The big difference between public and private blockchainsis related to who has access to participate in the network, running the consensus protocol, and maintaining the blockchain.
A public blockchain network is open, and anyone can join and participate. The network typically has a game theory-based incentive mechanism that encourages more participants to join the network. Bitcoin remains today the largest public blockchain in production.
A private blockchain network requires an invitation validated by the network’s creator or by a set of rules when the creator created the network.
Companies that open a private blockchain typically do so with a permissioned network to restrict who can participate in the network and transact. The access control mechanism may vary; it may be the participants who decide future entrants or a regulatory authority that grants the licenses to participate. Once an entity has joined the network, it will play a role in maintaining the blockchain.
Federated or consortium blockchain
This type of blockchain eliminates the complete autonomy of a single entity over a blockchain.
Basically, in this type of network, a group of represented companies or individuals come together to make better decisions for the entire network. These groups are called consortiums or federations.
Unlike public blockchains, they do not allow anyone with internet access to participate in verifying transactions. Federated Blockchains are faster (more scalable) and provide more transaction privacy.
Consortium blockchainsare used in the banking sector and the energy sector.
A group of pre-selected nodes controls the consensus process. For example, one can imagine a group of 15 financial institutions, each operating a node and of which 10 must sign each block for the block to be valid.