Since its introduction, blockchain networks have undergone many developments as public and private companies have sought to benefit from their valuable infrastructure.
Although its impressive design has long played a secondary role in the enthusiastic sentiment driving valuations in cryptocurrencies, the actual technological rewards of the blockchain should not be ruled out.
If anything, the focused attention on the massive rise in cryptocurrency valuations has fueled interest in the entire ecosystem, accelerating adoption and increasing the potential for institutional engagement.
Countless international multinational companies with brand names have entered the space in an attempt to revolutionize this modern technology.
IBM, for example, is one of the leaders in business applications of blockchain technology, especially amid the growing drive to migrate more services to cloud-based infrastructure.
However, it is just one example of companies' increasing adoption of the blockchain, although it highlights a shift towards deploying private blockchains that eschew many of the characteristics and principles that early blockchain networks nurtured.
In essence, the blockchain can be thought of as a decentralized store of information, or a database that is updated in real time and distributed across its user base for authenticated record keeping.
Simplifying the concept even further, the blockchain can be a reliable means of exchanging value, both informational and asset-based.
Above all, public blockchains are especially valuable due to the transparency inherent in the technology, whereby anyone can view and verify all the data recorded in each block.
One of the reasons blockchain is gaining such importance is that just like enterprise resource planning (ERP) systems designed to help organizations connect different departments and systems, technology can act as a similar hub.
IBM's collaboration with global shipping giant Maersk and logistics provider Agility highlights the intersection of multiple shared interests.
It can be argued that a blockchain is an architecture capable of enabling frictionless relationships, whether between corporate units and service providers in private blockchain networks, or communities separated by national boundaries when referring to public networks.
Public blockchains are of extraordinary value because they can serve as the backbone of almost any democratic solution.
Whether it's verifying identity, helping Internet surfers control their private data through solutions like VALID, or even using MATRYX to promote collaborative efforts among researchers, the public blockchain is at the forefront of the revolution due to its decentralized design that allows anyone to participate.
Advantages of public and private blockchain networks:
Despite the added value that public blockchains offer, they are not without drawbacks.
Early blockchain networks such as Bitcoin and Ethereum are revealing many limitations that are detrimental to adoption efforts.
Efficiency and the amount of processing power required to operate these networks are among the biggest problems.
The resource-intensive and costly Proof of Work (mining) consensus for verifying transactions means that despite its popularity, bitcoin is still not a viable alternative to traditional currencies.
If you are a trader, chances are that you have already encountered these issues in one way or another, either due to the slow network or the high fees associated with the deals.
Although newer and lighter blockchains like Qtum overcome the amount of processing power needed to host public blockchains, private blockchains have already overcome this obstacle out of necessity.
Whereas, public blockchains focus on protecting users and promoting transparency, while private blockchains prioritize efficiency and stability.
This means that private blockchains offer a number of important advantages in the field of logistics, for example, that require low-cost exchange of real-time tracking information.
However, the nature of public blockchains means that they are much less transparent and not designed for widespread adoption and openness, which limits their access and application.
Inclusion and exclusivity:
Public blockchains are designed for public consumption, and by their inherent design, they allow anyone to participate in society in almost any capacity, thus contributing to increased adoption rates.
Many of the projects that have emerged aim to provide a decentralized benefit to as many users as possible, but remain constrained by scalability and trust issues.
Although Layer 2 solutions have addressed some parts of these problems, they are still insufficient.
Although private blockchains are purposefully designed for enterprise applications, they lose out on many valuable attributes that are unique to public blockchains.
In practice, for example, companies like Brazilian Construtivo use private blockchains to solve specific problems such as transparency and ease of auditing of records in infrastructure projects.
Construtivo uses a platform created by MultiChain, which allows the creation of private blockchains for specific use cases, as opposed to larger public blockchains that offer broad applicability.
However, despite the flaws of a more closed ecosystem and the limitations associated with it, the next big leap in blockchain aims to overcome these limitations, narrow the gap between the public and private sectors, and even enable them to interact.
One of the main complaints about blockchain networks is their inability to share data, or incompatibility, a common challenge faced by both networks.
The private and public blockchain.
If the blockchain is a means of transferring and transferring value, whether digital or physical, then a channel must eventually be formed to connect offline systems to extend the reach of existing applications.
The most cited example is the exchange of value from one digital currency to another.
Although there are many different tradable cryptocurrency pairs, whether tied to fiat or other competing cryptocurrencies, the process of transferring value from bitcoin to ERC20 can involve multiple steps that add costs rather than eliminate them through Smooth conversion.
The growing movement towards building solutions designed to provide functionality across blockchain networks means that many of the current barriers to value exchange today will gradually dissipate.
Indeed, functionality across blockchain networks can bring together the best features of the blockchain, both private and public for the purposes of exchanging value across offline ecosystems.
Ripple has already made notable strides in this regard, as the “Interledger” technology has already tested transactions across multiple blockchain networks simultaneously in different currencies.
Other solutions address similar challenges from a different perspective by focusing on enhancing the Internet of Value.
By developing an open software public chain designed for crypto-finance applications and third-party developers to contribute to the ecosystem, the “FUSION” project focuses on building interoperability to improve compatibility between values transferred on different blockchains.
With solutions such as multi-token smart contracts, support for off-blockchain data, and even parallel processing capabilities, FUSION intends to achieve the early goals of abandoning the intermediation that touted blockchain within a single platform.
Challenges and breaking down barriers:
Despite the lofty goals that blockchain networks pursue in their original quest, the progress of blockchain is hitting the barrier of limitations.
Blockchain’s decentralized formats offer tremendous potential, but the key to unlocking all of its potential depends on developing systems designed to interconnect unconnected blockchain networks.
Interoperability has long been the missing key to overcoming the hurdles facing private and public blockchains by enabling them to interact and exchange values across platforms seamlessly.
Although separated by their functions and purposes, the possibility of integrating public and private blockchains with innovative new solutions designed to bring exchange across different networks and increase compatibility bodes well for all interests, both individual and corporate.