Why enterprises are making the switch to public blockchains
Online stock trading and electronic marketplaces shook Wall Street’s dominance up in the nineties. Two decades later, blockchain technology threatens to do the same through its removal of third party intermediaries. A couple of years ago when ‘blockchain’ started to turn heads, the idea of a completely public, free-for-all system secured by cryptoeconomics (proof of work/proof of stake) was almost indigestible. In response to this, financial institutions adopted more governed, closed blockchain systems that still benefited from partial authenticity and decentralisation; a happy medium so to speak. Fast forward to now, and behemoth companies such as Societe Generale, EY, JP Morgan and Samsung have chosen to employ a public blockchain. Has the trend really switched from developing on private blockchains and was it the right switch to make?
First a quick recap on the similarities between public and private blockchains. Both are decentralized peer-to-peer networks, where users maintain a copy of a shared ledger containing digitally signed transactions. Replication is executed in sync through a protocol known as consensus. Further, both promise a certain guarantee on the immutability of the ledger regardless of fraudulent activity. What’s important to appreciate, is that as with most things, there are use-cases where one type is a more fitting solution over another.