Most people don’t understand what a blockchain is. Of those who do, few understand where blockchain came from. Fewer still understand where blockchain is going or what its purpose is. Moreover, there is a flurry of online misinformation that stops most people from digging into the realities of blockchain. And when it comes to private blockchains, the bewilderment deepens even further.
To make matters worse, the mere mention of the word “blockchain” brings to many people’s minds images of a nefarious hacker in a basement somewhere who uses blockchain to pay for illicit activities. Then, when you add the word “private” to the word “blockchain,” a nervous frenzy ensues.
However, is all this anxious speculation misguided? Let’s take a deeper look.
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What Are Private Blockchains?
Admittedly, private blockchains don’t make much sense to many people. The entire point of blockchain, as far as most people know, is to be a secure, open-source way to share and utilize information in a broad way. Therefore, the idea of private blockchains does not align with this purpose in most people’s minds.
However, it’s simply untrue to say that all private blockchains are harmful. On the contrary, they provide a way to test blockchain implementations. As a matter of fact, private blockchains usually start when someone creates a new framework to build upon.
The designer makes a genesis block that acts as the original starting point. Other designers can then create subsequent blocks from that genesis block. Each new node acts as yet another host for all of the transactions that have occurred—and will occur—on that particular blockchain.
Additionally, private blockchains are often used as demos or testnets for ICO’s. ICO’s are initial coin offerings. These are basically ways for businesses or groups to create private blockchain environments. These entities then use their private blockchains to develop and test new systems. They base future customized solutions on the successful systems that emerge from these tests.
Where Did the Stigma Come From?
Nonetheless, the idea that a blockchain could be private raises suspicion and inspires criticism. Some people wonder whether private blockchains have anything to do with mysterious and nefarious circles. However, people can use private blockchains, as they can use most technological tools, for either good or ill. It’s true that private blockchains do provide opportunities for abuse in malevolent hands. However, they are more often than not used by those whose causes are neutral, if not noble.
What’s more, most companies create private blockchain solutions for financial reasons. Using blockchain-based solutions as a ledger to keep company data secure simply makes good sense. Additionally, it’s interesting to notice that blockchain is becoming a basic regulatory tool for many companies. As a matter of fact, for every underground purpose that you might hear about, another five companies adopt blockchain for legitimate purposes.
Simply put, blockchain is a tool. What’s more, its technology is necessary for the development of ever more complex solutions. For example, blockchain provides decentralized information storage that cannot be manipulated.
What’s the Bottom Line?
The bias against the initiative to create private blockchains comes from a lack of information. Therefore, it’s good to keep in mind that private blockchains can be used by individuals or groups for their own purposes. And most of the time, those purposes are perfectly legitimate.
