How to create a private blockchain for enhanced security? A step-by-step guide for businesses

chirag January 10, 2024
create private blockchain

In this world where finance and technology dominate the entire digital ecosystem, digital investments have emerged as a captivating choice, capable of grabbing the attention of seasoned investors and curious newcomers alike. The surge of digital ledgers like Bitcoin and Ethereum has given rise to a new era of financial possibilities, promising incredible returns and disrupting traditional markets.

But with great promise comes great responsibility, and the increasing popularity of digital investments has raised significant security concerns. It is safe to say that dealing with digital assets and safeguarding your hard-earned money is one’s top priority. Thus, enters the hero of the story – the private blockchain.

A private blockchain is a decentralized distributed ledger operated by a single entity or a group of participants that can control access to the network. It has the power to determine who can view and create data on the blockchain, ensuring higher privacy and control compared to public blockchains. More details on the subject will be discussed later in the blog.

Well, these private blockchains are gaining instant popularity among businesses, all thanks to their capability to provide a solution for data security, copyright violation and infringement, streamlined operations, and improved transparency. These decentralized ledgers offer numerous benefits, allowing organizations to leverage blockchain technology while controlling their data and access. Furthermore, they provide enhanced security, privacy, efficiency, and cost savings, making them a valuable tool for driving innovation and unlocking new business opportunities.

The private blockchain is like a strong entity that provides top-notch security and control. It creates a safe space for digital assets with encrypted walls and limited access. You can create a private blockchain and personalize it according to your requirements while ensuring maximum protection for your investment and data.

According to the MarketsandMarkets report, the overall blockchain technology market size was valued at $7.4 billion in 2022 and is expected to reach $94 billion by 2027, witnessing a CAGR of 66.2% from 2022 to 2027. The increasing market share can be attributed to businesses’ increasing adoption of blockchain solutions for applications such as payments, smart contracts, documentation, digital identities, and more. As per the reports, the most popular sector for investment in the blockchain ecosystem was Web3, followed by DeFi.

US Blockchain technology market

This blog will help you understand the nitty-gritty of how to create a private blockchain, its benefits for the business, and its multiple use cases. So, let’s explore the world of private blockchain in detail and discover what advantages it can bring to your business.

But before diving into all the details, let us shed a brief light on what exactly is a private blockchain and how it works.

Private blockchain for your business

What is a Private Blockchain?

A private blockchain is a decentralized and distributed digital ledger that operates within a restricted ecosystem, accessible only to trusted participants. Unlike public blockchains, private blockchains offer a more exclusive and secure environment, ideal for businesses and organizations seeking confidentiality and control over their data.

In a private blockchain for businesses, access to the network is confidential, and all the participants must be granted explicit authorization to contribute to it. This access control safeguards sensitive information from unauthorized access and manipulation from external malware practices and thefts.

Private blockchains are widely used in industries prioritizing data privacy and security, including finance, healthcare, supply chain management, and government sectors. For instance, financial institutions employ private blockchains to enable secure and efficient cross-border transactions among authorized parties, improving operational efficiency while complying with regulations.

Private blockchain

How to Build a Private Blockchain Platform?

Creating a private blockchain is a sure-shot way of offering businesses and organizations a secure and efficient way to manage their private data and transactions. Here is the stepwise process to build a private blockchain. It is essential to understand that partnering with a blockchain development firm can help you put things into perspective while making way for optimized resource management.

Steps to build a private blockchain platform

Define the Purpose

This step of private blockchain development involves determining the specific use case and objectives. This allows the development team to tailor the blockchain solution per your unique business requirements and effectively comprehend the intended application’s challenges.

Select the Consensus Algorithm

During this stage, the private blockchain developers choose a consensus algorithm suitable for your requirements, such as Proof of Authority (PoA), Practical Byzantine Fault Tolerance (PBFT), or Delegated Proof of Stake (DPoS).

Set Up the Network

A permissioned network will be established in this phase with authorized participants who will serve as nodes and validate transactions.

Choose the Blockchain Platform

In order to create a private blockchain solution, this crucial step includes choosing a suitable blockchain platform like Hyperledger Fabric, Corda, or Quorum that aligns with your business needs and offers the desired features.

Design the Smart Contracts

After choosing the desired blockchain platform, it is now time to create and deploy smart contracts that will automate agreements and processes within the private blockchain network.

Implement Data Encryption and Test the Blockchain

Strong encryption is crucial for safeguarding data in transit and at rest, ensuring the integrity and privacy of information. Furthermore, conducting audits to test the blockchain network for vulnerabilities is essential while ensuring proper functionality and compliance.

Deploy and Maintain the Network

During this stage of private blockchain development, the private blockchain network will be deployed and protocols will be established for ongoing maintenance, updates, and backup procedures.

How do Private Blockchains Operate?

Private blockchains usually act as decentralized and distributed digital ledgers, just as public blockchains do. However, they are limited to a specific group of authorized participants and are not open to the public. Only a certain group of participants are given permission to access and contribute to the blockchain network.

Private blockchains utilize an access control mechanism to restrict participation in the consensus process to trusted entities. This mechanism validates transactions and adds them to the blockchain, thereby enhancing overall security and privacy. As a result, private blockchains are particularly well-suited for industries that require protecting sensitive data from public access.

Private blockchains for businesses utilize a consensus algorithm to ensure agreement among authorized nodes regarding transaction validity and order, resulting in streamlined and efficient consensus processes. This leads to faster transaction confirmation times and increased data processing throughput compared to public blockchains.

By offering a permissioned network, faster transaction processing, and customizable governance, private blockchains enable enterprises in diverse industries to leverage distributed ledger technology while safeguarding sensitive information.

Advantages of Private Blockchain Development for Businesses

By leveraging private blockchain technology, businesses can enhance data security, privacy, and collaboration while facilitating scalability. Let us look at the multiple benefits offered by private blockchain development for businesses:

Benefits of Private Blockchain Development for Businesses

Enhanced Security

Private blockchains provide enhanced security compared to public blockchains by limiting participation to authorized entities, thereby minimizing the risk of unauthorized access, data tampering, and malicious activities. These blockchains use permissioned networks that make the participants undergo verification and validation, thereby establishing high trust within the network. Private blockchains are ideal solutions for safeguarding sensitive information considering their use of various cryptographic techniques like digital signatures, capable of ensuring data integrity.

Cost Savings and Boosted Efficiency

One of the most sought-after advantages of private blockchain is cost savings. Private blockchains simplify business operations by removing intermediaries and automating trust. This makes transactions faster, reduces mistakes, and minimizes delays. It also helps optimize cost by cutting out intermediary fees and time-consuming processes. These benefits are especially important in industries like supply chain management and finance, where accuracy and speed are paramount.

Increased Transparency

A shared ledger is created by private blockchains that cannot be tampered with. Furthermore, the transactions are time-stamped and linked to create an unchangeable record. This transparency ensures that everyone on the network has the same information, reducing the chance of disagreements. In industries like healthcare and finance, private blockchains make it easier to follow regulations and undergo audits, which builds trust and ensures compliance.

Enhanced Data Privacy

One of the most sought-after benefits of private blockchain development is enhanced data privacy. Enterprise Private blockchains offer selective disclosure, allowing blockchain development companies and other companies to choose what information to share with specific participants while maintaining confidentiality. This level of privacy ensures that sensitive information is only shared with authorized parties, reducing the risk of unauthorized access or data breaches. This allows organizations to mitigate concerns about data misuse and ensure compliance with privacy regulations like GDPR or HIPAA.

Streamlined Collaboration

Private blockchains facilitate secure and efficient collaboration by offering organizations a trusted and shared infrastructure for data exchange. They allow businesses to create a secure network of trusted participants that removes the need for intermediaries. Furthermore, real-time tracking of transactions builds trust among stakeholders and improves collaboration.

Scalability and Customization

Private blockchains provide scalability and flexibility to meet the expanding requirements of businesses. These blockchains are optimized for handling high transaction volumes, ensuring business performance is not compromised. Companies can customize and implement smart contracts tailored to their operations, improving operational efficiency. Furthermore, the seamless integration with existing systems facilitates a smooth transition to blockchain technology without disrupting ongoing operations.

Examples of Private Blockchain

Many examples highlight the uses of private blockchains across various industrial sectors. It provides secure and authorized access to trusted participants, enabling companies to improve data sharing, streamline operations, and build stakeholder trust. As blockchain technology evolves, more industries may explore and create a private blockchain to meet specific business needs and improve efficiency and security.

Private blockchain examples

Hyperledger Fabric

Hyperledger Fabric is a prominent example of a private blockchain widely used for supply chain management. It allows businesses to securely share data and information, streamlining the complexities of supply chain operations.

For example, Walmart utilized Hyperledger Fabric private blockchain to increase food supply chain transparency. The private blockchain only allowed the authorized participants to securely access the shared data in a permissioned network, thereby ensuring accuracy and traceability. This implementation improved food safety and reduced tracking time from days to seconds. The transparency further facilitated the quick identification of contamination sources, enhancing supply chain efficiency and consumer trust.


Corda is another famous private blockchain example that has made it large in the industry. In the BFSI ecosystem, Corda is a notable private blockchain financial organizations use. They leverage Corda to securely and efficiently share sensitive financial information, making way for smoother transactions and improved collaboration within the industry.


For financial transactions, Quorum has emerged as a popular permissioned private blockchain. Many large corporations use Quorum for its enhanced privacy and security features, making it an attractive alternative to traditional financial platforms.

Multiple Use Cases of Private Blockchain

Enterprise private blockchains have become a powerful solution for businesses seeking secure and efficient data management. These real-life examples demonstrate how private blockchain development can provide customized solutions to meet specific business needs and drive innovation in the digital age. Let us look at the private blockchain use cases in detail below:

Multiple private blockchain use cases

Supply Chain Management

One of the most sought-after private blockchain applications is their capability to revolutionize supply chain operations for businesses. Private blockchains provide a secure and transparent platform that ensures the traceability of goods, effectively reducing instances of fraud and counterfeit products.

[Also Read: How is Blockchain Disrupting Supply Chain Management]

Financial Services

Private blockchains can streamline cross-border payments, facilitating secure data sharing among financial institutions and expediting the settlement process.

[Also Read: Blockchain in Fintech: A Catalyst for Disruption in Finance World]


Private blockchains play a crucial role in the secure sharing of patient data, thereby improving interoperability and ensuring compliance with data privacy regulations.

Intellectual Property Rights

Private blockchains play a crucial role in safeguarding copyrights and patents by providing a secure ownership and licensing management platform.

Identity Management

Identity management is another one of the famous  private blockchain applications that has helped businesses streamline their conducts. Private blockchains make way for a secure digital identity verification that can reduce identity theft and fraud in online transactions.

Real Estate

In real estate, private blockchains can enhance property transaction transparency and streamline transfers that can mitigate fraud and ensure efficient property management.

[Also Read: How Adoption of Blockchain in Real Estate Changing the Scenario?]


In the insurance sector, private blockchains facilitate automated claims processing, improving data accuracy and fraud detection.

Best Practices for Using a Private Blockchain

To ensure the successful implementation and operation of private blockchains, many industry best practices are vital to implement. Let us look at them in detail:

Best practices to create a private blockchain

Choose a Consensus Algorithm

When choosing an algorithm for nodes agreement, it is important to select the one as per your business requirements carefully. Some options to consider are Proof of Authority (PoA), Practical Byzantine Fault Tolerance (PBFT), and Delegated Proof of Stake (DPoS).

Use a Permissioned Network

One of the most sought-after practices to create a private blockchain is to use a permissioned network. To enhance security and scalability, ensuring that only authorized people with proper credentials can participate in the network is crucial.

Use Strong Encryption

To safeguard your blockchain against attackers, employ strong encryption techniques for data in transit and at rest. Additionally, adhere to secure key management protocols.

Ensure Network Resilience

We need to establish a strong network infrastructure that can handle potential disruptions. This includes implementing a well-defined disaster recovery plan, conducting regular backups, and having protocols to address possible attacks.

Use Smart Contracts

Self-executing smart contracts can be implemented to automate the execution of agreements, providing security and integrity for transactions.

Ensure Compliance

To maintain legal compliance in order to create a private blockchain, it is vital to adhere to associated laws and regulations, including anti-money laundering (AML) and know-your-customer (KYC) requirements.

Regularly Test and Audit

Frequent testing and audits are essential to ensure the proper functioning and security of the blockchain. It is recommended to conduct penetration testing, vulnerability scanning, and code audits before implementation.

Partner with a Dedicated Blockchain Development Firm

You should consider partnering with a specialized development firm like Appinventiv that offers private blockchain development services and has extensive experience building and deploying several projects. Our experts can create a private blockchain while addressing complex challenges and customizing them to meet your business requirements.

Leverage private blockchain technology into your business explore our blockchain service


How Can Appinventiv Help You Build a Private Blockchain Network?

Private blockchain development offers a myriad of advantages to businesses. They enhance the overall security, efficiency, and privacy of data while facilitating collaboration and scalability. From protecting sensitive information to increasing transparency, private blockchain are the entities that can help you thrive in the digital age. Thus, evaluating your business needs and deciding if a private blockchain is the right solution to meet your goals and stay ahead of the competition is advisable.

Appinventiv is a dedicated private blockchain development company with years of expertise in the field. Our skilled blockchain developers can guide businesses through the entire process of creating a private blockchain, all the way from defining the purpose and use case to implementing and deploying the platform. Our customer-centric approach for blockchain development services ensures that the solution is tailored to meet each business’s specific needs and objectives. By prioritizing security and efficiency, we strive to utilize cutting-edge encryption techniques and consensus algorithms to create a robust and scalable network.

We recently collaborated on the blockchain-based Empire App, a mobile platform that offered guests a seamless and transparent hotel-booking experience. The immutability and transparency of the blockchain solved the double booking issue and eliminated third parties from the transactions.


Get in touch with our experts to build a private blockchain for your business venture now!


Q. What is the difference between a private blockchain and a public blockchain?

A. Private blockchains are the digital ledgers that are restricted to a specific group of participants who have access to the network, providing businesses with more privacy and control. They are often used for internal purposes where sensitive data must be protected from public view, so they are more suitable for industries such as finance, healthcare and supply chain management. On the other hand, public blockchains are open to everyone, allowing anyone to participate, view and verify transactions, but with reduced privacy and control, making them suitable for decentralized applications and publicly available cryptocurrencies.

Q. How much does it cost to build an app on a private blockchain network?

A. The overall cost to create a private blockchain-based app can vary from $50,000 to $300,000. There are further several factors that can impact the overall cost of development such as the location of the hired app development firm, the overall complexity of the app, the consensus algorithm used, customization and security requirements, etc. Get in touch with blockchain developers to get cost estimates based on your custom business requirements.

Q. How can you secure your private blockchain?

A. Securing a private blockchain is essential to protect sensitive data and ensure the integrity of transactions. To achieve this, access control can be implemented to restrict the participation to a few limited participants, creating a permissioned network. Strong encryption techniques can be used to safeguard data during transmission and while stored on the blockchain. A robust consensus mechanism is chosen to ensure all authorized nodes agree on the validity of transactions.

In addition to these, regular security audits and vulnerability testing can be conducted to identify and address potential vulnerabilities in the network. Additionally, smart contracts that can automate agreements should be carefully designed and audited for potential weaknesses.

Blockchain Evangelist
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