Superiority of public blockchains

Blockchain technology has become popular mainly because of its openness, neutrality, censorship-resistant, and permissionless. We can think of open blockchains as a pure democracy, where developers are legislators, miners are deputy, and users are electoral. All parties incentives themselves to act honestly. If developers (legislators) don’t do their best to improve the ecosystem, miners and users will choose different, better blockchains. If miners start to form cartel, censor transactions, or approve illegal transactions, users will stop using this blockchain. If users stop using the blockchain, the whole project collapses; thus, developers and miners lose their job. This perfect equilibrium makes public blockchains great. Everything is strengthened by the fact that each of them holds some shares in the project in the form of cryptocurrency, so the gains and losses are tangible.

Things change significantly when we strip blockchain from being public––the most fundamental property. Private Blockchains are just immutable, integral, distributed database. It must be admitted that private blockchains have many advantages, they can handle higher transaction throughput, do not require costly mining, are asymptotic resistant (asymptotic resistant means that the node consisting of large computational resources does not gain any advantages in the network, especially can not proceed 51% attack, that is possible in PoW protocols) and are easier to manage. On the other hand, private blockchains are not as transparent as public ones; their security model is based on trust in institutions, whereas open blockchains security is based on game theory and market forces. A public blockchain is a decentralized, trusted third party. That is why I believe that solutions based on public blockchains are superior to the private ones.

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