Blockchain networks, known as permissioned blockchains, require access to join. In these blockchain varieties, a control layer that regulates the actions taken by the authorized players runs on top of the blockchain. As is evident, the operation of permissioned blockchains differs significantly from that of private and public blockchains. They are designed to benefit from blockchains without surrendering the centralized system’s authority.
There is a blockchain access paradigm that employs hierarchical governance to stop this. Users must have permission to join the blockchain platform in this model. The permissioned or private blockchain is the name of this model.
Despite the fact that permissionless blockchains initially appear to pose a security risk, these models each have specific use cases and are appropriate in a variety of settings.
Blockchain technologies that don’t require permission are more prevalent and receive more support from the open-source community, like Ethereum and Bitcoin. This paradigm is not ideal for companies and communities that prefer hierarchical privileged rights and restricted access.
It is crucial to understand the requirements of your decentralized application to match them with an appropriate blockchain access architecture.
What is a permissioned blockchain?
Decentralized networks and platforms with no central authority are made possible by the blockchain. However, unapproved individuals may join public blockchain platforms employing permissionless blockchain access architecture to defraud other users.
Therefore, the primary distinction between a permissioned and a permissionless network is how the participants will interact with the network. In addition to having restrictions on the consensus participants, permissioned systems are known to be tightly designed and managed by their owners. It is not necessarily bad, but creating a good blockchain network is key.
A distributed ledger that is password-protected is referred to as a permissioned blockchain. Only users with the appropriate permissions can access it. Users must authenticate themselves using certificates or other digital methods and are limited to the precise actions permitted by the ledger administrators.
Consider adding permissioned users as an additional layer of blockchain security. In order to restrict access to certain actions to just specific identifiable parties, administrators maintain an access control layer. The blockchain keeps track of who participated in the transactions. Permissioned blockchains are distinct from public blockchains because of this.
“Even though blockchain was first invented for building a public and open trustless network without any central authority, it is evolving towards permissioned and private platforms for enterprises. Private blockchains are similar to public blockchains; they also are immutable, nodes share the same ledger, but access to the network is permissioned. This means that permission and role for each node have to be granted.”
Cited from: Permissioned blockchain frameworks in the industry: A comparison
Permissioned blockchain architecture
Multiple methods can be used to create and access a blockchain. To read, access, and publish data on some blockchains, you may need to have specific rights. The only requirements for some are the ability to connect and the capacity to do network-related tasks. The inherent structure of every blockchain regulates the transactions made by the participants and establishes the responsibilities that each participant can partake about accessing and modifying the blockchain.
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Additionally, it might entail preserving each blockchain user’s identity on the network. Permissioned blockchains are those that fit this description.
Advantages of permissioned blockchains
When opposed to permissionless blockchains, permissioned blockchains have many advantages that make them the most advantageous to utilize. Let’s examine the advantages of permissioned blockchains and their advantages.
Efficiency
We found that permissioned blockchains perform better than permissionless blockchains. The platform’s small number of nodes is the primary cause of this. This enhances overall performance by eliminating the extra calculations needed to reach a consensus on the network. Furthermore, permissioned networks have their own pre-selected nodes for transaction validity.
Appropriate governance structure
Permissioned networks do have a suitable governance structure. This demonstrates that they are structured. Additionally, administrators need less time to change the rules across the network because it is much faster than public blockchains.
The consensus issue affects the public blockchain network since not all nodes cooperate in implementing the new upgrade. These nodes might prioritize their needs over those of the blockchain, resulting in slower network updates overall. As the nodes cooperate to move the updates more quickly, the permissioned blockchain does not have the issue.
Decentralization
Permissioned networks also effectively utilize blockchain, including the decentralized aspect of the technology for data storage.
Profit
Compared to permissionless blockchains, permissioned blockchains are, without a doubt, more cost-effective.
Disadvantages of permissioned blockchains
Permissioned blockchains are not free from disadvantages or drawbacks. Here are the disadvantages of permissioned blockchains:
Security concerns
Due to proper node participation in a consensus procedure, a public or private blockchain offers superior security. However, this might not be the case with permissioned blockchains. A permissioned network’s security is only as strong as its members’ integrity.
This implies that a small portion of a permissioned system can cooperate to change the network’s data storage. The network’s integrity could be at risk in this way. In order to fix it, the system needs to have the right permissions configured so that the bad actors can’t combine to achieve the desired impact.
Administration
These permissioned blockchains ought to function as a public blockchain would in an ideal world, but with rules. The rules, however, impose censorship on the network, allowing the ruling body to limit or prevent a transaction from taking place.
These pose a risk to any company or group accessing the permissioned network. Additionally, this strategy prevents the permissioned network from utilizing the full potential of the blockchain ecosystem.
Types of permissioned blockchains
The Bitcoin blockchain technology was straightforward. Each node in the public peer-to-peer network has a copy of the ledger, enabling transactions to be completed without needing a central authority. It is not the only blockchain or distributed ledger technology that might exist, though. DLTs come in a variety of forms. To have a good understanding, let’s briefly list them.
Public permissioned blockchains
The most prevalent blockchains are the public ones, which lets anyone use them to conduct transactions or even participate in the consensus process. There are a lot of well-known public blockchains available.
Two excellent examples are Bitcoin and Ethereum. The first cryptocurrency of its generation, Bitcoin, uses blockchain technology in its most fundamental form. Ethereum adds value by enabling the creation of distributed applications (dApps) utilizing smart contracts or distributed ledger technology.
Consensus algorithms used by public blockchains also do not enable a permissioned blockchain approach. Since they are open source, anyone can join the network without prior authorization.
Private permissioned blockchain
Private blockchains will be the final type of blockchain we cover. Permissioned blockchains and private blockchains are “comparable,” yet there are key features that set them apart. While a permissioned blockchain might have some requirements for the public to join, private blockchains are completely closed to the “public.” They both have a restricting nature but go about it slightly differently.
Federated permissioned blockchains
No outside parties are permitted to participate in these blockchains. It has many advantages, including greater scalability, and is a great option for commercial businesses. R3, B3i, Hyperledger, and other permissioned blockchains are only a few examples.
Permissioned vs permissionless blockchain
Because they both employ the same technologies, permissioned and permissionless blockchains are comparable. Permissioned blockchains, on the other hand, prevent unauthorized users from accessing the blockchain.
To track money transfers, for instance, a bank might use a permissioned blockchain run through a set number of its own internal nodes. You lack the necessary permissions. Hence you are unable to access this blockchain. In contrast, after creating a semi-anonymous account in a network like a bitcoin mining network, you might join that network’s permissionless blockchain.
What is a permissionless blockchain?
Another DLT paradigm, a permissionless blockchain, sits on the other end of the spectrum. Most significant cryptocurrencies now operate on permissionless blockchain networks, including Bitcoin.
True to its name, it enables anybody to access information and participate in the network. In a nutshell, it is public and decentralized. There are no gatekeepers or censors, hence the name “permissionless.” Nobody needs to provide identification documents or pass Know Your Customer (KYC) checks to access the blockchain.
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Technically, anyone can use it to accomplish anything they want within the network as long as the protocol permits it. The original vision of Satoshi Nakamoto for the blockchain is thought to be more closely represented by permissionless blockchains.
The common trade-off of permissionless blockchains is speed right now because it is open to the public. They are typically slower than their permissioned counterparts, much less in size.
The differences between a permissionless and permissioned blockchain
So how do blockchains without permission operate? Usually, the public verifies the transaction data recorded on these blockchains. The network depends on the general population to agree on the legitimacy of transactions because there is no regulating organization or authority.
Some differences that you need to understand in brief:
Public and private usage
One of the key distinctions between the two is this. For instance, a business that wishes to expand with additional privacy and security features and controlled access to the data will choose permission blockchain. It is simpler for the organization to create responsibilities and manage the data because it has its own level of transparency, and only certain people are permitted to access or alter it. Managing the supply chain using a permissioned blockchain is an excellent example. The permissionless concept is used when things like Donation and blockchain platforms like Bitcoin require anyone to engage freely.
Decentralization
The permissioned blockchain is only slightly more decentralized than the permissionless blockchain. Increasingly more people have the option to join the network thanks to permissionless blockchain technology, which also broadens the network. On the other hand, decentralization is constrained by the permissioned blockchain’s limited nature. Decentralization can only be used to manage the data and resources because permissioned is utilized by businesses.
Improvements
A community of users can easily build, upgrade, and change the components of the blockchain since a permissionless blockchain is an open source. Additionally, it gives all users unrestricted access to view data and transactions. Permissioned blockchain restricts the developer or firm utilizing it from updating and developing the blockchain.
Transparency
Users are not restricted when using a permissionless blockchain to see and access transactions. As a result, it provides less transparency because anonymity is more prevalent, and it is difficult to determine who made the changes. It is difficult to trace a wallet address since transactions are encrypted. Similarly, it is simple to identify who changed the data because only a small number of individuals have access to the transactions. It not only facilitates tracking but also lessens errors, which is crucial for private organizations.
Permissioned blockchain use cases
Both permissioned and permissionless blockchains have various architectural styles that can be advantageous for some applications and disadvantageous for others. However, we have separated the applications that can be used based on their usage. For instance, a strong financial platform built on a decentralized platform can be created using permissionless blockchain technology. It can be used for file storage for the general public and for digital trading, donations, and crowdfunding. Users can readily access it because it has no access restrictions.
Similar to a public blockchain, a permissioned blockchain has limited user access to the data and can be applied to supply chain tracking, claim settlements, and identity verification. Permissioned blockchain is the most appropriate technology for these applications because they are built on privacy and have limited access to specific people. The type of business application any technology will be utilized for will determine how widely it is adopted.
You can use the following criteria to decide between using permissionless or permissioned blockchain:
- Performance: It relates to the volume of transactions and how often users engage with it for purposes such as security and validation.
- Power usage: The processing of transactions uses more energy the more there are of them.
- Roles: It describes many forms of user configuration required for tasks, including decision-making, granting access, setting permissions, and more.
- Smart contract: If the system is compromised, smart contracts verify responsibility and obligation.
- Token: It is more pertinent to the permissionless blockchain because businesses can choose to reward users with tokens or digital prizes.
- Privacy: It is possible to decide whether a certain level of privacy is necessary or whether it should stay public based on business parameters.
Permissioned blockchain examples and platforms
Below you can find some of the most significant permissioned blockchains out there:
Ethereum
After Bitcoin, Ethereum is the most widely used DApp. We are able to develop more blockchain-based DApps on top of Ethereum because it is a decentralized platform. Using Ethereum smart contracts, we create DApps on the platform. Smart contracts are programs that execute exactly as intended with no chance of censorship, fraud, or outside interference.
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Quorum
We can create permissioned blockchain-based DApps on top of Quorum because it is a decentralized platform. Since Quorum is actually a fork of Ethereum (technically, it is a fork of Go Ethereum, which is an implementation of Ethereum using the Golang programming language), if you have ever worked on Ethereum, it will be simple for you to understand and develop permissioned blockchains using Quorum. Due to Ethereum’s big community and accessibility of Ethereum developers, many businesses choose Quorum to create blockchains.
MultiChain
A platform for creating permissioned blockchain-based DApps is called MultiChain. Assets, data streams, and permissions management are some of MultiChain’s distinctive characteristics. It is not compatible with smart contracts. This illustrates a platform for creating blockchain-based DApps that are not based on smart contracts. MultiChain uses round-robin validation consensus.
Hyperledger Fabric 1.0
We must first grasp what Hyperledger is in general before discussing what Hyperledger Fabric 1.0 is. The Linux Foundation launched the Hyperledger project in December 2015 as a hub for open-source blockchains and associated tools. Fabric, Sawtooth, Iroha, and Burrow are the four Hyperledger projects that were active when this article was written.
The most well-known Hyperledger project is Hyperledger Fabric. The project’s primary contributor is IBM. Additionally, IBM’s Bluemix offers BaaS, so you may quickly create your own Fabric network on the Cloud.
BigchainDB
BigchainDB, a decentralized database, uses blockchain. BigchainDB has excellent scalability and adaptability. It takes advantage of the Blockchain data model. Rich permissions, petabyte capacity, sophisticated querying, linear scaling, and other features are supported. BigchainDB is not yet ready for production. However, it can be used to create proof of concepts (PoCs) at the time this article was written. Later chapters will teach us how it functions, and we’ll use it to build a simple PoC.
Key takeaways
- As they need an access control layer, permissioned blockchains offer an extra layer of protection over standard blockchain systems like Bitcoin.
- Entities that require security, identification, and role definition within the blockchain choose these blockchains.
- Blockchains with permissions are becoming increasingly widespread as companies see their advantages.
Conclusion
Both permissioned and permissionless blockchains can be utilized for a variety of purposes. Because the application depends on the business criteria, it is impossible to say that one solution is superior to another. Blockchains, whether permissioned or permissionless, both have a certain set of features. On the other hand, the permissionless blockchain is designed to allow an increasing number of people to join and contribute to adding their own value. In contrast, permissioned is more focused on private entities and businesses to manage their data and operations. Blockchains with and without permissions are constantly being improved and expanded to offer them more space to operate in.
