Private blockchains are only accessible to specific authorized users. They offer more control and privacy than public blockchains but are less secure because there is a central authority that controls the network. Transactions on a private blockchain are verified by consensus algorithms, just like public blockchains. However, because there is a central authority, decision-making is not decentralized.
Pros:
- Speed: With very few nodes verifying transactions, private blockchains tend to be very fast and they require less computing power.
- Scalability: Companies that use a private blockchain network can easily adjust the number of nodes on the network to their preferred size.
- Privacy: Private blockchain networks are preferred by organizations that want to retain a level of privacy and confidentiality while still leveraging blockchain technology.
Cons:
- Centralized: A private blockchain system is controlled by a central entity that has full administrative control and monitoring capabilities.
- Trust Issues: With fewer participants verifying transactions, trusting the integrity of transactions can be a little difficult.
- Security: Fewer nodes makes private blockchain projects more vulnerable compared to public blockchains with more nodes.