Blockchain is based on distributed ledger technology that supports cryptocurrencies like bitcoin and others. Before knowing details about integral security risks in blockchain technology, You must understand the difference between public and private blockchain.
Private Blockchain v/s Public Blockchain
Private blockchain reestablishes the transitional value, and there is a need to validate the starter of the network. Businesses with private blockchain need to set up a permitted network.
In this way, there is a restriction for transactions, and if participants want to join, they require permission. Not limited to this, this technology offers an access control mechanism that enables existing participants to allow future entrants.
In addition, regulatory authority issues licenses for participation. When you join a network as an entity, it maintains blockchain decentralization. Private blockchain has a restricted nature and is known as permissioned blockchain.
On the other hand, public blockchain may not be appropriate for enterprises. In this, all participants get access to the data. In contrast, participants prefer accountability and want to keep their personal data anonymous. Individuals who want to join the network can download the software, create a node, look at the ledger’s details, and connect with the blockchain.
Companies mainly prefer to use a private blockchain to be in control of the entire entity’s network.
What are the risks & challenges associated with Private Blockchain?
Blockchain technology develops a linear distributed ledger that tackles transactions in a system. It can carry on multiple transactions and exchange time-consuming operations or facilities with a complete transactional or contract data source.
Although private blockchain ensures privacy, security, and availability, there are risks and challenges associated with it.
Here is the list of common challenges with a private blockchain. not limited to this, it has some risks that need to be considered.
Privacy and Security
Private Blockchain technology is built to provide privacy and anonymity. One of the most prominent technologies, it offers innovative transaction consistency and contracts to connect to identities and offers security. Still, there are questions about its anonymity and privacy.
Many industries focus on privacy rules because they have sensitive customer data information. Companies prefer to use blockchain to make this sensitive information secure, but this information gets stored in a public ledger that is not private.
However, private blockchain can keep all of your data safe, yet it is not favorable to trust it excessively.
Lack of Awareness and Understanding
Another risk associated with the misuse of private blockchain is the lack of awareness. Many corporate sectors are not fully aware of the technology, and this lack of understanding leads to the misuse of private blockchain technology.
Companies need to invest in training staff who do not have much technical knowledge like Bitcoin dust. When organizations educate themselves about this emerging technology, they will increase their understanding and use private blockchain technology for their benefit.
Lack of interoperability is another challenge that impacts the blockchain network. Private blockchain offers multiple solutions based on various protocols, including privacy measures, consensus mechanisms, coding languages, etc.
In other words, it assimilates so many networks, so it minimizes its unified standards and acts as communication of different networks with one another.
This lack of uniformity minimizes consistency in the private blockchain network. Plus, it creates a barrier to its vast adoption.
There is a need to establish exceptional standards with different blockchain protocols. It could assist in further application development, sharing blockchain solutions, and authentication of proofs of concepts.
In short, Private blockchain is more secure compared to the public blockchain. It enables easy access to data, so it does not allow businesses to store any private details unnecessarily. It can be helpful in data security and minimize the oversharing of data.
Nonetheless, there are some challenges associated with private blockchain that you need to keep in mind to protect your data.