What are private blockchains and can they help meet regulatory compliance
The public approach to blockchain seems to have raised the question of how the technology might perform on a private level. Experts believe that private blockchains can help entities function through compliance with regulatory prerequisites.
Private blockchains are developed by companies that enable platforms to maintain control over mining rights and the consensus algorithm. The technology remains disrupted within private government, as it consists of permanent participants. According to SoftwareMill, a software company, private blockchain-based standards can secure multi-party partnerships for digitizing business practices. “I believe private blockchains limit access to authorized participants such as employees and suppliers, allowing organizations to maintain control and privacy over data and networks. They help improve efficiency by automating processes and removing intermediaries,” says Suman Bannerjee, CIO, Hedenova, a US-based hedge fund, to FE Blockchain.
Market research has shown that private blockchains can develop a decentralized landscape by ensuring widespread use of blockchains. Insights from BSV Blockchain, a blockchain-oriented platform, mentioned that private blockchains can help manage the volume of organizational data and do not require funds to place blocks on the network. However, private blockchains cannot function without a centralized server and need investment in hardware infrastructure. In the case of public blockchains, miners are rewarded for processing blocks on private blockchains.
“I believe private blockchains are playing a role in shaping the decentralized landscape by introducing an approach for organizations to use blockchain. Private blockchains have the potential to unlock avenues for businesses to monetize their products and services and optimize their workflows ,” emphasized Edul Patel, co-founder and CEO, Mudrex, a crypto investment platform.
Companies such as Amazon Web Services, IBM, Microsoft, among others, are reportedly leading the private blockchain ecosystem. For example, IBM Hyperledger Fabric is considered one of the most popular global private blockchains, which allows private organizations to develop private blockchain applications. Monika Proffitt, a blockchain evangelist, stated that the IBM Hyperledger Fabric system has an annual cost of $120,000.
Furthermore, future predictions indicate that private blockchains can benefit from the development of digital currencies and the need for data security. “In today’s world, I believe that every business is required by contracts to interact with many different entities to deliver its goods and services. In the future, a private blockchain can help save time and money by automating these operations between different organizations,” concluded Pratik Gauri, Founder and CEO, 5ire, a blockchain-based platform.
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