Beginner Series #4: Public vs Private Blockchains

Welcome to my fourth edition of 0xfarmed Beginner Series Newsletter!

In our previous editions, we learned about Blockchain technology, How Do Cryptocurrencies Work and What is Consensus, if you have not checked them out or need a refresher check out the links below.

Today we're exploring the two main types of blockchains: public and private. Think of it like the difference between a public park and a private club - each has its own purpose and rules!

Understanding the Difference

Public Blockchain:

• Like a public park park

• Anyone can:

  • Join the network

  • See all transactions

  • Participate in validation

• Examples: Bitcoin, Ethereum

Private Blockchain:

• Like a private club 🏢

• Only approved members can:

  • Access the network

  • See transactions

  • Participate in activities

• Examples: Business networks, company systems

Real-World Examples

Let's make this super simple with everyday examples:

Public Blockchain = Social Media

• Anyone can create an account

• Everyone sees the same content

• Anyone can post and interact

Private Blockchain = Company Email or Company transactions like Starbucks want to track their Coffee from farm to store.

• Only employees get access

• Limited to approved members

• Controlled by the organization

Key Differences Explained Simply

1. Access

   • Public: Like a website anyone can visit

   • Private: Like a password-protected site

2. Transparency

   • Public: Everyone sees everything

   • Private: Only members see what's happening

3. Control

   • Public: Community controlled

   • Private: Organization controlled

4. Speed

   • Public: Can be slower (lots of users)

   • Private: Usually faster (fewer users)

When to Use Each Type?

Public Blockchains are Great for:

• Cryptocurrencies

• Public applications

• Global systems

• When trust comes from everyone participating

Private Blockchains are Perfect for:

• Business networks

• Company records

• Supply chain tracking

• When privacy is important

Simple Practice Exercise 🎯

Think about these everyday situations. Which blockchain would work better?

1. Sending money to family overseas

2. Tracking company inventory

3. Sharing medical records

4. Buying digital art

Important Terms to Remember 📚

• Permissionless: Anyone can join (public)

• Permissioned: Need approval to join (private)

• Node: A participant in the network

• Access Control: Rules about who can join

Think About This 🤔

1. Why would a company choose a private blockchain?

2. What makes public blockchains special?

3. Which type would you trust more with your money?

Remember: Both types of blockchains are useful - it just depends on what you're trying to do!