Making Sense of Public Versus Private Blockchains for Banks | PYMNTS.com (2025)

When financial institutions and payments players talk about their “blockchain strategy” today, what they’re really grappling with is architecture.

Amid the noise surrounding crypto, tokens and Web3 hype cycles, the most consequential choice for builders, product leaders and decision-makers in the financial services and payments space often boils down to a deceptively simple question:public or private?

After all, not all blockchains are built the same. For stakeholders in financial services and payments ecosystems building infrastructure, developing new products, or simply assessing risks around embracing on-chain operations, understanding the difference between public and private chains is key to informing any crypto or blockchain strategy.

Both iterations of blockchain technology promise some version of faster, more secure and more transparent transactions. But, under the hood, they are fundamentally different; and for institutions operating at scale or under regulatory scrutiny, those differences can matter immensely.

Read more:5 Blockchain Projects the World’s Biggest Banks Are Behind

Trust in the System, or the System of Trust?

Public blockchains, like Bitcoin, Ethereum and Solana, are open networks. Anyone can participate, validate transactions and view the ledger. They’re decentralized by design, governed by protocol rules and maintained by distributed communities of node operators.

Private blockchains, on the other hand, are permissioned systems. Access is restricted to selected participants, usually enterprises or consortia, who control who gets to read from and write to the network. Think of JPMorgan’s Onyx platform and other banking initiatives where a public blockchain’s transparency can inadvertently reveal sensitive information.

Public blockchains offer radical transparency but limited control. For institutions used to operating in closed systems, the idea that anyone could audit their transactions, or build interoperable layers on top of their infrastructure, is both powerful and potentially threatening.

In public chains, trust is algorithmic. Consensus mechanisms like proof of work or proof of stake ensure that no single entity can manipulate the ledger. The system is the source of trust.

Private blockchains, meanwhile, deliver enterprise-grade control and governance. But they sacrifice the kind of transparency and resilience that make public blockchains attractive for high-trust, low-friction applications like cross-border payments, stablecoins or tokenized assets.

In private chains, trust is institutional. Participants must trust the consortium, or the company running the network, not to change the rules unilaterally or abuse access. This can be entirely acceptable for closed-loop systems like supply chain finance, interbank settlement or corporate treasury management.

Read more:Blockchain Interoperability Hits the Right Note for Crypto Payments

Strategic Fit, Not Ideological Purity

Ultimately, the choice between public and private blockchain architectures isn’t about ideology, it’s about strategy. What are you building? Who are you serving? What risks are you managing?

There’s no one-size-fits-all solution. What’s becoming clear is that the future of financial infrastructure will be multi-chain, with smart routing between public and private environments depending on context.

For a global remittance provider seeking interoperability across borders and partners, a public chain might offer better reach and lower friction. For a bank digitizing its internal settlement processes, a private chain may offer better security, governance and control.

On Thursday (March 20), Circular Protocol,Arculus by CompoSecureand IT Lab announced that they plan to launch a blockchain-compliant ecosystem for healthcare providers in the U.S. market in the second quarter. Circular Protocol uses a dual approach, offering both private and public blockchains within its architecture.

While preconceptions have favored private over public blockchain for regulated industries due to strict data privacy requirements public blockchain has numerous potential benefits to serve the unique needs of healthcare and other regulated industries that must adhere to numerous requirements, according to the PYMNTS Intelligence andSolanacollaboration, “Blockchain’s Benefits for Regulated Industries.”

Still, as financial institutions tokenize real-world assets (RWAs), FinTechs experiment with programmable payments, and more of consumers and enterprises financial lives moves onto the blockchain, the line between public and private chains is set to blur even further.

For decision-makers in financial services, this is both a challenge and an opportunity. The right blockchain architecture won’t just support your current business model — it will shape your strategic flexibility, regulatory posture and innovation capacity for years to come.

Because in the blockchain world, the architectureisthe strategy. And innovative applications of that architecture are already transforming areas such ascorporate treasury operations.