Blockchain Almanac: Types of Networks — Public, Private, and Hybrid

Blockchain often sounds like a single concept, but in reality it is a whole group of technologies with different purposes and architectures. Behind this term lies not one network, but many parallel paths: some are open to everyone, others are accessible only to a select few, and still others combine both approaches. This article reveals the classification of the three main types of blockchain networks and their practical application.

Public networks and maximum openness

A public blockchain operates on the principle of complete accessibility — anyone can install special software (a node) that synchronizes with the network and stores a complete copy of all transactions. Management is decentralized: decisions are made by thousands of independent network participants through voting mechanisms.

Bitcoin pioneered this model, and Ethereum developed the concept further by adding smart contracts. Litecoin offered alternative ways to confirm transactions to speed up processing.

Advantages:

• Resistance to censorship and external control
• Transparency of all operations — any participant can verify each transaction
• Security through distribution: the more independent nodes there are, the more difficult it is to attack the network

Limitations:

• Low transaction processing speed (7–15 operations per second)
• Increased fees during high network traffic
• High energy consumption — miners solve complex mathematical problems that require significant computing power

Private networks and corporate efficiency

A private blockchain operates within a limited group of participants. Administrators control who can read data and record new transactions, making such solutions popular in the business environment.

Hyperledger Fabric, R3 Corda, and Quorum are key examples of private networks.

Advantages:

• High processing speed (1000+ transactions per second)
• Confidentiality of corporate information
• Low operating costs — no need for energy-intensive calculations

Limitations:

• Centralized management creates a single point of vulnerability
• Dependence on the honesty of administrators
• Limited innovation due to the closed nature of the ecosystem

Hybrid networks and balanced solutions

Hybrid blockchain combines elements of public and private models. Some information remains publicly available, while some remains confidential, allowing organizations to demonstrate transparency in key processes while maintaining commercial secrecy.

Dragonchain, XinFin, and Multichain represent different implementations of the hybrid approach.

Advantages

• Customizable balance of transparency and privacy
• Flexible access rights management for different user groups
• Moderate processing speed (100–500 transactions per second)

Limitations

• Complexity in design and implementation
• Need for careful consideration of network management rules

Comparative characteristics

Practical application

• Government agencies in a number of countries are implementing hybrid blockchains for digital identification: basic data is public, personal information is protected
• Large corporations use private networks to track supply chains and internal settlements
• DeFi projects are built on public platforms, using openness as the basis for trust

Connection with trading strategies

Each type of network affects the volatility, liquidity, and correlation of tokens, which can be taken into account by filters for starting the Veles bot when building a trading system. The Veles Finance team has demonstrated the effectiveness of trading strategies on various blockchains, showing how their characteristics affect the effectiveness of algorithmic approaches:

• Veles Daily — cycles and flagships

Conclusion

Understanding the differences between types of blockchain networks is critical for participants in the crypto ecosystem. Public networks provide maximum decentralization and transparency, private networks provide speed and control, and hybrid networks offer a compromise. Perhaps the next issues of the Almanac will feature a detailed analysis of the architecture of specific platforms, which will help when considering assets and developing trading ideas.

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[Full table of contents for the Blockchain Almanac]