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T. Paul and S. Rakshit

Advantages of Private Blockchain

• Compared to public blockchains, private blockchain transactions occur at a higher

speed. That means, in the case of private blockchains, the TPS rate is higher. This

is because, as opposed to a public network, a small number of nodes operate in

a private network. This fastens all the nodes in a network with the consensus or

authentication process of a transaction. The rate of inserting fresh transactions

into a block is also rapid. Private blockchains can enable the transactions at a rate

of up to thousands or hundreds of thousands of TPS.

• As per organizational requirements, they can choose the size of their private

Blockchain. For example, the organization can easily deploy a blockchain of only

40 nodes or any number. Then, if more nodes need to be added, they can do

so easily after expansion. This makes private blockchains very flexible because,

without much effort, it provides the organization with the ability to scale up or

down the size of its network.

Disadvantages of Private Blockchain

• Private Blockchains are not truly decentralized, since private blockchains require

a central management system to work properly. The central management system

has all of its control and administrative privileges. It permits a connection of a new

node to the network or determines the degree of access to the information stored

in the Blockchain. That is one of the main drawbacks of the private Blockchain

and goes against the core principle of distributed ledger technology.

• It is difficult to gain trust within the private Blockchain since the centralized nodes

make the last call.

• Because a private blockchain network has fewer nodes or users, the probability

of a security breach is higher. If one of the nodes gains access to the central

management system, all of the nodes in the network can be accessed. For a node,

this makes it easier to hack the entire private Blockchain and misuse the data.

4.3

Consortium Blockchain

Some nodes in Consortium Blockchain monitor the consensus mechanism, and some

other nodes may be allowed to engage in transactions. The Blockchain Consortium

is like a Public and Private Blockchain combination. It is public because various

nodes share the Blockchain; and private as well, because the nodes that can access

the Blockchain are limited. It is, therefore, partly public and partly private.

In other words, the consortium blockchains are semi-decentralized ledger forms.

Furthermore, more than one organization performs within a consortium-blockchain

network. Therefore, the feature is contradictory to a private blockchain, which a

single organization manages. Several organizations together can serve as participates

(nodes) in a consortium blockchain to exchange information or do mining. Consor-

tium blockchains are usually used by banks, service providers, and government

bodies.