportedly). There is no access or rights management done for a public blockchain and anyone can use the network as well as be the part of the consensus.

Private blockchains in contrast are permissioned.  They use similar technology to the public blockchain but access controls restrict who can participate and who can be part of the consensus building process.  These networks are (or can be) decentralized in the sense that multiple nodes are verifying and providing decentralized data, but control is centralized by whatever process allows either access or participation in consensus building.

With those at the extremes of public and private it is interesting to consider a few flavors that do not fit quite as neatly at either pole.

For instance, where does a blockchain driven healthcare market sit? The “signers” or consensus builders could be a public group which anyone could join, perhaps through a stake or through setting up a mining node driven by rewards.  However the providers of health services, say free standing radiology centers, would need to be verified before being granted access to post available time slots and services with set rates. Consumers (needing a different type of access to the network) would have a different verification process to access that information (maybe its restricted to a certain group) or perhaps consumer access could be fully public.  This all could be done on Ethereum through smart contracts but might be better on a purpose built blockchain. Is it public or private? It is some of both.

One can imagine other flavors where different aspects of setting up networks, signing transactions, accessing information from those networks and actively participating in them, are at varying degrees along the public to private spectrum.  

In the long run we are likely to see many types of businesses and markets transformed by the transparent, efficient and decentralized value of a whole class of blockchain solutions.

That said, many real businesses (you know, ones with customers and revenue never mind regulation) are going to need a path to this future state and it might not be feasible to do so in one massive jump.  There will be many cases where a phased approach with different gradations along the way from private to public will help make the transition feasible.

Lastly, one of the key values for many blockchain driven solutions is a verified history of an entity represented on the network.  Allowing a semi-private mode could be useful in building those histories before the entire eco-system is ready to jump into a fully public solution.  

We, the team working on the Tupelo protocol, with our unique take on a many chained solution have a strong solution to this challenge.  That however is a topic for a future post.

Please reach out if you want to hear about it before the full story is publicly available.