What Is a Private Chain?
Private chains differ from public chains because they use a central entity that governs the network. Participants in this type of blockchain technology normally require permission from the administrator to read, write, or audit the blockchain. Hence, private chains are known as ‘managed blockchains’; unlike public chains, private blockchains are not decentralised.
Additionally, the central entity also has the power to grant different levels of access and assign roles to participants. Once this permission is granted, a private chain functions similar to a public chain — participants have mining rights, transacting rights, and the ability to edit existing transactions on the blockchain.
Private blockchains are more commonly found in enterprises and closed environments that require a protocol with regulating power. This allows the organisation to maintain a distributed digital ledger without exposing important data to external parties, protecting confidentiality. However, similar to a public blockchain, the network operators must still validate the transactions before adding to the blockchain.