How to Create the Best Private Blockchain for Your Enterprise

Greater Access Control

Public blockchains are available to the public and open to anyone willing to participate. Each transaction is anonymous, too.

Private blockchains, on the other hand, require users to authenticate their identity first. Enterprise users can validate each participant, giving them greater control over who becomes part of the network and what they can do within the network.

Furthermore, private blockchains do a better job of maintaining data confidentiality, ideal for enterprise users who must process complex, sensitive transactions.

High Levels of Customization

With the private blockchain, enterprise users can customize the network to suit their unique requirements. This is particularly useful for those businesses with stringent industry and regulatory needs.

Private blockchains can be modified with new features and functionalities. These include tailored payment solutions, smart contracts (self-executing contracts with terms written into the code), and automated processes. Enterprise users can also integrate private blockchains with their existing processes.

Streamline Regulatory Compliance

In addition to the customization benefits, private blockchains can be modified to meet strict industry and regulatory standards. This is particularly useful for enterprise users in heavily regulated industries, including healthcare, government, and industrial fields.

Platforms like Avalanche and EOSIO have pre-built security and compliance tools. These tools help enterprise users comply with strict data privacy laws (E.g., the General Data Protection Regulation (GDPR) in Europe and similar laws around the world). Private blockchain networks can link transactions to personal identities while keeping the underlying data concealed.

Centralization Concerns

Public blockchains operate on a decentralized network. There is no one entity or organization that controls the entire system. Private blockchains operate on a centralized network, one that is open only to authorized users.

This centralization forces all power and control to a single entity. This can raise concerns about how such entities not only choose their participants but also the level of access they provide to those participants.

Trust and Security Concerns

Centralization can raise trust and security concerns. With so much power redirected to one entity, participants may be concerned about whether the government entity is acting in the party’s best interests. Disputes may occur as a result.

Security is also delegated to one entity. One network operator sets up all security and access permission controls. If security features are misconfigured, unauthorized users may gain access and compromise the private network.

Define Your Purpose and Goals

Define the purpose of your private blockchain network. Then, link that purpose to your short- to long-term business goals. Do you want to increase efficiency, reduce costs, or enhance trust and transparency? Clarify what you hope to gain or what you hope to avoid in a concise statement.

While defining your purpose and goals, decide which aspect of your enterprise you wish to focus on. It could be supply chain management, customer relationship management, sales and marketing, or another business function.

Another step is to identify pain points. What problems can a private blockchain network address? For example, it could help address a lack of trust in digital transactions. It could also help reduce reliance on third-party entities for greater independence.

Choose the Desired Consensus Algorithm

A consensus algorithm is a set of rules and protocols. Nodes on a blockchain network reach a consensus on the authenticity and order of blockchain transactions.

With years of experience providing blockchain development services, Orient Software can help. Our experts can help you choose the best consensus algorithm for your private blockchain network. This way, you get the assurance that your network is running on the most suitable infrastructure.

Different consensus algorithms exist to suit different requirements. The most common are:

Proof of Authority (PoA)

A PoA is a consensus algorithm used primarily on private blockchain networks. Identifiers (machines with the authority to validate transactions) undergo a strict vetting process to confirm their trustworthiness. Authorized machines have permission to produce and verify transactions.

Practical Byzantine Fault Tolerance (PBFT)

A PBFT is a consensus algorithm for asynchronous systems. It allows nodes on a distributed network to reach a consensus – even if some of the nodes fail to respond or if they respond with false info. It employs collective decision-making (accounting for both correct and faulty nodes) to reduce the negative effects of faulty nodes.

Delegated Proof of Stake (DPoS)

Under a DPoS mechanism, users vote on and elect delegates to validate blocks. This is similar to a proof-of-stake (PoS) mechanism, but the process is more democratic. Users decide which validators or delegates get to validate transactions and maintain the blockchain.

Choose the Ideal Blockchain Platform

There is a variety of blockchain platforms. Some of the most prevalent include Ethereum, Solana, Cosmos, Avalanche, and Hyperledger Fabric.

While the best blockchain platform can be used for public blockchains, many support the creation of private blockchain solutions. Choose a private blockchain platform that aligns with your business goals and objectives.

Orient Software’s private blockchain development services can help you choose the best custom blockchain solutions for your enterprise. We consider important factors like scalability, security, and user-friendliness. We also determine a platform’s compatibility with your existing systems.

These considerations ensure that your platform will work as intended. And with the least possible setup time and effort.

Set up Networks, Smart Contracts, and Nodes

Once the technical specifications and business goals are established, the next step is to set up the network.

Orient Software’s blockchain software development team can set up everything for you, from developing smart contracts to enhancing data security solutions to wallets and exchanges. Together, these components contribute to a secure, efficient, and scalable private blockchain network.

Deploy and Maintain the Network

The last step is to deploy the network. This involves not just launching the network but committing to an ongoing maintenance plan. Private blockchain technology requires constant care to remain secure, available, and up to date.

If possible, have the same blockchain developers who launched your private network do the maintenance for you. This assures you that your network is maintained by the right people, experts who know how it works and the purpose it serves.