Advantages and Disadvantages of Public Blockchains Explained

Public blockchains are the backbone of Bitcoin and Ethereum, but they’re not magic. They give you freedom, transparency, and security - but at a cost. If you’ve ever waited 20 minutes for a transaction to go through, or paid $50 in fees to send $100 worth of crypto, you’ve felt the downside. This isn’t theory. It’s real. And it matters.

What Makes a Blockchain Public?

A public blockchain is open to anyone. No permission needed. You don’t need to apply, get approved, or pay a fee to join. Anyone can download the software, run a node, verify transactions, or send crypto. Every transaction ever made is visible to everyone. That’s it. No central bank. No company controlling it. Just code, cryptography, and thousands of computers around the world agreeing on what’s true.

Bitcoin started this in 2009. Ethereum expanded it in 2015 with smart contracts. Today, over 100 million unique wallet addresses exist across major public chains. The Bitcoin network processes 300,000 to 400,000 transactions daily. Ethereum handles over a million. These aren’t small numbers. But they’re also nowhere near Visa’s 1,700 transactions per second.

Advantage 1: Decentralization Means No Single Point of Failure

Centralized systems - like banks or PayPal - have one boss. If that boss gets hacked, shuts down, or changes the rules, you lose. Public blockchains don’t have a boss. They’re run by a network of strangers. Thousands of nodes spread across continents. Even if half of them go offline, the network keeps running.

This isn’t just a tech detail. It’s political. It’s economic. It means governments can’t freeze your wallet. Corporations can’t delete your transaction. Censorship becomes nearly impossible. That’s why activists, journalists, and people in countries with capital controls use Bitcoin and Ethereum. It’s not about speculation. It’s about survival.

Advantage 2: Transparency Builds Trust Without Intermediaries

On a public blockchain, you can look up any transaction. Ever. Go to blockchair.com/bitcoin right now. Type in any Bitcoin address. You’ll see every coin it ever received or sent. No hiding. No secrets.

This level of openness removes the need for auditors, lawyers, or middlemen. If you’re paying a contractor in crypto, you don’t need to trust them. You can verify the payment was sent. You don’t need a bank statement. The blockchain is the statement. This transparency is why supply chain companies are testing public blockchains to track food or medicines. If a box of medicine moves from factory to pharmacy, you can see every step - publicly.

Advantage 3: Immutability Keeps Data Permanent

Once a transaction is confirmed on a public blockchain, it’s nearly impossible to change. Not hard. Nearly impossible. To alter a single block, you’d need to control more than half the network’s computing power - and do it faster than everyone else updates the chain. That’s called a 51% attack. It’s been attempted. It’s failed. On Bitcoin, it’s practically unthinkable.

This permanence is why public blockchains are used for digital identity, land registries, and voting systems. If your diploma is stored on-chain, no university can erase it. If your vote is recorded on a public ledger, no official can delete it. That’s powerful. But it’s also scary. Mistakes can’t be undone. Send crypto to the wrong address? Too bad. No customer service. No refund.

Advantage 4: User Empowerment and Permissionless Innovation

Anyone can build on a public blockchain. No approval. No pitch deck. No venture capital. If you have code, you can launch a token, a marketplace, or a lending app. That’s how DeFi exploded. In 2020, a handful of developers built protocols like Uniswap and Aave on Ethereum - no company backing them. Today, those platforms manage over $10 billion in assets.

That’s the beauty of permissionless innovation. You don’t need permission to create value. But that freedom comes with risk. Most DeFi apps fail. Many are scams. But the ones that work? They change finance forever.

Disadvantage 1: Slow and Expensive Transactions

Bitcoin can only handle 7 transactions per second. Ethereum does 15-30. Compare that to Visa’s 24,000. When demand spikes - during an NFT drop, a DeFi surge, or a meme coin frenzy - the network clogs. Transactions sit in a backlog. Miners prioritize those with the highest fees. So you pay more. Or you wait hours.

In 2021, Ethereum gas fees hit $700 for a single trade. In 2023, during a major NFT launch, users paid $200 just to mint a digital image. That’s not just inconvenient. It’s exclusionary. If you’re trying to send $10 to a friend in Nigeria, paying $50 in fees doesn’t make sense. Public blockchains work best for large-value transfers, not small daily payments.

Disadvantage 2: High Energy Use (Even After Ethereum’s Shift)

Bitcoin still runs on Proof of Work. That means miners compete to solve math puzzles using massive amounts of electricity. One Bitcoin transaction uses as much power as an average U.S. household does in two days. That’s not sustainable.

Ethereum fixed this in 2022 by switching to Proof of Stake. Energy use dropped by 99.95%. Now, it uses less than a household lightbulb per transaction. But Bitcoin hasn’t changed. And many newer public chains still rely on energy-heavy models. If climate concerns matter to you, not all public blockchains are equal.

Disadvantage 3: Governance Is Messy and Slow

Who decides what changes happen on a public blockchain? No one. That’s the point. But that also means decisions get stuck. In 2017, Bitcoin developers argued over block size. Some wanted bigger blocks to handle more transactions. Others feared centralization. The split led to Bitcoin Cash - a new chain that copied Bitcoin but changed the rules.

Ethereum had a similar moment in 2016 after the DAO hack. $60 million was stolen. The community voted to reverse the transaction - a move against blockchain immutability. That created Ethereum Classic. Two chains. One original. One changed. Governance debates like this happen constantly. They’re messy. They take months. And they create uncertainty. Enterprises hate that.

Disadvantage 4: Privacy Is a Myth

Just because you’re anonymous doesn’t mean you’re private. On a public blockchain, your wallet address is visible. Every transaction you make is public. If someone links your address to your real identity - through an exchange, a social media post, or a public donation - your entire financial history is exposed.

That’s why you can’t use Bitcoin to store medical records or payroll data. You can’t use Ethereum to track confidential contracts. Even if you use a privacy coin like Monero, most exchanges don’t support it. Public blockchains are transparent by design. Privacy requires extra tools - and even then, it’s not foolproof.

Disadvantage 5: Hard to Use for Businesses

Most companies don’t use public blockchains for core operations. Why? Because they need reliability. Predictability. Speed. Public chains don’t deliver that. Gas fees spike unpredictably. Transactions take minutes. Nodes can go offline. You can’t guarantee uptime.

That’s why Walmart, Maersk, and Deutsche Bank use private or consortium blockchains. They control who joins. They set the rules. They get speed and privacy. Public chains are great for open finance and digital ownership. But for supply chain logs, HR records, or internal accounting? Not yet.

Who Should Use Public Blockchains?

Public blockchains aren’t for everyone. But they’re perfect for specific cases:

• Cryptocurrency holders who want censorship-resistant money
• DeFi users who want to lend, borrow, or trade without banks
• Developers building open apps with global access
• Activists or citizens in repressive regimes needing financial freedom
• Artists and creators minting NFTs with verifiable ownership

If you need speed, privacy, or enterprise-grade reliability? Look at private blockchains or centralized systems. Public chains aren’t better. They’re just different.

The Future: Layer 2s and Hybrid Models

People aren’t giving up on public blockchains. They’re fixing them. Layer 2 solutions like the Lightning Network (for Bitcoin) and Arbitrum, Optimism (for Ethereum) are scaling transactions off-chain, then settling them on the main chain. Total value locked in Layer 2s crossed $10 billion in 2024.

Hybrid models are also rising. Think of a company using a public blockchain to verify a product’s origin - but storing sensitive data on a private server. The public chain proves authenticity. The private system keeps details confidential.

Public blockchains won’t replace banks. But they’re changing how we think about trust. They’re proving you don’t need a central authority to make value transfer work. That’s revolutionary. Even with all their flaws.