Public Blockchain: Specifics, Benefits, and Potential

Blockchain is a term with different meanings, even though its principle of work is well-known. The reason is that it hides many variants of how this technology can be implemented. Different protocols can vary depending on who can join its network, its accessibility, and the degree of control and permissions involved. Public blockchains, in particular, break down barriers by offering unrestricted access to anyone interested in using the technology.

Let’s clarify the distinction between public vs private blockchains here to navigate the decentralized world of Web3 better.

Public Blockchains: Unleashing Decentralization

A public blockchain is a type of network that is accessible to everyone connected with it, embodying the principles of transparency and decentralization. In a public blockchain, anyone can participate, view the data, and contribute to the development of the network using its tokens. More importantly, individuals can volunteer and actively participate in the consensus process, such as mining or validating transactions.

In contrast to public blockchains, private blockchains are permissioned networks with restricted access and control mechanisms. These blockchains are typically designed for specific use cases within organizations or consortiums, where privacy, scalability, and regulatory compliance are paramount.

Satoshi Nakamoto’s creation of Bitcoin was the first successful example of a public blockchain, demonstrating how such a system could operate securely and transparently without control from a centralized entity. Several years later, Ethereum was developed by Vitalik Buterin, which enables more user involvement using smart contracts.

Today, there are hundreds of operating blockchains. The majority of them operate using this public, permissionless framework. Some well-known examples include:

• Ethereum
• Solana
• BNB Smart Chain
• TON
• Cardano

These public blockchains have fostered a vibrant ecosystem of decentralized applications (dApps), enabling peer-to-peer transactions, smart contract execution, and a wide range of innovative use cases. Check the GetBlock blockchain and cryptocurrency comparative guide to understand how it works.

The Essence of Permissionless Cryptocurrency Networks

A traditional cryptocurrency network is characterized by its non-permissioned functioning, which requires the following key elements:

1. Distributed Data Storage: Instead of storing information on a single server, the data is structured into blocks and stored across a distributed network of nodes in many copies.
2. Decentralized Consensus: Since there is no central authority controlling the network, a public blockchain utilizes consensus algorithms: encoded rules that govern how nodes agree or disagree on the validity of data. Examples are proof-of-work (PoW) and proof-of-stake (PoS) instruments.
3. Immutable Record: This system maintains a clear and chronological record of all activities. Once data is added to the blockchain, it cannot be erased, replaced, or edited.
4. Open Participation: What truly defines a cryptocurrency network as permissionless is the ability for anyone to download the required software, run a node, synchronize it with the entire blockchain’s data, and participate in the consensus mechanism. All nodes in such a network have equal rights to perform operations. Therefore, the public blockchain relies on a distributed network of nodes, consensus algorithms, and open participation principles to maintain a secure and transparent record of transactions.

It’s a fundamental departure from traditional centralized systems, where a single authority controls and governs the network. By eliminating the need for a central authority, permissionless cryptocurrency networks empower individuals to participate in a truly democratic financial and governing system.

Characteristics of Public Blockchains

Blockchains like Bitcoin are decentralized, trustless systems, and this characterization encapsulates several key aspects.

Open-Source Trustless Nature

Communities and developers from around the world are welcome to contribute to the continuous improvement and diversification of these platforms, while their source code is open to anyone. This collaborative approach fosters innovation, transparency, and the collective ownership of the technology. Along with that, it doesn’t require trust in any regulating authority: instead, the decentralized consensus mechanism ensure that all transactions will be completed, and no funds will be compromised.

Inclusivity and Accessibility

Decentralized blockchain networks are designed to be inclusive and accessible from any computer, laptop, or mobile device. Users can immediately participate in the network by making transactions or, if they choose, configure their hardware to become node operators and have rewards for that. This democratization of access empowers individuals to be active participants in the ecosystem, rather than mere spectators.

Independence and Resilience

A remarkable aspect of public blockchain networks is their independence and resilience. Even if the companies or organizations that initiated these networks cease to exist, the networks can continue to operate solely relying on the distributed network of nodes. The Ethereum Classic chain serves as a prime example, having split from the Ethereum blockchain and continuing to operate independently today.

All these aspects make public blockchain a technology that can serve various community needs, from payments and governance to gaming and recreation. Let’s see which advantages make it a robust tool for redefining and empowering communities.

Benefits of Permissionless Blockchains

The accountability, accessibility, and stability of public blockchains determine their benefits. Let’s explore them.

• Data redundancy means that hundreds, thousands, or potentially millions of blockchain copies are stored across all the network nodes, increasing the assurance level and system resilience.
• Robust security follows from its distributed nature, making it extremely difficult to breach and falsify any data, as it would require compromising a majority of the nodes simultaneously, which is de facto impossible due to the network size.
• Transparency of the blockchain follows from the visibility of all network transactions and contracts signed. Any attempts at data manipulation or fraudulent activities would be immediately detected and rejected
• Accessibility means that everyone with Internet access can reach the blockchain and participate in it, using dApps or trading tokens, benefiting from it without any intermediary or restrictions.

Source: GetBlock

As we’ll see, private networks are much more similar to traditional centralized governing bodies than to those we’ve described above. Let’s compare them further.

Public vs. Private Blockchains

The opposite of a publicly accessible blockchain is a private blockchain, where participation and access are controlled and limited to specific authorized individuals or entities. This allows for more control over who can read and write data to the blockchain, which can be beneficial for specific cases that require privacy and regulatory compliance.

However, this also means that private blockchains do not offer the same level of decentralization and accountability, as there always be a group that makes most of the decisions in the network and stores most of its data.

The key distinctions between public and private blockchains can be summarized as follows:

• Access: Public blockchains are open and permissionless, allowing anyone to join, while private blockchains have restricted access, limited to authorized participants.
• Control: Public blockchains cannot be controlled by a single entity, while private blockchains are centralized and controlled by the organization operating the network.
• Transparency: All transactions on public blockchains are publicly visible, while transactions on private blockchains are only visible to permitted participants.
• Trust Model: Public blockchains are trustless, meaning there is no need to trust any third party, while private blockchains require trust in the controlling entity or entities, being closer to centralized systems.
• Consensus: Public blockchains achieve consensus through decentralized mechanisms like PoW and PoS, while the consensus process in private blockchains is controlled by the network operators, usually those who run it.

Public blockchains are well-suited for cryptocurrencies, dApps, and trustless governance systems, while private blockchains can serve enterprise applications requiring privacy and regulatory compliance. They provide privacy, control, and the potential for higher throughput due to being specifically designed for a limited number of requests. Still, as they lack decentralization, they are more vulnerable to failure and cannot serve the community’s needs as public blockchains.

Some organizations lean towards so-called hybrid chains, combining the two architectures to pick the best elements of both. They usually have public and private components, allowing for a balance between transparency, privacy, decentralization, and control.

Challenges and Limitations of Public Blockchains

Despite the benefits of democratic participation and stability, open-access blockchains have always faced different problems. Yet, all of them are opportunities for improvement, too. Let’s look closer.

• The speed of decentralized networks can be slow due to the large computational resources usage and time required to reach an agreement among numerous nodes. These challenges are being overcome with solutions such as sharding and Layer-2 networks.
• Privacy issues follow from the fact that all transactions are fully visible, so additional information or analysis could potentially link activity to individuals. Zero Knowledge (zk) technology is an example of how private but transparently verifiable transactions can be implemented to reduce privacy issues.
• Setup and maintenance challenges include specialized knowledge, expertise, hardware, and software necessary to set up the blockchain. That’s why node providers like GetBlock are highly relevant for blockchain developers, as they take the majority of these challenges, enabling developers to focus on realizing their ideas. Sign up now and explore immediate access to 50+ blockchains with a free plan.

Summing Up

The inclusive nature of public blockchain networks drives its development, as enthusiasts of various kinds participate in it, either as developers, traders, or consensus participants. In addition, due to its profound influence on community development, blockchain facilitates innovations and progress in general, not only in the crypto industry. Guided by existing challenges, the capabilities of cryptocurrency networks will only grow and lead to a stronger ecosystem, benefiting the whole world.