What is Public Blockchain and How Does it Work?

If you have been paying close attention to emerging technologies, you have likely encountered the term public blockchain. 

That chance increases exponentially if you have been interested in cryptocurrencies and the bull run. 

But what exactly is a public blockchain? To understand this popular term, you need to take a deep dive into the world of decentralized digital systems. The technology emphasizes decentralization, openness, and transparency. But that’s not all that there is to it. 

To learn more, join us as we give a 3-D description of public blockchain networks, how they work, their features, benefits, and potential challenges. 

Let’s get straight into it!

What is a Public Blockchain Network? 

Public blockchains are “permissionless” distributed data systems capable of recording transactions and data and are accessible by any member of the public. Individual or centralized entities do not entirely control these blockchain networks. This implies that any interested parties can view the transactions and participate in any blockchain processes. Some of these processes include transaction execution, validation, and even mere reading of the blockchain’s data or transactions. 

In simpler terms, a public blockchain has no restrictions. Therefore, anyone with a suitable device and internet connection can simply access it and start executing, viewing, or validating transactions on it. 

All these are made possible by the open and permissionless nature of the public blockchain. As such, this network infrastructure is highly responsible for the rapidly increasing reputation of decentralized ledger systems. For better context, Bitcoin and Ethereum are two of the most notable examples of public blockchains, and you know how cool and “big” those two blockchains have been in the emerging crypto community. 

Apart from the buzz surrounding public blockchains due to their increasing adoption, these awesome technological innovations have some vital features that contribute to their “openness.” Let’s quickly examine them in the next section.  

Characteristics of a Public Blockchain Network

The following are some important features every public blockchain possesses: 

1. Open Participation

Open and permissionless access is the most obvious feature of a public blockchain. Anyone can participate in the mining, validation, and transaction execution processes on the blockchain without seeking permission from any governing body. Furthermore, anyone can download and add nodes to the system. 

2. Immutability

Public blockchains are also inherently unchangeable. Once a transaction has been executed or data has been recorded on a public blockchain, it can no longer be changed. This feature is responsible for the high level of integrity and trust that public blockchains have. 

3. Decentralization

Single centralized governing bodies do not manage public blockchains. Rather, the burden of control is spread evenly among all network participants, whoever or wherever they may be. 

This is because public blockchains operate on distributed ledger technology, which stores data and records transactions using multiple nodes worldwide. Each node can access, read, and write on the public blockchain ledger. As such, there is no single point of failure, making public blockchains highly resistant to censorship and centralized control. 

4. Transparency

Combining features like decentralization, immutability, and openness makes the public blockchain highly transparent. All the transactions recorded on the blockchain network are visible to all network participants and even independent bodies. 

They can easily access and view them, but due to their immutability, they can not alter them. 

5. Consensus Mechanisms

All public blockchain networks maintain their integrity because they validate transactions using specific consensus mechanisms, such as Proof-of-Work (PoW) and Proof-of-Stake (PoS). 

Now that we have an idea of some important features that make public blockchains, indeed, public, let’s examine how these features work together to make a public blockchain operative. 

How Does a Public Blockchain Work? 

Public blockchains are able to maintain their decentralized nature as they execute, validate, and record transactions by making sure the network’s globally distributed nodes all function together as a unit. 

With each network unit performing specific functions, the inner workings of a public blockchain can be summarized as follows: 

1. Transaction Initiation

Here’s some quick trivia: 

The name blockchain originates from the fact that data is being stored in “blocks” in these networks. This data could be the details of each transaction being processed on the blockchain network. So, when a sufficient amount of data is recorded and stored on the network, the blocks are then linked together to form a chain-like structure. It’s kind of like how literal chains are linked together. 

The same applies to a public blockchain, and it all starts with a single transaction. So, a random person initiates a blockchain transaction using the public and private keys, and the chain reaction literally starts. The network now links these public and private key details with those of the recipient before both details are all gathered into a block. This is how the first block starts. 

2. Block Creation

Although the complete information has already been bundled into one, some things still need to be added to make it one complete block. These include the digital signature or code generated through public encryption processes to validate the authenticity and integrity of each transaction. Think of your normal signature that authorizes any document. 

Additionally, the transaction’s timestamp is also included in the block to indicate exactly when it happened. Now, the block is complete. 

3. Network Broadcasting

Remember we said the public blockchain has blocks distributed across different locations locally? So, whenever a new block is created on a particular node, this new addition is broadcasted to all the other nodes in the network, so every node is aware. This is one of the ways the public blockchain maintains decentralization. 

By the way, nodes are computers or devices that run the blockchain’s software. The network broadcasting process occurs so that each node in the network has a copy of every chain that gets uploaded to the blockchain as fresh blocks are continuously added to the chain. 

4. Transaction Validation

Now, here’s another crucial step in maintaining open participation in public blockchains. After the news of a new block is broadcast to all nodes, they must confirm and authenticate the addition of that block. The network participants at work here are called miners and validators.  

Public blockchains get their input before each block is added to the existing chain through consensus mechanisms such as proof-of-work and proof-of-stake. These mechanisms help verify transactions to ensure that they are valid and legitimate, maintaining their integrity. The nodes reach a consensus on each transaction.

5. Block Addition

After consensus has been reached, the new block can now be added to the existing chain. This represents the completion of a transaction after a user has correctly included their public and private keys. 

The block addition process always includes a reference to the previous block, thus forming a chain. Once the addition is complete, the record becomes immutable and can no longer be altered forever. This is why it is important for all the previous validation processes to have occurred before addition. 

6. Incentivization

Incentives are the final piece of the public blockchain puzzle. All the network participants involved in the validation process (i.e., miners and validators) get rewarded with the public blockchain’s native currency to keep them motivated to be involved in blockchain operations. This also encourages security as all the participants are invested in keeping the public blockchain safe and secure. 

With all these processes and mechanisms working together, the public blockchain is able to continue processing transactions and maintaining all the other features it comes with. This working system has some advantages over other types of blockchains, like private blockchain. Let’s get into those in the next section. 

Benefits of Public Blockchains

The features and working principles of public blockchains make them attractive for several applications. The following are some vital benefits of public blockchains: 

1. Inclusivity

Openness is a feature of a public blockchain that allows anyone to participate in the blockchain. Without permission from a centralized governing body, you or anyone else can too. This makes it more accessible to everyone. Public blockchains break down barriers by offering unrestricted access to anyone interested in using the technology. 

2. Immutability

The fact that all transactions and data validated and recorded on a public blockchain cannot be altered or tampered with is an advantageous feature for different use cases. In finance, this confers a certain level of authority on financial records, preventing fraudulent activities and other kinds of malicious intentions. 

3. Improved Security

Public blockchains use cryptography to prevent unauthorized access and secure transactions. In addition, the fact that the nodes and participants in charge of all blockchain processes are also distributed globally makes it difficult for hackers to manipulate blockchain data because the validators are scattered around the world. The same thing can’t be said for most traditional centralized finance infrastructures. 

4. Transparency and Trust

Lack of trust and transparency is another complaint that has been plaguing legacy financial systems. The open nature of public blockchains comprehensively addresses this concern. 

Transaction records are visible and available for anyone who cares to monitor them. This promotes trust and eliminates the need for intermediaries. Anyone can read, write, or audit the activities recorded on a public blockchain. 

5. Decentralization

One of the earliest and most widespread applications of blockchain technology is in digital finance. This is because the shortcomings of the much-established centralized, traditional financial systems necessitated an alternative. The finance industry needed something with little or no single point of failure. 

And that’s what public blockchains offer: the fact that no single entity controls the network. Rather, control is distributed across all the nodes and participants in the blockchain network. Therefore, public blockchains can’t just abruptly stop functioning because even if one node goes down, the others just continue to function. 

Challenges of Public Blockchain Networks

Despite all these important value-adds, public blockchains still present some vital shortcomings that make them unsuitable for several use cases. Some of them include:

1. Scalability

Public blockchains promote true decentralization and inclusivity by involving all participants in all vital validation processes. While fixation improves the system’s integrity and transparency, it is not very efficient and practical for high volumes of transactions. In fact, it actively limits the number of transactions the entire blockchain can process per time. 

Consequently, when public blockchains onboard a large number of users, the entire blockchain network starts to experience slow transaction speeds. In response, transaction fees spike, making public blockchains unideal for applications that require high throughput. 

2. High Energy Consumption

Additionally, considering the number of nodes and systems validating these transactions, it becomes obvious that they all require a significant amount of energy. Furthermore, the consensus mechanisms, such as PoW and PoS, that public blockchains employ also require high amounts of energy to validate each transaction. 

These high energy requirements present serious environmental concerns for the planet based on their by-products. 

3. Regulatory Uncertainty

Despite its juicy benefits, many people are still skeptical about blockchain technology and its potential applications, especially in high-stakes use cases. This skepticism creates a lack of clarity around the regulatory requirements for participating in blockchain operations.

Many blockchain providers and consumers do not understand their legal rights and obligations. Therefore, it is important for governments and regulatory bodies to strengthen the existing security and regulatory frameworks surrounding public blockchains to prevent the misuse of blockchain technology. 

4. Interoperability

Public blockchains are built using different distinct protocols and standards. These unique standards also govern their activities. Consequently, it is sometimes difficult for different blockchains to maintain a connection or operate with one another. 

This challenge limits the potential for cross-chain applications and transactions across different blockchain platforms. As long as they can’t exchange data seamlessly and operate with different protocols, this presents a serious challenge for adopting public blockchains for different purposes. 

5. Privacy Concerns

While it is cool that all transactions recorded on the public blockchain can be easily viewed and traced, this reality poses a serious privacy challenge for some users. There is a significant possibility that some sensitive personal details can fall into the hands of individuals with malicious intent. This is another major reason why some users who even believe in blockchain technology steer clear of public blockchains. 

6. Governance Issues 

Public blockchains are structured such that network participants must agree or reach a consensus on all individual transactions before each block is added to the blockchain. They also have to reach this consensus every time any significant decision is made on the blockchain. 

But what if they do not agree? 

The decentralized nature of public blockchains means that disagreements among participants can create confusion and disrupt the network’s activities. For instance, it could lead to forks, which split the blockchain. 

Not cool! 

Conclusion

By now, you already know that public blockchains are all about openness, and they execute this using a series of steps centered around consensus mechanisms and equal contributions from network participants. As a result, they promote inclusivity, immutability, better security, transparency, and trust. 

Nonetheless, they still find it difficult to cope with a high volume of users and require a lot of energy to function. They are also not very interoperable and present serious privacy concerns due to their transparency. 

However, many businesses still believe the benefits far outweigh their potential challenges. As such, they try to build public blockchains that minimize these concerns. Suppose you would also like to get the most out of the benefits of public blockchains. In that case, it is advisable to reach out to blockchain consultants at a blockchain development company like Debut Infotech. They know what your business needs and the public blockchain features needed to fulfill those needs. 

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