What Is A Permissioned Blockchain?

BLOCKCHAIN is a cryptocurrency company used to buy or sell digital money like bitcoin and Ethereum. It is a wallet, much like the ones we use from day to day except it can be so much more. Just like our purses and wallets store our money, credit cards, ID cards, and other things of importance that we use regularly, the blockchain is a ledger that also stores data. It records transactions and tracks assets in a business network. It is fast as it is accurate.

Blockchains are based on distributed ledgers that have been in existence for many years at the enterprise level to manage data. Cryptocurrency however introduced them to the public and made them popular, Bitcoin especially.

What-Is-A-Permissioned-Blockchain

They are designed for varying functions depending on users’ needs and to give users several types of access or tasks.

Types Of Blockchain Networks

There are four different types of blockchain networks namely:

  • PUBLIC BLOCKCHAIN NETWORK
  • PRIVATE BLOCKCHAIN NETWORK
  • PERMISSIONED BLOCKCHAIN NETWORK
  • CONSORTIUM BLOCKCHAIN NETWORK

#1. Public Blockchain Network

This is the only kind of blockchain network where anyone is allowed to join in and participate in every activity going on in the network. It is a self-governed decentralized system that anyone can audit, write or read the activities going on with it. They allow anyone accesses to them unlike other types of blockchain networks. This easy access though leads to lax or weak security and little or no privacy on the shared networks.

#2. Private Blockchain Network

In a private blockchain network, only validated and carefully chosen participants are allowed entry after being authenticated by the operator. The operator holds the right to edit, delete or override data entries on the blockchain. Any interested investor or participant can join the private network only through an invitation. The invitation where their identity, purpose and other necessary pieces of information are verified is validated by the network operators.

#3. Consortium Blockchain Network

This is a combination of public and permissioned blockchain networks. Here, several organizations maintain the blockchain through shared responsibilities. They pre-determine who can have access to the system to submit their transactions. This means all members have to be permitted before they can access the network.

#4. Permissioned Blockchain Network

This is a mix of private and public blockchain networks. Here, an extra layer of security is added to protect the blockchain by adding permissions. This means that only users with such permissions are allowed access to the network. Although it is a distributed ledger, it can only be privately accessed. Users on this network can only execute set activities.

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Participants are required to submit their certificates or other necessary documents for identification. The admins are in charge of allowing or disallowing certain actions from being performed on the system. They also keep a record within the blockchain of activities performed on the network. They support several customization options.

EXAMPLES INCLUDE Corda, Hyperledger Fabric and Quorum.

Characteristics Of Permissioned Blockchain Network

  • They can be partially decentralized or fully centralized.
  •  The level of decentralization is determined by its members.
  • The members also determine the algorithm for consensus.
  • For security purposes, transparency is optional.
  • Decisions are made by the network owners.

Advantages Of Permissioned Blockchain Network Over Other Networks

  • They provide an additional level of security and are very private.
  • They can be customized.
  • Anyone can join after their identities have been verified.
  • Special permissions can be granted as there is a proper structure governing the use of this network.
  • They provide many functions.
  • They are scalable and can be designed to meet a company’s specific needs.
  • They perform efficiently due to the limited number of nodes on the platform.

Disadvantages Of Using Permissioned Blockchain Networks

  • They are vulnerable to hacking because they require a network connection.
  • When private keys are stolen, users’ information can be stolen.
  • The network owners can easily alter rules after a consensus has been made.
  • They are subject to regulations and censorship.

Challenges Of Permissioned Blockchain Networks

They are not free from challenges as their implementation can be a tough task.

  • Data privacy: Quorum is the best pick where privacy is concerned. The industry is regulated and they meet all requirements.
  • Identity: As users’ identities are required to have access to a permissioned blockchain network, there is a need to choose one where users’ information is protected.
  • Data access: Using The Graph exposes data to APIs and provides easy access for smart contracts which combats the slow nature that permissioned blockchain networks have when data is accessed.
  • Integration: When using APIs for communication, integration becomes a challenge, to make things easy, there are great tools that can be used. They connect and integrate services more efficiently. Examples include Rhombus, Oraclize, and Chain link.
  • Data storage: Use data storage such as  IPFS Private Network, Big chain DB, and AWS Quantum Ledger, to ensure proper storage. They provide optimal storage especially when an enormous amount of data is stored on the blockchain.
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Things To Consider Before Starting A Permissioned Blockchain Network

  • Decide which blockchain platform best fits your business needs.
  • Determine the blockchain runtime to be used.
  • Answers to both questions above will give you the development stack on which the development will take place.

Differences Between Permissioned And Permissionless Blockchain Network

Although both permissioned and permissionless blockchain networks are similar in that they use the same technologies, they also have a wide range of differences.

While users can access the blockchain without permission in a permissionless blockchain network, users require permission to transact on a permissioned blockchain network.

Businesses, governments, and all users of the blockchain network have over time come to realise the cost-saving benefit of using a permissioned blockchain network. This makes them more popular and highly preferred to permissionless blockchain networks.

For any companies interested in security, role definition and identity, a permissioned blockchain network is the preferred choice.

A permissionless blockchain network can extend over a really large network, they also allow more users. Permissioned blockchain networks though have a meagre decentralization as they are mostly used for business purposes.

As an open-source network, permissionless blockchain networks can have their data changed or used by anyone. Permissioned blockchain networks however are controlled by their users and are proprietary.

Permissionless blockchain networks provide anonymity for their users, they cannot be tracked and they use an encrypted form for transactions.

Permissioned blockchain networks are also faster and legal as opposed to permissionless blockchain networks.

Permissionless blockchain networks are more suited for financial applications. For those that require a high level of decentralization, such as Donations & Crowdfunding, Trading of digital assets, and Blockchain Storage, they are highly applicable. Permissioned blockchain networks however are more suited for applications that require a high level of privacy and security, such as Identity verification, supply chain tracking, and Claims Settlement.

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Frequently Asked Questions What Is A Permissioned Blockchain?

What is a permissioned blockchain network?

These are blockchain networks that require approval or permissioned to be granted to users before they can join.

Are there other types of blockchain networks?

Yes, there are four(4) known types of blockchain networks namely:

Private blockchain networks, Public blockchain networks, consortium blockchain networks, and permissioned blockchain networks. They are all explained in depth in the article above.

Which blockchain network is best for a business?

Every business or company have different needs and requirements. For a private company, however, a centralized system is advisable. Public companies should have a fully decentralized network.

How does blockchain work on a permissioned network?

Organizations that use permissioned networks use models like Practical Byzantine Fault Tolerance (PBFT), federated, and round-robin consensuses. The Round robin consensus has nodes that are selected randomly to create blocks. To add a new block, each node has to wait for a full cycle to be completed. The PBFT consensus is a voting-based consensus algorithm that guarantees network safety as long as the nodes required are working well and performing efficiently. The federated consensus has a set of signals trusted by each node in the blockchain. The signals use a single block generator that accepts the transactions, holds them and filter them accordingly. This helps the node reach the consensus stage.

Conclusion

Even though the idea behind blockchains when it was invented was to have an open system without any one person having authority over it, over time It has evolved towards a private and permissioned system for investors.  Permissioned blockchain networks are now used more in the industry today due to their performance, scalability and privacy.

Permissioned blockchain networks are here to stay. It is cost-effective and its advantages outweigh any challenges or disadvantages users might encounter on the system.

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