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How Private Blockchain Solutions Reinforce Your Business Processes

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How Private Blockchain Solutions Reinforce Your Business Processes

Want to learn more about the ways private blockchain is being used in the business sector? Check out this post to learn more!

· Security Zone ·
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Blockchain is a growing technology that underpins both Bitcoin and Ethereum. It’s the technology that brings the idea of decentralization to the forefront. Seen by many experts as a solution to remove intermediaries from transactions, it’s believed to reshape the way the finance sector operates entirely.

However, it isn’t restricted to enhancing the finance system (banking). Blockchain can be of immense value for large corporations as well as SMEs. However, this is done in a very different way. In fact, corporate giants — like Microsoft and JP Morgan — already invested their multi-million dollar hats into private blockchain development.

Today, we’ll be discussing private blockchains and, when properly executed, how they can elevate business operations and prove to be cost-effective for companies in various sectors.

What Types of Blockchains Are There?

Currently, existing blockchains fall into the following three categories:

  1. Public
  2. Consortium
  3. Private

These networks’ key distinctions depend on mainly two factors — who is governing them and how.

Public Blockchains

A public blockchain refers to a blockchain that anyone can read, send transactions, and expect to see included after the verification. In a public blockchain, anyone can participate in the consensus process. It's the process that determines what blocks should be added to the chain.

Cryptoeconomics is the technology that makes public blockchains secure. Cryptoeconomics is the combination of cryptographic verification and economic incentives that uses the mechanisms such as Proof-of-Stake (PoS) (Ethereum) and Proof-of-Work (PoW) (Bitcoin). Public blockchain can be considered as “fully decentralized.”

One problem with these type of blockchain is that they require a substantial amount of power to manage a distributed ledger at a large scale.

Consortium Blockchains

In a consortium blockchain, a pre-selected group — for instance, a group of corporations- controls the consensus process. The permission to access the blockchain and submit transactions to it may depend on: a) whether its public or restricted to participants, b) known as the “permissioned blockchains," or c) consortium blockchains are most suitable for use in business.

Private Blockchains

Controlled by a single entity, group, or organization, private blockchains determine who can submit transactions, read transactions, and take part in the consensus process. As they are 100 percent centralized, private blockchains can be used as sandbox environments. However, they should not be used for actual production.

Benefits That Corporations Can Get From Using Private Blockchains

Private Blockchains Are Resilient

Private blockchains have no single point of failure as they’re distributed databases. The node of a private blockchain doesn’t depend on a single central machine running it. Thus, there are fairly negligible chances of a system shut down due to some unforeseen error.

Private Blockchains Are “Participants Only”

As mentioned earlier, there’s no way to impose restrictions on who can transact on public blockchains because of their explicit design that lets everyone in. Moreover, numerous nodes at distinct places that are all far apart, substantially hamper the network’s agility. Private blockchains consist of a limited number of participants. Therefore, their capacity is much greater when compared to public networks.

Secure

They are extremely secure as the miners or validators can’t be anonymous on private blockchains. An organization pre-selects the participants and, thus, are highly trusted. Because of this, the chances of someone acting maliciously on a company’s network are much less. Also, hack or virus attacks are out of the question — which is what public blockchains fear the most.

Regulations

It’s unlikely that you haven’t heard about Bitcoin being used for criminal purposes. It was used to launder money and buy guns — all of that was possible because of the lack of regulations. Well, this isn’t the case with private blockchains. They can be developed along with being compliant with AML (Anti-Money Laundering), KYC (Know Your Customer), and HIPPA (Health Insurance Portability and Accountability Act) laws.

Find out how Waratek’s award-winning application security platform can improve the security of your new and legacy applications and platforms with no false positives, code changes or slowing your application.

Topics:
blockchain ,blockchain developement ,private blockchains ,security

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