Private Blockchain

How To Create a Private Blockchain?

When we talk about blockchain, it's often the public networks like Bitcoin that steal the spotlight. But tucked away from this limelight is a more discreet yet powerful player: "The Private Blockchain." It's like the difference between a bustling city square and a tranquil private garden. In the business world, this 'garden'—our private blockchain—becomes a sanctuary where control and privacy are not just expected but necessary. So, how does one go about creating such a digital haven?

This article will explore the complexities of creating a private blockchain from scratch, providing a step-by-step guide. Whether you're an expert developer or a curious enthusiast, our comprehensive walkthrough will equip you with the knowledge to build a secure and efficient blockchain network.

What is a Private Blockchain?

A private blockchain is characterized by controlled and restricted access to participants, led by a single organization or consortium, in contrast to the open accessibility of public networks. It maintains a traditional blockchain's decentralized ledger and consensus-based record-keeping, but participation is limited to specific individuals or groups.

This exclusivity allows for more privacy and security, making private blockchains a popular choice for businesses and institutions that require confidentiality and control over their internal processes and data. They offer the benefits of blockchain—such as immutability, traceability, and security—while also providing a way to set permissions for different users, which can help to meet compliance and regulatory requirements. In essence, a private blockchain is a restricted and often more efficient version of blockchain technology designed to suit the needs of private enterprises or organizations.

Example of Private Blockchain

Let's consider an example from the pharmaceutical supply chain for a clearer understanding. A pharmaceutical company needs to ensure the integrity of its products as they move from manufacturing to distribution centers and then to pharmacies. The company establishes a private blockchain for its supply chain management. Access to this blockchain is restricted to:

  • Manufacturing sites
  • Quality control labs
  • Distribution centers
  • Partnered pharmacies
  • Each medicine bottle manufactured is assigned a unique identifier, and this information is recorded on the blockchain. As the medicine moves through each checkpoint, the system records its status:

  • Manufacturing: The production date, batch number, and quality control results are logged.
  • Quality Control: After passing the tests, the quality control lab confirms the medicine's compliance with health regulations on the blockchain.
  • Distribution: The distribution center logs information regarding storage conditions and transportation details.
  • Pharmacy: Upon receipt, the pharmacy confirms the medicine's authenticity and integrity before it reaches the consumer.
  • Throughout this process, each stakeholder has specific permissions. For example, quality control labs can only add data related to testing results; they cannot alter manufacturing data. It creates a transparent and unalterable record of the medicine's journey, ensuring authenticity and compliance.

    Because the blockchain is private, the data is not exposed to the public internet, protecting sensitive information. Moreover, the company can easily integrate the blockchain with its internal systems, enabling automated smart contracts to reorder stock when supplies run low at a distribution center or a pharmacy, further optimizing the supply chain.

    It is a practical application of a private blockchain, where the benefits of distributed ledger technology are harnessed in a controlled and secure manner tailored to the specific requiremnts of the pharmaceutical supply chain.

    Selecting a Platform for Creating a Private Blockchain

    Selecting the right platform is essential to meet the specific needs of a private blockchain. Here's a more detailed view of what to consider and some of the popular platforms: In-depth Analysis of Popular Private Blockchain Platforms:

    Hyperledger Fabric:

  • Features: Hyperledger Fabric offers a highly modular and configurable architecture suitable for a wide range of industry use cases. It is designed for enterprise solutions that require identity services, private transactions, and fine-grained access control.
  • Consensus: It does not require cryptocurrencies to operate and uses a pluggable consensus model that can be tailored to the trust level of the network.
  • Smart Contracts: It supports chain code written in Go, Java, and JavaScript.
  • Development and Maintenance: It is actively maintained by the Linux Foundation and has a large community of developers.
  • R3 Corda:

  • Features: Corda is designed for the financial industry but can be used in other sectors. It focuses on transaction finality and legal certainty.
  • Consensus: Corda provides a unique consensus approach where participants and a notary service verify transactions to prevent double-spending.
  • Smart Contracts: It supports contracts written in Kotlin or Java, making it attractive for enterprises with existing Java capabilities.
  • Development and Maintenance: Corda has strong backing from the banking sector and is known for its strong regulatory and compliance focus.
  • Quorum:

  • Features: Corda is designed for the financial industry but can be used in other sectors. It focuses on transaction finality and legal certainty.
  • Consensus: Corda provides a unique consensus approach where participants and a notary service verify transactions to prevent double-spending.
  • Smart Contracts: It supports contracts written in Kotlin or Java, making it attractive for enterprises with existing Java capabilities.
  • Development and Maintenance: Corda has strong backing from the banking sector and is known for its strong regulatory and compliance focus.
  • Platform Capabilities and Limitations:

  • Scalability: Evaluate how well the platform can handle the expected transaction load and data growth.
  • Interoperability: Consider how the platform will interact with other blockchain and traditional systems.
  • Community and Support: Look into the size and activity of the development community, as well as the support options available.
  • Matching Platform to Requirements:

  • After analyzing the platforms, match their features to your specific use cases, regulatory needs, and technical requirements.
  • Consider future-proofing and the longevity of the platform—its adaptability to changing requirements and technological advancements.
  • When selecting a platform, it is not just about the current capabilities; it's also about the ecosystem, ongoing support, and the roadmap for future development. You will need to consider the technical skill set of your team and the overall investment you are willing to make, not just in terms of money but also time and effort to learn, implement, and maintain the blockchain system.
  • How to Build a Private Blockchain? (Step by Step Guide)

    Creating a private blockchain is like crafting a digital ecosystem that operates under the rules set by a specific organization. Imagine setting up an exclusive club where membership is by invitation only, and you control the club's activities—that's what a private blockchain is all about.

    Step 1: Identifying the Need for a Private Blockchain

    Before you start, it's essential to understand why you need a blockchain. This technology isn't a one-size-fits-all solution, so it's vital to identify a clear purpose. Ask yourself what specific business issues or processes you want to improve. For instance:

  • Do you need to streamline the way data is shared and stored within your company?
  • Are you trying to eliminate fraud or errors in your record-keeping?
  • Do you require a system where transactions or data points need to be validated and agreed upon by multiple parties within your organization without all of them trusting each other?
  • Step 2: Choosing the Consensus Mechanism

    The consensus mechanism is a set of rules your blockchain uses to validate transactions and keep all nodes in sync. Here are two popular mechanisms:

  • Proof of Authority (PoA): In PoA, selected individuals, known as validators, are given the right to validate transactions. These individuals are typically trusted members within the organization's network.
  • Practical Byzantine Fault Tolerance (PBFT): This mechanism protects the system even if some nodes (computers or servers) fail or act maliciously.
  • Step 3: Picking the Right Platform

    Choosing a platform is like picking the foundation for your house. It needs to support everything you're planning to build on top of it. Two renowned platforms are:

  • Hyperledger Fabric: Ideal for enterprises, offering modularity and versatility in permissions, which is perfect for businesses that need to keep certain information private.
  • Ethereum Private Network: Allows you to leverage Ethereum's features in a private setting.
  • Step 4: Designing the Node Architecture

    Nodes are the individual computers that connect to form the blockchain network. You'll need to decide:

  • Distribution: Will the nodes be centrally located or spread out?
  • Roles: Some nodes will create blocks, while others will confirm them. Decide how many you need for each role.
  • Specifications: Determine the technical requirements for each node, like processing power and storage space.
  • Step 5: Setting up the Blockchain Configuration

    This step involves the technical settings of your blockchain, such as:

  • Permissions: Define who can access the blockchain and what they can do.
  • Network settings: Similar to setting up a new smartphone, you'll need to configure the network so nodes can communicate correctly.
  • Step 6: Creating the Blockchain Environment

    The environment is the ecosystem where your blockchain will operate. This step involves preparing the technical infrastructure to host and run your blockchain. Think of it as setting up a stage for a play. You'll need:

  • Security: Firewalls and encryption to protect your data.
  • Communication Protocols: Rules for how nodes talk to each other.
  • Data Storage: Databases to store information from the blockchain.
  • Step 7: Defining the Blockchain Parameters

    Now, you'll customize your blockchain's characteristics. This is like setting the rules of a game before you start playing. It includes:

  • Block Size: How much data can each block in the chain hold?
  • Identity Management: Systems to verify the identity of participants.
  • Asset Definitions: If you're tracking assets, define what those assets are.
  • Step 8: Developing Smart Contracts

    Smart contracts are automated agreements that run when predetermined conditions are met. They're like vending machines that release items once the right amount of money is inserted. When developing them, ensure they're:

  • Secure: Free from errors and vulnerabilities.
  • Efficient: Using resources in the best way possible.
  • Tested: They need to be tried and tested to ensure they work as intended.
  • Step 9: Testing the Network

    Testing is crucial. It's the rehearsal before the opening night. Here you:

  • Check Security: Ensure that no one can hack into your system.
  • Assess Performance: Make sure the system can handle the expected transaction load.
  • Verify Reliability: Ensure that the system works non-stop without errors.
  • Step 10: Going Live with Your Blockchain

    Launching your blockchain is a big deal—it's showtime! But start small:

  • Begin with a Pilot: Launch with a small group of users and scale up. Monitor Closely: Keep an eye on the system for any unexpected behavior.
  • Monitor Closely: Keep an eye on the system for any unexpected behavior.
  • Be Prepared to Iterate: Be ready to make changes and improvements.
  • Step 11: Maintaining the Blockchain

    Your work isn't done when your blockchain is live. Like a garden, it needs regular care. It involves:

  • Updates: Regularly improving the system with new features or improvements.
  • Monitoring: Keeping an eye on system performance and user activity.
  • Support: Being there to help users with any issues.
  • How does private blockchain operate?

    Private blockchains operate as secure, decentralized networks where access is restricted to authorized participants only. They maintain a distributed ledger similar to public blockchains but with key differences:

  • Selective Participation: Access is invitation-only, managed by a central authority, ensuring that only vetted entities can join the network.
  • Consensus Mechanisms: They employ less resource-intensive consensus protocols since participants are trusted entities, leading to faster and more efficient transaction validation.
  • Privacy and Security: Transaction details are shared only among authorized parties, which is crucial for businesses handling sensitive information.
  • Customizable: The blockchain's rules, protocols, and features can be customized to meet particular business needs and regulatory requirements.
  • Performance: With a smaller number of nodes and streamlined processes, private blockchains can process transactions quickly, making them suitable for high-performance enterprise applications.
  • In short, private blockchains provide organizations with a controlled environment to leverage blockchain technology's benefits with enhanced privacy, efficiency, and customization.

    Best Practices to follow while creating private blockchain:

    Creating a private blockchain is a significant undertaking that requires careful planning and execution. To help navigate this complex process, here's a set of best practices aimed at guiding you toward a successful implementation:

  • Define Purpose and Scope
  • Before you dive in, clearly define what you want your private blockchain to achieve. Whether it's enhancing data security, optimizing supply chain management, or streamlining transactions, having a clear purpose will guide your development process and help you stay focused on meeting business objectives.

  • Select an Appropriate Consensus Mechanism
  • Private blockchains don't require the extensive computational work found in public networks. Choose a consensus mechanism, like Proof of Authority (PoA) or Practical Byzantine Fault Tolerance (PBFT), that aligns with your efficiency, control, and security needs.

  • Design with Scalability in Mind
  • A common pitfall is underestimating future growth. Design your blockchain to easily handle an increase in users, transactions, and data. It will save you from costly overhauls down the line as your business and its blockchain needs to expand.

  • Prioritize Security and Privacy
  • Despite their private nature, these blockchains still need robust security protocols to guard against internal and external threats. Implement strong encryption, secure key management, and privacy-preserving features to protect sensitive business data.

  • Craft a Comprehensive Governance Model
  • A clear governance structure is crucial for managing a private blockchain. It should detail who has authority over various aspects of the network and outline processes for decision-making, updating the protocol, and handling disputes.

  • Ensure Regulatory Compliance
  • Align your blockchain's design and operation with relevant regulations. Compliance with data protection laws, financial regulations, and industry-specific guidelines is non-negotiable for operating a credible and trustworthy blockchain network.

  • Plan for Interoperability
  • Your blockchain should not be isolated; plan for interoperability with existing systems and other blockchains. It will allow for more flexibility and scalability, and it will enable your business to adapt to a rapidly evolving tech landscape.

  • Test Extensively Before Launching
  • Thoroughly test your blockchain with real-world scenarios to ensure it meets all functional requirements and performance benchmarks. Assessing the system's response to potential security threats is also essential.

  • Provide Comprehensive Training
  • Ensure that your team is well-versed in how the blockchain operates. Training for developers, administrators, and end-users is critical for smooth operation and fully utilizing the blockchain's capabilities.

  • Prepare for Ongoing Maintenance and Updates
  • Blockchain technology evolves rapidly, and ongoing maintenance will be necessary to keep your network current and secure. Plan for regular updates, patches, and potentially even major upgrades as blockchain technology and your business needs evolve.

  • Partner with a Specialized Blockchain development company
  • Embarking on the journey of creating a private blockchain network can be daunting. To navigate this intricate landscape, forming a strategic partnership with a blockchain development company specializing in private blockchain solutions is wise. Such a firm brings a wealth of knowledge, hands-on experience, and a comprehensive suite of services that can streamline the development process, reduce potential pitfalls, and pave the way for a seamless and successful launch. Opt for a partner whose portfolio reflects a strong presence in your sector, offering a full spectrum of services that cover the project's lifecycle, from initial concept to ongoing support. This collaboration can be pivotal, ensuring your blockchain infrastructure is robust, secure, and tailored to your organization's needs.

    How Can Rejolut Help You Build a Private Blockchain Network?

    In today's rapidly evolving digital landscape, private blockchain networks are becoming a cornerstone for businesses looking to enhance data security, streamline processes, and maintain competitive advantage. Unlike public blockchains, these tailored networks offer the exclusivity of a members-only club, ensuring that sensitive business transactions remain confidential and tamper-proof. With such bespoke solutions, enterprises can manage their operations with unprecedented transparency and trust among chosen participants.

    Rejolut stands at the forefront of this technological frontier, offering a blend of deep industry insight and cutting-edge blockchain expertise. Our blockchain experts craft custom blockchain solutions that align with each client's unique objectives, prioritizing a combination of robust security measures and operational efficiency. We ensure a seamless fit with your business's specific needs by meticulously tailoring every aspect of the blockchain's architecture, from consensus protocols to encryption standards.

    Scale your Blockchain projects with us

    Bottom Line:

    In conclusion, private blockchain networks offer a transformative potential for businesses seeking efficiency, security, and privacy in their operations. As the digital landscape continues to shift, embracing these technologies enhances internal processes and establishes a new standard of trust and transparency in business transactions. Companies like Rejolut are well-positioned to provide the necessary expertise and bespoke solutions that can bridge the gap between traditional practices and innovative blockchain applications.

    By partnering with a specialized service provider like Rejolut, businesses can confidently navigate the complexities of blockchain implementation. From strategic planning to ongoing support, their comprehensive approach ensures that the private blockchain network is not just a technological investment but a strategic asset poised to drive competitive advantage and operational excellence in an increasingly digital world.

    Next Article

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