Key Limitations of Public Blockchain Networks


Blockchain has made huge strides in terms of popularity over the course of just a couple of years.

Today, organizations such as banks and supply chains are increasingly implementing distributed ledgers to facilitate collaborative data storage and management. While the majority of these organizations rely on permissioned blockchains, some use public blockchains to make their businesses more efficient and simplify data access.

Originally derived from Bitcoin protocol, public blockchain is completely open and anyone can join or participate in the network. It is permissionless which means that anyone can access and update the blockchain without seeking permission from a centralized entity. That complete openness is one of the biggest concerns of public blockchain networks.

Privacy and Security Concerns

A public blockchain like Ethereum or Ripple is designed to provide complete transparency of transactions. This is because the network lacks existing legal relationships or centralized governance. Thus, the only way to combat maliciousness is through algorithmic trust guaranteed by consensus mechanisms. But this type of transparency can also result in little to no privacy for transactions since everyone can see all transactions.

Bitcoin is said to be pseudonymous, which means that an individual’s address cannot be tied to their real-world identity.  But this pseudonymity can nevertheless be broken when an individual proves ownership of an address on an exchange. For example, Coinbase was summoned last year by the IRS to turn over certain records involving cryptocurrency transactions. It came as a rude awakening to Bitcoin enthusiasts and traders.

Incidents like these point to the need to address privacy and security concerns of public blockchains. One possible solution is to introduce “trade-offs” of aspects of the technology but those trade-offs risks to remove some of the inherent blockchain benefits. An example is invoking “private permissioned blockchain” as a response to privacy concerns of a public blockchain. But a permissioned blockchain introduces a controlling authority which goes against the spirit of decentralization. In addition, it also brings security vulnerabilities because the compromise of a controlling entity can compromise the integrity of the entire system.

As it stands, there is no identifiable use case that addresses all of these issues and then addresses the full implications of the trade-offs.

Unintended Use

Another concern revolves around the misuse of technology due to the public nature and lack of control of these blockchain networks. For example, earlier this year, reports emerged that child pornography was uploaded to the Bitcoin blockchain. The appearance of the abuse images once again highlighted how misuse by a rogue party can jeopardize public blockchains.

How did this happen in the first place? In the past, people couldn’t add full images in the blockchain as the network could support only short chunks of texts or web links. But a decision was made in January to increase the amount of data that could be added to the blockchain. This explains why it is now possible to store and link imagery on the bitcoin blockchain.

While it is inevitable to control such unintended misuse, the immutability nature of blockchain makes it difficult to remove illegal content. This potentially implicates all network participants since they are liable for any objectionable content added to the blockchain. Consequently, it would be illegal to participate in a blockchain system as soon as it contains illegal content.

Blockchain jobs in United States and Canada

To combat illegal content infiltrating public blockchain networks, some possible solutions have been implemented. For example, XRP Forensics, a community arm of Ripple, is using artificial intelligence to monitor the ledger. More specifically, they are implementing Google artificial intelligence API’s to scan all uploads for explicit content and potentially illegal content.


When it comes to public blockchains, there is a little question they are fundamentally flawed from the security and privacy perspective. They are also vulnerable to misuse. Hopefully, a solution to these problems can be found that addresses possible trade-off implications as well.

Ray Battrick is a certified blockchain expert and FinTech copywriter who is devoted to working for you to build blockchain-based applications for your business. Ray is also a FinTech copywriter who is skilled at creating persuasive content for a wide range of products, including financial technology, business blockchain, investing and more. As an avid blockchain enthusiast, Ray enjoys writing about business blockchain, ICOs and cryptocurrency investment.

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