How to Create a Private Blockchain: A Guide for Businesses

Businesses all around the world are opting for blockchain technology. According to their leaders, about seven out of ten businesses that use blockchain report improved performance. However, 50% of the companies currently relying on blockchain are shifting towards permissioned private models instead of full-access public ones.

A private blockchain is getting a lot of attention because it allows for controlled access to data while still providing all the benefits of blockchain technology. But how does the private blockchain work, and how is it different from public ones? In this guide, we will cover everything about private blockchain while also discussing how to create your private blockchain solution for better security.

What Is A Private Blockchain?

A private blockchain is a decentralised ledger that is accessible to a limited group of participants. The network is open for use and can be contributed to by anyone who receives access through authorisation or invitation. Its customised setup allows for more efficient network management, greater security, and personalised governance.

Most of the time, a single-owning entity or association governed by trusted members centrally and privately manages the entire blockchain network. An expert Blockchain Development Company can help businesses build a customised private blockchain solution for businesses.

How Are Private And Public Blockchains Different?

The key difference between the public and private blockchains lies in their distinctive features. Here are the primary disparities between the two:

How To Create A Private Blockchain Solution For Your Business?

Private blockchain development is always carried out with a long-term vision and meticulously carries each step of the process as per the needs and goals of the business.

Specify The Goal And Needs

Before getting into the process of building a blockchain network, first, come up with the expectations from the network and the requirements it ought to meet. Carry extensive research about the business, and the customer needs to come up with a model that meets all those necessities. For example, a business can consider factors like scale of operations, customer base, data storage, and transaction type to finally carry out the blockchain development accordingly.

Choosing The Right Platform

Once the goals have been established, it’s time to select the platform that best suits the business needs and to establish a high-performing network. There are various options to consider, such as Corda, Hyperledger Fabric, Quorum, and more. Factors such as the needed extent of security, interoperability, scalability, and transparency should be taken into consideration to make the appropriate selection. Corda is best for confidentiality, Hyperledger Fabric for scalability, and Ethereum for flexibility. It’s important to align the platform selection with the specific features required for the business’s blockchain network, as the choice made now will impact future business operations.

Nodes And Network Setup

Nodes are key components of private as well as public blockchain networks. One needs to consider if the nodes would be managed through a cloud service or internally and carry the blockchain development accordingly. They are set through a careful configuration process to establish the blockchain network, keeping the security on high preference and avoiding unauthorised access. Security can be easily managed by using secure protocols and encryption.

Configuring Consensus Mechanisms

Blockchain solutions can be developed using various consensus mechanisms, but for private networks, a permissioned consensus model is often recommended. Commonly used mechanisms for blockchain business applications include Raft, Quorum, and Practical Byzantine Fault Tolerance (PBFT). They provide authority to the nodes in order to validate the tractions for better efficiency.

Utilising Smart Contracts

Leverage the blockchain capabilities to their best by deploying smart contracts, such as on Ethereum using Solidity. The process begins by writing and defining the rules and agreements that will govern the transactions within the smart contracts. Once the terms are established, the code automatically executes the contracts when those conditions are met. It is critical to pay close attention to eliminating vulnerabilities in order to safeguard the functionality of these smart contracts and protect them against potential exploits.

Compliance, Test, And Launch

It is crucial to ensure that your blockchain solution adheres to all relevant industry regulations and legal requirements. After building the network, conduct thorough and continuous testing to identify and resolve any issues. Focus on key factors such as security, functionality, and efficiency throughout the testing phase. Once the solution has been refined, launch the network and actively monitor its performance to maintain smooth operations and security standards over time.

Also Read: How Can Blockchain Be Used To Improve Supply Chain Management?

Why Do Businesses Need Private Blockchain?

The private blockchain is advisable for companies looking to improve security and privacy in their operations due to the controlled access it offers. Let’s discuss the benefits and uses of private blockchain for businesses in more detail:

Immutable And Transparent Ledger

Although the private blockchain ledger is not decentralised, it is immutable and transparent, just like a public blockchain. No third party can manipulate or alter the data once it’s recorded. All the authorised network participants even hold a copy of the distributed ledger; thus, there is no need to incorporate third parties as well. Companies in the supply chain management, financial, and auditing industries heavily depend on private blockchain development.

Efficiency And Less Cost

Private blockchain allows better efficiency in operations and reduces costs. By eliminating the need for intermediaries, companies can enjoy a seamless, streamlined, and automated workflow. This not only saves time and resources but also accelerates business operations. For example, private blockchains enable real estate companies to simplify property transactions, making the process low-cost and more efficient.

Smart Contracts

Just like a public blockchain, a private blockchain allows the use of self-executing agreements called smart contracts that work as defined by preset rules. These contracts have an automated feature that eliminates the need for human intervention in the process. When the requirements are met, smart contracts in the finance industry execute automatic transactions.

Security And Control

The permissioned network system of a private blockchain provides enhanced security by allowing for the selection of selected participants. Moreover, its cryptographic consensus mechanism contributes to resistance to tampering or any malicious activity. These features cause a high preference of healthcare organisations for private blockchain networks to record and secure doctor-patient data.

Data Privacy And Compliance

A private blockchain network can be developed and altered as per specific regulatory conditions demanded by the governing authorities. This versatility allows companies to leverage the latest technology in their business operations and stick to compliance standards at the same time. Entities can set their own rules to run the whole blockchain network while still complying with industry regulations.

Conclusion

Utilising a blockchain network for business operations can provide privacy while in addition allowing access to its other benefits. However, the process requires precision, experience, and skills to successfully carry out blockchain development. For this, you can hire Webcom Systems, a leading blockchain development company that has helped thousands of businesses by offering customised blockchain solutions. Bring transparency, security, data privacy, and efficiency to your business operations with our expertise in blockchain technology. Get in touch now.

Also Read: Blockchain Impact on FinTech: Transforming the Financial Industry