A public blockchain is an open network allowing anyone to freely join and participate in the activities it offers. Networks of this sort are massively decentralized and authority is equally distributed among the participants, also referred to as nodes.
In this article, we will explore the public blockchain ecosystem. Also, to help you understand the concept better, we will start with the definition and then slowly move toward a practical example of this type of technology. So, let’s check out what this technology is all about.
Introducing Public Blockchains
Public blockchain embrace distributed ledger technology, decentralization, and self-governance properties to the fullest, hence allowing any participant to read, write, and audit the ongoing operations of the public network while also maintaining a log of the overall ledger themselves without needing permission to do so. They are also often referred to as permissionless networks.
This guide aims to explain the process with which public networks are maintained, key characteristics, and other types of blockchains at work incorporating public network qualities.
How Do Public Blockchains Work?
A blockchain network is essentially a shared system of recordkeeping often referred to as a distributed database or ledger. A public blockchain is a truly decentralized system where every participant of the network (nodes) is equally responsible for verifying record entries, improving the protocol, and governing the network.
In a blockchain network, information of all sorts including transaction data, smart contracts, or any other codified document, is stored in blocks. Blocks are cryptographically sealed and are chronologically linked to each other using a hash, forming a blockchain.
These blocks can only hold a finite amount of information. For example, a block in the Bitcoin network can hold just above 2000 transactions. In a public blockchain, nodes assume the responsibility of creating new blocks by verifying the transactions via approval from the majority of the network.
Every independent blockchain has its own native token, such as BTC in Bitcoin or Ether in Ethereum, allowing the cryptocurrency to be used as an economic incentive to reward nodes for their honest contribution to managing the network.
Key Characteristics of a Public Blockchain
There are several unique qualities of a blockchain network that help self-govern itself by creating a secure and trustless environment. These properties distinguish a blockchain from traditional databases or ledgers. Let’s have a look.
Decentralized: It is the main ethos of all public blockchain. A decentralized system eliminates the need for a central authority responsible for ensuring that all record entries are genuine and the system is up-to-date. In a public blockchain, this responsibility is distributed among all of the nodes which collectively make sure the authenticity of all information recorded.
Immutable: Every block holding the transactions is cryptographically sealed through hashing function: an algorithm that creates a unique code of all transactions, and changes drastically if one of the entries is altered. Every block includes its own and the previous block’s hash code, so any change would be reflected on the totality of the chain, thus easily traceable.
Consensus-based: It is through certain consensus mechanisms, most notably proof of work and proof of stake, that each node can verify the authenticity of the transactions. These mechanisms allow the verifying nodes to prove that they’ve put the work into making sure the transactions are genuine so that other nodes in the network can also approve, and effectively reach a consensus on the state of the ledger.
How to Engage With a Public Blockchain
Users need a decentralized wallet to engage with the public blockchain network, which follow public-key cryptography (PKC). With these wallets, the network participants can buy, store, and track their cryptocurrencies. They can sign up for one without having to submit any personally identifying information: as a user creates a password, they are given a public key and a private key. The former works similarly to an email address, it can be distributed and used to receive funds. The latter functions more like a password to the email address; it is personal, should not be disclosed, and is used to use the funds in a wallet.
Other Types of Blockchains
Blockchains are typically classified based on their accessibility options. Besides public blockchain, there are also private blockchains, hybrid, and consortium blockchains.
Private Blockchains: As the name suggests, private networks are limited in how many nodes are accepted to a network. As opposed to public networks, private networks are governed by a central authority that decides on node selection and how much a network can scale. It's seen as an ideal solution for corporations or enclosed organizations to harness blockchain technology without compromising confidentiality.
Hybrid Blockchains: These types of networks benefit from both public and private models. In a hybrid network, a central authority may decide what parts of the network will remain private, and what parts will be made public. They are true to the immutability property, no one can tamper with the records regardless of authority level. It's an ideal architecture to be used for governmental or healthcare databases which require both transparency and confidentiality.
Consortium Blockchains: These networks function similarly to private blockchains, but instead of one single entity, they are governed by a group of entities, also called consortium or federation. Like hybrid networks, they can make use of both public and private architecture models of a blockchain network.
The Future of Public Blockchains
The functionality of public blockchain is crucial to realize the core mission of blockchain technology: decentralization, robust security, utmost accessibility for people with historically less integration into global financing systems, and elimination of intermediaries.
One major problem looms on the path to the widespread adoption of public blockchains: scalability. With current management models, blockchain networks struggle to accommodate the rising number of participants, and by extension, data transactions. Developers are hard at work in building solutions like Layer 0 or Layer 2 blockchains in order to prevent blockchain networks from losing their key characteristics and scale sustainably. Should the scalability problem be solved, public blockchains promise a much more integrated way of storing public information and greater inclusivity.
