Episode 12 - Public and Private Chains
Blockchains, depending on who can read the state and who can participate in block production (updating the state), could be classified in mainly two ways:
Private or Public state
Permissionless or Permissioned block production
In a permissionless blockchain, anyone can participate in the block production process, while in a permissioned blockchain, only selected nodes can produce blocks.
In a public blockchain, anyone can read the state (data), while in a private blockchain, only the intended users or nodes can read the data.
For example, the Bitcoin blockchain is a public permissionless blockchain. Anyone can read the balance of any account and any node can mine blocks. There is absolutely no restriction.
On the other hand, there are blockchains where only interested parties host nodes in a closed network and are allowed to read the state of the chain. These blockchains are private permissioned blockchains. They are popular among large enterprise use-cases. For example, a supply chain blockchain in which multiple parties like manufacturer, warehouse, retailer, etc. exchange information with each other on the state and value of goods.
There are also scenarios where public permissioned blockchains are deployed. These are popular in governments and NGOs, where the block production is done by selected nodes belonging to government agencies or departments, while the blockchain data could be read by all the citizens and third-party applications.
In some cases, there are hybrid blockchain setups where one network is public while the other is private and they interact with each other to process transactions based on their state and user inputs.
Public and permissionless blockchains provide the maximum amount of security and decentralization as they have a relatively larger number of nodes and it is almost impossible to hack or control a sufficiently decentralized network.