Blockchain technology has evolved rapidly, giving rise to a diverse ecosystem of networks tailored for different use cases. From public ledgers like Bitcoin to specialized private chains, the landscape can be overwhelming. This guide breaks down the core types of blockchains—public, private, Layer 2, sidechains, and app chains—to clarify their differences, strengths, and ideal applications.
Understanding these distinctions is essential for developers, enterprises, and innovators aiming to leverage blockchain effectively. Whether you're building a decentralized app (dApp), securing enterprise data, or scaling transaction throughput, choosing the right blockchain type is foundational.
Public vs. Private Blockchains
At the highest level, blockchains are categorized as public or private, based on accessibility and governance.
Public Blockchains
Public blockchains are open, decentralized networks where anyone can participate—validate transactions, run nodes, or deploy smart contracts. These are often referred to as Layer One (L1) networks because they form the foundational layer of the blockchain ecosystem.
Examples include Bitcoin, Ethereum, and Solana. On these networks:
- Transaction history is fully transparent and verifiable.
- Security is maintained through consensus mechanisms like Proof of Work (PoW) or Proof of Stake (PoS).
- Decentralization ensures censorship resistance but limits scalability.
👉 Discover how public blockchains power next-generation digital economies.
Private Blockchains
Also known as permissioned blockchains, private chains restrict access. Only authorized participants—such as members of a consortium or enterprise partners—can join and validate transactions.
Key characteristics:
- Used in enterprise settings where privacy and control are critical.
- Nodes are permissioned; participants are vetted and invited.
- Ideal for internal systems like supply chain tracking or financial settlements.
While less decentralized than public chains, private blockchains offer faster transactions, enhanced privacy, and compliance-ready architectures.
What Is a Layer Two (L2) Blockchain?
A Layer Two (L2) solution is a secondary protocol built on top of a Layer One blockchain to improve scalability and reduce costs.
For example, Ethereum processes around 15–30 transactions per second (TPS), leading to congestion and high gas fees during peak demand. L2s solve this by:
- Bundling hundreds or thousands of transactions off-chain.
- Submitting a single compressed transaction back to the mainnet (L1).
- Inheriting the security of the underlying L1 while drastically increasing throughput.
Why Use a Layer Two?
- Reduce gas fees: Users pay significantly less for transactions.
- Increase speed: Higher TPS enables real-time interactions.
- Support innovation: Ideal for testing dApps, rapid iterations, and research environments.
Popular Layer Two Examples
- Arbitrum: Offers near-native compatibility with Ethereum smart contracts.
- Optimism: Partners with major DeFi platforms like Synthetix and supports token staking.
- Immutable X: First NFT-focused L2 on Ethereum, enabling instant trades with zero gas fees.
- xDai Chain: A stablecoin-powered PoS sidechain that facilitates low-cost transactions.
What Is a Sidechain?
A sidechain is an independent blockchain that runs parallel to a mainnet and connects via a two-way bridge. Unlike L2s, sidechains have their own consensus mechanisms and block parameters.
While they resemble miniaturized mainnets, sidechains are purpose-built—often serving specific functions like NFT minting or gaming economies.
Benefits of Sidechains
- High-speed transactions: Customizable consensus allows faster finality.
- Low or no gas fees: Attracts users and developers seeking affordability.
- Public accessibility: Anyone can run a node or explore blocks, ensuring transparency.
Example: Polygon
Polygon is one of the most widely adopted sidechains. It enables developers to build Ethereum-compatible applications with faster processing times and lower costs—without sacrificing connectivity to the broader Ethereum ecosystem.
👉 Explore how sidechains are reshaping decentralized application development.
What Is an App Chain?
An app chain is a specialized blockchain dedicated to a single application. It combines features from private chains, L2s, and sidechains into an enterprise-grade solution.
Think of it as a custom blockchain tailored for one dApp, offering full control over rules, performance, and data privacy—while retaining the ability to connect securely to public networks when needed.
Key Features of App Chains
- Permissioned access: Node operators must be invited; not open to the public.
- Scalability & cost-efficiency: No competition for block space = zero gas fees.
- Single-use focus: Built exclusively for one application (e.g., a supply chain tracker).
- Interoperability: Can "anchor" to L1s or L2s via bridges for added security and asset transfers.
Enterprise Use Case: Supply Chain Management
Imagine a global supply chain involving manufacturers, ports, logistics firms, and customs agencies. An app chain allows:
- Secure sharing of sensitive data (pricing, contracts) among trusted parties.
- High-volume transaction processing across multiple touchpoints.
- Bridging to public chains like Polygon to verify provenance via NFTs or store immutable checkpoints.
This hybrid approach delivers what some call "Enterprise-grade Security"—leveraging public chain immutability while maintaining private operational control.
Frequently Asked Questions (FAQ)
What’s the main difference between a Layer 2 and a sidechain?
A Layer 2 inherits security from its parent L1 and processes transactions off-chain before settling them on-chain. A sidechain operates independently with its own validators and consensus model, making it more autonomous but potentially less secure unless properly anchored.
Can a private blockchain connect to a public one?
Yes—especially in the case of app chains. Through cross-chain bridges, private networks can periodically commit state updates or transfer assets to public blockchains for enhanced security and auditability.
Are app chains only for large enterprises?
While commonly used in enterprise settings due to their complexity and customization needs, app chains are increasingly accessible to mid-sized projects thanks to modular blockchain frameworks and cloud-based deployment tools.
Do sidechains have their own tokens?
Many do. For example, Polygon uses MATIC for staking and transaction fees. These tokens incentivize node operation and secure the network independently of the mainnet.
Why would someone choose a private chain over a public one?
Privacy, compliance, and performance. Public chains expose all data globally—unsuitable for business-sensitive operations. Private chains offer controlled access, predictable performance, and alignment with regulatory requirements.
How does an app chain improve security?
By anchoring to a public chain (like Ethereum), an app chain can regularly post cryptographic proofs (checkpoints). This creates an immutable audit trail without exposing internal data—effectively outsourcing finality and trust guarantees.
Final Thoughts
The blockchain ecosystem is not one-size-fits-all. Each type—public chain, private chain, L2, sidechain, app chain—addresses distinct needs:
- Need decentralization? Go public.
- Prioritize privacy? Build private.
- Facing scalability issues? Use L2.
- Want transparency with specialization? Choose a sidechain.
- Building a complex, high-performance dApp? Consider an app chain.
As interoperability improves, we’ll see more hybrid architectures where chains coexist and communicate seamlessly. The future isn’t about picking one type—it’s about orchestrating multiple layers to achieve efficiency, security, and innovation.
👉 Learn how modern blockchain solutions are converging across layers and ecosystems.