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Public vs. private blockchains: It could all prove a bit like the cloud

Blockchain is one of those hot new areas which an awful lot of companies are getting interested in. Yet there is still an often misunderstood difference between a public blockchain and a private one. Put very simply a public blockchain has full open access and is associated with famous cryptocurrencies like Bitcoin. While the private variety is shut – you need permission to join – and acts more akin to a safe ‘walled garden’ or ‘intranet’ for companies.

“Permissionless [public] blockchains are much more disruptive and difficult to fit into existing legal and business frameworks,” summarised Smith and Crown in an article around the difference and advantages of each. “Their strongest argument is that blockchains are like the internet: they need to be open to benefit from innovation.”

This means many technology firms are working to develop saleable private blockchain services to meet specific business needs while potential customers – like banks – are looking to find ways to utilise them. In fact, a recent report by Infosys Finacle suggested that, out of a small sample, 69% of banks surveying blockchain were interested in private blockchains, 21% hybrid models and only 10% public blockchains.

So, what does this mean for the future deployment of blockchain? Well, Brian Donegan, head of e-business operations for the Isle of Man Government’s Department of Economic Development tells us that the high profile security breaches faced by public blockchain over the last year “prompted a spike in interest for private permissioned Blockchain development especially from within the financial services community”. He adds “I see enterprises diverging away from public usage towards private usage given the greater security benefits of private.”

But this could be just a short term phenomenon. Peter Loop, AVP and principal technology architect, at Infosys believes “in the long run, as the technology and governance improves, a public Blockchain will be viewed as a public good, much like TCP/IP, and will serve as a foundational element. Adoption will follow a pattern like on premise> private cloud > public cloud. Several hurdles need to be cleared at each stage – and there is lots of room for hybrid models along the journey.”

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