Cryptoasset Anti-Financial Crime Specialist (CCAS) Certification Practice Test

What advantage does a public blockchain provide compared to a private blockchain?

1. It allows for faster transaction processing

2. It is more secure against external attacks

3. It promotes transparency and decentralization

4. It has limited access and ownership rights

The correct answer is: It promotes transparency and decentralization

A public blockchain indeed promotes transparency and decentralization, which are two of its most significant advantages. In a public blockchain, all transactions are visible to anyone who wishes to view them, fostering an open environment where all participants can verify and audit transactions independently. This transparency builds trust among users, as there is no single entity that controls the information or can manipulate it without consensus from the network. Decentralization refers to the distribution of control across many participants rather than being held by a single entity or group. This mitigates the risks and vulnerabilities associated with centralized systems, where power can lead to abuses or failures. In contrast, a private blockchain operates under a system where access is restricted to certain authorized users, potentially limiting transparency and centralizing control. Thus, the characteristics of transparency and decentralization in a public blockchain make it particularly well-suited for applications where trust among diverse parties is essential, as everyone has equal access to the same information.