I came across an article where Umar Farooq, CEO of JPMorgan Chase’s asset-tokenization platform, Kinexys, stated that public blockchains are ​"not fit"​ for large transactions due to the lack of redress.

In my opinion, private blockchains play a critical role for industries with specific requirements and criteria for blockchain networks. For instance, JP Morgan facilitates fixed-income trading through Kinexys, which handles $1–$2 billion daily in tokenized traded assets. Private blockchains are particularly appealing for institutions as they offer enhanced control, redress, and compliance with regulations.

However, public systems are essential for developing a robust and accessible ecosystem, ensuring that the best technology remains publicly available and competitive. Public blockchains also foster transparency and innovation through decentralization and community-driven development.

To clarify, a private blockchain is a network accessible only to a select group of individuals or organizations, while a public blockchain, such as Ethereum, is open to anyone.

Interestingly, institutions like UBS adopt a hybrid model, utilizing a combination of private and public blockchains to deliver their services. According to UBS, hybrid systems provide the flexibility to construct product frameworks tailored to business and operational requirements, minimizing dependence on external suppliers.

As blockchain technology evolves, the hybrid model may become a standard approach, balancing the strengths of both private and public systems.

Merging Private and Public

Another point to consider is that there is the possibility to build secure systems that have redress options on public blockchains. This approach allows companies to maintain privacy and control while benefiting from the transparency and security of public systems.

Programmable data protection refers to the ability to embed and enforce rules within the blockchain itself, ensuring compliance with policies and safeguarding sensitive data through automated processes. Zero-knowledge proofs enable verification of information without revealing the underlying details, combining confidentiality with transparency. As features are enhanced and developed to advance public blockchain networks, this becomes an attractive offer by combining the transparency and security of decentralized systems with the accountability and reliability provided by trusted companies that offer redress and are liable.

Private blockchains will continue to thrive in environments with strict regulations and compliance, such as financial services, healthcare, and government operations, where privacy and control over sensitive data are paramount. For example, institutional investment is a clear outlier where a pure private network would need to be developed and managed.