As companies outside of the fintech space attempt to integrate blockchain into their operations, they face the tough question of should they use private or public blockchains. Both offer similar solutions but there still lies many pros and cons with each. Private blockchains may offer more privacy, but public blockchains are more innovative often.
Privacy is typically one of the most important factors for many companies. It often is even the leading factor and leads a majority of companies to choose private blockchain solutions. By sticking with these centralized entities, they are just transferring their needs from financial institutions to software companies. They then do not gain the full exposure of what blockchain can offer.
It has been argued lately that companies looking to implement blockchain solutions for their business should instead look towards public networks. They cite the benefits of innovation and stronger networks along with a permission-less and decentralized nature as things private networks miss out on.
There are hurdles that must be overcome before organizations will commit to these public blockchains according to several researchers. First, regulators must make rulings on aspects of blockchains and determine what is rules as an asset, commodity and security. This has been one of the largest issues cryptos have faced, leaving a blanket of uncertainty that could make or break the industry.
The second hurdle that must be met before companies make moves towards the space is the implementation of the regulations on tokens and smart contracts. This could turn into a very time consuming process as no progress can be made until regulations are established.
A public blockchain network offers many new advantages and leads towards a more efficient market according to Paul Brody of EY’s Blockchain Initiative. Exchange of product and asset tokens for money could take place between various institutions. This can create expedited deals through packaging of numerous products.
The regulations on a process like this could be difficult but very rewarding with the proper guidance. Features such as audit, KYC and AML all could be programmed into smart contracts to occur while the deal is taking place. The opportunities of a system like this has endless benefits if companies open up to the open nature of the system.