What are private blockchains and can it help in meeting regulatory compliances

Experts believe that private blockchains can ensure blockchain’s widespread adoption

Reportedly, companies such as Amazon Web Services, IBM, and Microsoft are understood to lead the private blockchain ecosystem
Reportedly, companies such as Amazon Web Services, IBM, and Microsoft are understood to lead the private blockchain ecosystem

Public approach towards blockchain seems to have raised the question of how the technology can perform at a private level. Experts believe that private blockchains can help entities function through compliance with regulatory prerequisites.  

Private blockchains are developed by companies which enable platforms to maintain control over mining rights and the consensus algorithm. The technology remains disrupted within private authority, as it consists of fixed participants. According to SoftwareMill, a software company, private blockchain-based standards can ensure multi-party partnership for digitisation of business practices. “I believe private blockchains limit access to authorised participants such as employees and vendors, allowing organisations to maintain control and privacy over their data and network. They help to improve efficiency by automating processes and removing intermediaries,” Suman Bannerjee, CIO, Hedenova, a US-based hedge fund, told FE Blockchain. 

Market research has shown that private blockchains can develop a decentralised landscape through ensuring blockchain’s widespread adoption. Insights from BSV Blockchain, a blockchain-oriented platform, mentioned that private blockchains can help manage volume of organisational data and doesn’t require funds for placing blocks on the network. However, private blockchains cannot function without a centralised server and need investments in hardware infrastructure. With regard to public blockchains, miners are rewarded for processing blocks on private blockchains. 

“I think private blockchains are playing a role in shaping the decentralised landscape by introducing an approach for organisations to utilise blockchain. Private blockchains have potential to unlock avenues for businesses to generate revenue from their products and services and optimise their workflows,” Edul Patel, co-founder and CEO, Mudrex, a crypto-investing platform, highlighted. 

Reportedly, companies such as Amazon Web Services, IBM, Microsoft, among others, are understood to lead the private blockchain ecosystem. For example, IBM Hyperledger Fabric is considered one of the most popular global private blockchains, which allows private organisations to develop private blockchain applications. Monika Proffitt, a blockchain evangelist, stated that IBM Hyperledger Fabric system carries a cost worth $120,000 on a yearly basis. 

Moreover, future predictions indicate that private blockchains can benefit from development of digital currencies and need for data security. “In today’s world, I think every business is required by contracts to interact with many different entities in order to deliver their goods and services. In future, a private blockchain can help save time and money by automating these operations between different organisations,” Pratik Gauri, founder and CEO, 5ire, a blockchain-based platform, concluded. 

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First published on: 06-03-2023 at 08:00 IST