Public vs private blockchain: what's the difference?



Public blockchains are open access. Anyone can read the ledger, transact, and run a node on the chain. In private blockchains, only invited users can view or participate, and a known operator typically controls access.



Most cryptocurrencies like Bitcoin and Ethereum exist on public blockchains. This is also true for decentralized finance (DeFi). Increasingly, institutions prefer to use private / consortium chains for business and enterprise activities such as interbank settlements, internal records, supply-chain tracking. Here we’ll explain the main differences between public and private blockchains, the other types of blockchain, their real-world uses and trade-offs.



Key Takeaways

• Public blockchains are open and permissionless; private blockchains are restricted and permissioned.

• Public chains are more decentralized and transparent but can be slower and more expensive to use.

• Private and consortium blockchains offer great privacy, speed, and scalability, which are commonly used by businesses and institutions.



Public vs private blockchain: the core difference



There are three key elements that differentiate public and private blockchains: who can read and write on the ledger, and who is allowed to validate transactions. Public blockchains are permissionless. This means that access is open, all the data on the network is available to read and anyone can run a node. Private blockchains are permissioned. The central entity decides who can participate, transact, validate blocks, and so on. This can make private chains faster than public ones. But less secure and decentralized.

What is a public blockchain?



A public blockchain is a network that is open and accessible to everyone. Other than requiring an internet connection, anyone can browse the network’s ledger, make transactions, or run a blockchain node. Bitcoin and Ethereum are the best-known examples of a public blockchain. They provide a high degree of censorship resistance and transparency, though they can become slow and costly during periods of high demand. Public blockchains rely on consensus mechanisms like proof of work (PoW) or proof of stake (PoS) for security and block validation, which is supported by large amounts of independent miners and nodes around the world.

What is a private blockchain?



A private blockchain has restricted or limited access. Typically, only invited participants can read its data or send transactions. They also have a singular central operator (or group) that controls who joins and validates blocks. Compared to public chains, private ones are much faster and offer higher throughput (transactions per second). The trade-off is that they give up some of the decentralization and censorship resistance that public blockchains possess.

Public, private, permissioned & consortium: side-by-side



Here is how the four main types of blockchain compare:





Real-world use cases

Public blockchains are best known for powering cryptocurrencies, stablecoins, decentralized finance (DeFi), and NFTs because they offer transparency and resistance. Outside of crypto, public blockchains are already playing a role in global logistics, food traceability, digital identity, credentials, and more.



Private blockchains are usually used within a single organization for specific purposes. They offer high speeds, strong privacy, and greater control over network access and transaction validation. Companies typically use them in areas such as internal record keeping, supply chain tracking, and secure data management.



Permissioned blockchains make participation invite-only. They deliver the security and transparency of blockchain but offer much higher speeds and privacy than public chains. Organizations usually use them for enterprise solutions such as compliance reporting, internal audits and secure data sharing.



Consortium blockchains are primarily operated by a group of entities or organizations instead of a single entity. They allow multiple trusted participants to share data and validate transactions privately between them. This type of blockchain is increasingly common in trade finance, interbank settlements, and multi-party supply chains.

Which kind do regulators prefer in the EU?

EU regulators haven’t banned any chain type. Under crypto regulation in the EEA countries (MiCAR), authorised crypto-asset service providers (CASPs) in the EEA typically interact with public blockchains for trading, custody, and other cryptocurrency services. There are many government and enterprise projects, including ongoing work with a potential digital euro CBDC, that use permissioned or hybrid designs. This is because they can offer greater control, privacy, and regulatory compliance. For more details on the regulations around blockchain, see our guide on crypto regulation in the EEA countries.

Bottom line

These types of blockchain solve different problems. Public chains focus on delivering maximum decentralization and openness. Private and consortium chains favor control, speed, and privacy. There are trade-offs to consider, but each type of blockchain serves a purpose.

FAQ



What is the difference between a public and a private blockchain?Public blockchains are open to everyone. Anyone can browse and read the ledger, send transactions, and run a node. A private blockchain is permissioned, so only invited participants can access it, and a central operator controls it and validates blocks.



Are private blockchains decentralized?Private blockchains are not fully decentralized, usually. Because a single entity or group controls access and block validation, they are more centralized than public blockchains.



What is a permissioned blockchain?A permissioned blockchain restricts participation to approved users only. It’s a broad category that includes private and consortium blockchains.



What is the difference between a private and a consortium blockchain?Private blockchains are typically controlled by a single entity. A consortium blockchain is operated by a group or organizations that have shared governance and control. Both are permissioned, but consortium chains distribute trust more than private chains.



Why do banks use private blockchains?Banks use private blockchains for their high speeds, privacy, and regulatory compliance. Public chains are often slow and transparent, which isn’t ideal for sensitive and frequent interbank transactions or internal records.



Are CBDCs built on public or private blockchains?Many central bank digital currency (CBDC) projects are experimenting with permissioned or consortium designs instead of fully public blockchains. This could give them better control of issuance, rules, privacy and compliance.



Investing in crypto‑assets is associated with risks, including high volatility and the potential loss of capital. Inform yourself thoroughly about the risks before making an investment decision. The information provided in this article is strictly for educational and informational purposes and should not be construed as financial or investment advice.