Bitcoin maximalists and a progressive part of the crypto community continue to argue on the issue of who can access private blockchains. Supporters of the king of cryptocurrencies prove that private blockchains are an oxymoron.
Satoshi Nakamoto’s original Bitcoin White Paper does not mention the word blockchain. Only after Bitcoin was already several years old, the term “blockchain” appeared. Since then, this general term has been used to describe more or less decentralized technologies that implement one or more aspects of the original Bitcoin system. Meanwhile, however, “blockchain” has become a vague collective term that means all sorts of things: automation, a decentralized database, or just a protocol.
In their opinion, the problem is as follows: due to the absolute verbalization of the term, the technology has degenerated into a marketing phrase. No one else knows what the purpose of this actually very cumbersome decentralized database is. This term was brought to the point of absurdity by the appearance of so-called private blockchains. Only authorized persons have access to read or modify the data stored there. Private blockchains are an oxymoron, a contradiction in terms.
They believe that in the end, the blockchain thrives only thanks to the maximum possible decentralization. Only if all participants come to an equal consensus on the state of the ledger, the blockchain will be able to prove its integrity. No, blockchain is not a chicken laying an egg in a poke, and no one needs “private blockchains” anyway. Just use the database.
That’s their whole ideology. Is it so?
Private blockchains illustrate the scope of the technology
The motivation for creating the Bitcoin blockchain was a decentralized registry visible and accessible to everyone. It makes no distinction between origin, income or social status. Everyone is equal when it comes to blockchain – the concept of an open source is deeply embedded in the protocol. But what if the information cannot be shared with everyone or not at all? For example, supply chains, patient data, tax returns.
There are many reasons why companies, authorities, administrations, agencies or institutions should decide against the public, and in favor of the private blockchain. Private blockchains, also called “authorized blockchains, unlike public ones, are available only to a select group of participants. Depending on whether unauthorized participants can also monitor data, there are open and closed private blockchains.
The advantage of private blockchains is their optimization for individual applications. Private blockchains can be adapted for specific use cases. For data protection reasons alone, private blockchains are often the preferred means.
They also do not compete at all with public blockchain networks, which are mainly focused on the transfer of tokens. Rather, they illustrate the wide range of the technology’s action. Therefore, the decision on whether to use a private or public blockchain is not idealistic, but purely pragmatic.