Corporate Finance, DeFi, Blockchain, Web3 News
Corporate Finance, DeFi, Blockchain News

Private Blockchains vs The Bitcoin Blockchain

Startups, Entrepreneurship, UX, Usability, Product Management.. Personal Blog of Abdylas Tynyshov (Ades).

Private Blockchains vs The Bitcoin Blockchain
Lately, there has been a huge spike in interest in private blockchains, particularly from banks and financial institutions.

Some of them are already working on their own private blockchains to improve the efficiency of their services. Improving the efficiency of their services is one thing, but to equate the private blockchain to the Bitcoin’s Blockchain is something totally different.

Private blockchains are no different than relational databases, which are centralized. They are like an Intranets to Corporations. While Bitcoin’s Blockchain is like the Internet i.e the World Wide Web.

Private blockchains are centralized. An organization that owns it, can, if they want, alter any transaction at their will. There is absolutely nothing stopping them from doing it. So, private blockchains shouldn’t be seen as transparent, tamper-proof systems.

On the other hand, Bitcoin’s blockchain – The Blockchain – is unique and different precisely because it’s not centralized. It’s not owned by a particular organization. Decentralized nature of The Blockchain is the main value proposition and its competitive advantage over its counterparts – private blockchains. The Blockchain is analogous to a public ledger that is transparent and tamper-proof, and it contains all the transactions that ever happened on its network.

The Blockchain has a reward layer on top, which is the Bitcoin. This reward system makes it interesting for server farms to be a part of the ecosystem – to become third-party, independent bodies – who are willing to sync all the data that the blockchain has, and in return to get a reward in the form of Bitcoins. (As of today, it’s a $5+ billion worth industry) These are literally thousands of servers, also known as full nodes (5,084 nodes as of today)(1). Besides getting paid for fulfilling transactions on the Blockchain, they also mine Bitcoins. How exactly they mine Bitcoins is a topic for a different blog post.

The Blockchain – Nearly Tamper-Proof

Changing any confirmed past transaction in the blockchain is almost impossible. See the simplified illustration below in order to understand how the Bitcoin system works.


It’s nearly tamper-proof, because there is still a tiny chance of being able to alter a transaction if you have enough processing power. And this is also known as 51% attack in the Bitcoin community.

In summary, it would be great if we stopped equating private blockchains with The Blockchain! Thanks

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Jeudi 3 Décembre 2015