Private blockchain benefits explained

Maria Kucharczyk

01 Jul 2021.5 minutes read

Why leverage private blockchain? Learn about Hyperledger Fabric and how it can help you modernize existing business processes.

Trust is the foundation of every business relationship. When there's a lack of it, a conventional way to make cooperation possible is to introduce an authority in the form of a third-party entity. Today, almost every transaction made in the world is controlled by a third-party, but this generates costs and is time consuming.

Hyperledger Fabric changes that. This open source, industry-focused implementation of blockchain technology, introduces trust, accountability, and transparency in business settings. Any industry that would benefit from a higher level of security, privacy, and performance can consider leveraging private blockchain to reshape the way it operates and exchanges information with its business partnership network.

How does private blockchain work?

When companies interact with the help of a third-party entity instead of directly with each other, simple processes turn into lengthy procedures. The lack of trust introduces friction. There is a need for a trust enabler that guarantees seamless transactions where any personal data and sensitive corporate information is secured from unauthorized access.

To address the above-mentioned challenges in multi-party cooperations, Piotr Hejwowski explains blockchain core features like:

  • immutability,
  • replicaction,
  • and smart contracts,

and looks at them from a business perspective to determine when there are potential determinants of a successful blockchain adoption. Find out more in his post: “Do you need private blockchain?”

The main takeaway is that the private blockchain architecture puts emphasis on enabling trust. By design, it offers control over the logic and sharing of information within a set of known and authorized parties.

On top of being tamper-proof due to the mechanisms mentioned above, blockchain provides a cryptographic history of data operations. It makes it even more resistant to failure because any information on the blockchain is fully auditable.

From this point of view, blockchain is best suited for applications where it is required to have a so-called “the only, transparent source of truth” that a company can use to achieve data privacy and control over sharing sensitive information when collaborating with external business partners.

Private blockchain benefits for business


In a business context, it is necessary to protect sensitive corporate information and customer data. Blockchain is considered to be one of the most secure technologies. It ensures that data is tamper-proof, traceable, and trustworthy. Here’s how Hyperledger Fabric provides secure and trusted infrastructure for business transactions.

The extra layer of security comes from a fine grained permission control and data integrity embedded into the blockchain technology. Businesses that set up private blockchains generally set up a permissioned network and define rules for data sharing and visibility for other participants of the network. Anything recorded in the ledger can never be deleted, which later helps to facilitate audits and ensures data safety.

The ability to restrict access for some participants also reduces the likelihood of outsider attacks while facilitating the hierarchy rules and data access control in the enterprise environment. A blockchain owner can choose to permit only certain nodes to perform the transaction verification process. And later only the newly verified transactions are communicated to the rest of the network. Thus, in practice, only given parties of the network are granted permissions to access certain types of data and execute specific functions. This is an efficient and secure way to implement sensitive business processes that use sensitive corporate information.

Data privacy

You already know that the blockchain owner controls the access to the network as well as the participants’ visibility. This serves two essential needs of a corporate environment. Businesses that decide on private blockchain adoption do it to make sure they know who they’re dealing with and to ensure unauthorized participants won’t access sensitive transaction data.

Private blockchain helps organizations keep their information for authorized parties only. It provides a high level of privacy for any enterprise and is one of the main reasons why to implement the blockchain technology in the enterprise scenario.


Because there is a limited number of participants in the private blockchain network, private blockchains are faster and can process a higher number of transactions per second. Unlike public blockchains, private networks do not depend on the price of gas. They take up a lot less energy because they operate on a different type of a consensus algorithm to reach an agreement over a transaction.

Additionally, when speaking of Hyperledger Fabric, its performance is highly related with the smart contract design and the data model beneath. Transactions are automated with smart contracts which increase efficiency and speed. Both the smart contract design and client application need a special care of experienced developers to utilize the blockchain technology.


The most important question when implementing a new technology is: “Does it scale?”. Usually when you start with a private blockchain PoC, you want to start small, but later grow the network of more internal and external partners. Thus, the challenge of scalability is about not just transaction speed but, more importantly, the size of the ecosystem.

“The architecture of Fabric naturally supports sharding, where the shards are the channels themselves hosted on independent ordering services. This means, as you approach the limits of an ordering service's ability to adequately handle the transaction load of its current set of channels, you can spin up a new ordering service to host the new channels.”

Here's more about how Hyperledger Fabric performs at scale by IBM experts.


Businesses looking to reap the benefits of blockchain technology most often turn to Hyperledger Fabric. It is flexible and business-oriented. Its rich system of permissions, modularity, and unlimited possibilities of network configuration, as well as high performance with strong data consistency, are the features designed specifically for enterprise needs.

Hyperledger is developed by the Linux Foundation and supported by IBM. Discover some success stories of companies like Walmart, Sony Global Education, British Columbia, and more that are utilizing the value of private blockchain.

Thinking of a blockchain PoC?

Thinking of launching a private blockchain of your own? We can help! Let’s discuss how we can turn your idea into a successful project.

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