What is Private Blockchain? Everything You Need to Know

What is Private Blockchain?

A private blockchain is also known as a permissioned blockchain. As the name suggests, It is overlooked by a single private organisation which has full authority over the network. They decide who can participate and invite them into the blockchain network where their identity or other information required is verified. Unlike permissionless blockchains, It is not open to the public where anyone can access, read and write on the blockchain.

In the case of mining, due to the network’s private nature, the single entity controls which users can execute the consensus algorithm required for deciding the mining rights and rewards. Apart from this, every participant’s access rights are also controlled; some are restricted from viewing all or some data on the ledger, while others may be allowed to submit new transactions. At the end of the day, the right to edit, delete or override any entry lies with the owner or organisation.

How does a private blockchain work?

A private blockchain is usually controlled by a single trusted organisation such as a company limited by guarantee or a joint venture. In both cases, blockchain technology is set up to solve a particular problem. This blockchain software is either built by the organisation itself or licensed from third parties such as Hyperledger. The private blockchain network is formed using this software to set up nodesthat require access to participate in the network. The set of core nodes is run by the organisation itself or delegated to subcontractors. These nodes, also called validator nodes, are in charge of validating transactions before they are recorded on the ledger.

Main characteristics of private blockchains

  • Permissioned 

It is a closed blockchain, which means they are not accessible to the public or has a layer of access control. Only users with permission can access the network.

  • Privacy 

Complete data privacy is their main focus. It is a more centralised blockchain and therefore authorisation is required before participating or accessing any data in the process.

  • High Performance 

The number of participants in a private blockchain is limited, which is why fewer validators are required to carry out consensus protocols to reach a final decision. This makes its performance much faster and therefore easy to scale.

  • No Anonymity 

In a private blockchain, there is no anonymity as users are known to the owner. Documentation and other information need to be provided for the user’s identity to be confirmed. 

Private blockchain advantages and disadvantages


  • Empower Enterprises

A private network works towards empowering enterprises. Rather than focusing on individuals, it focuses on the benefits organisation as a whole. These blockchain solutions are usually for the enterprise’s internal systems. 

  • No Illegal Activity

Individuals invited into the network are made to go through an authentication process. This ensures that all participants are verified, thus reducing the possibility of any illegal activities.

  • More Scalable

Due to its limited entry, private blockchains have fewer nodes on the network. This means any implementation of changes and features on the network can be done easily, making it more scalable. 


  • Centralised

This blockchain is usually used by enterprises and businesses which is why it is more centralised. It is controlled by one central authority, which authenticates and validates users.

  • Requires Trust

Since only a few trusted participants have the authority to verify transactions, external players need to trust the private network, while having no control over verification.

  • Less Secure

A private network has fewer nodes that validate transactions making it easier for hackers to manipulate or take control of the network. It is more susceptible to data breaches and other security threats, and therefore less secure.

Private Blockchain Use Cases

Now that we have a better understanding of private blockchains and how they work, let’s have a look at some of their use cases in the business world.

  • Logistics & supply chain

Due to their security and privacy, private blockchains are a popular choice in the logistics industry. It is used to track every stage of an item’s delivery process in a supply chain. 

  • Financial services

The financial services industry has also gotten a massive boost with the help of private blockchains. Its cryptography key and digital ledger help companies identify their customers, while its regulatory compliance allows for the use of automated smart contracts. 

  • Healthcare

In the healthcare sector, private blockchain technology can be used to secure and track patient data. It helps avoid duplication with its distributed ledger, provides confidentiality and gets rid of other management issues.

  • Banking 

With the help of this blockchain platform, payments and fund transfer settlements are made much faster in banking. Organisations are also looking at the use of stablecoins, a cryptocurrency that would work as a part of a centralised network, where the issuing bank or investment company would have control over the network.

Private Blockchain Examples

Why private blockchain? 

Private blockchains are seen as more desirable for business adoption as opposed to public blockchains because of their viability and promising nature. What makes it more beneficial is its scalability, transaction validation speed, computing and energy power, security and several other factors. Even though the idea of a private blockchain deviates from the basic ideology of blockchain, that is decentralisation, it is still a more practical choice. 

Since there are different types of blockchain technology and numerous concepts, it is important to learn more about them and their features so that an informed decision can be made for their application in the real world.

More contents to be discovered

If you are interested in discovering how blockchain is implemented in the industry, these are some of the best resources that can help you out!

Learn the skills of Fintech

Learn the skills of Fintech

More To Explore

Frequently Asked Questions

The Centre for Finance, Technology & Entrepreneurship (CFTE) is a global education platform that aims to equip financial professionals and organisations with the necessary skills to remain competitive in a rapidly changing industry. Our leading training programmes, curated by global industry experts, help talent build skills to join the digital revolution in finance. CFTE’s courses are globally recognised with accreditations from ACT, IBF, CPD, SkillsFuture and ABS.

At CFTE, our mission resonates with every learner’s goals to rapidly advance in their career, to thrive in their next project or even to lead the disruption in finance with their own venture. To help you do this, CFTE gives you the tools you need to master the right skills in digital finance. We bring exclusive insights from leaders that are steering the developments in the financial sphere from global CEOs to disruptive entrepreneurs. With CFTE you don’t just learn what’s in the books, you live the experience by grasping real-world applications.

If you are looking for rich insights into how the Financial Technology arena is transforming from within, we can help you get the latest knowledge that will stir things up in your career. CFTE offers leading online programmes in digital finance, covering an expanse of topics like – Payments, AI, Open Banking, Platforms, Fintech, Intrapreneurship and more, that will help you conquer the financial technology landscape. With this expertise at your disposal, you will be on track to turbocharge your career.

You will be learning from a curated line-up of industry leaders, experts, and entrepreneurs hailing from Fortune 500 companies and Tech Unicorns, among others. They will each be presenting their knowledge and experience in the field of digital finance. No matter if you are embarking on a new journey or fortifying your role, these lecturers and guest experts will guide you through the perspective of established institutions like – Starling Bank, Wells Fargo, tech giants like – Google, IBM, successful startups such as – Kabbage or Plaid, among many more!