TOP > Cryptocurrency > Public Vs. Private Permissioned Blockchain Guide
April 22, 2019 Updated

Enterprises and banks wanted to join in. Unfortunately, they realized that the way a blockchain was structured; it wasn’t practical for them to use.




April 22, 2019 – Blockchains are becoming increasingly popular. These last few years we’ve witnessed an explosion of innovations brought about by this complex technology. The first blockchain was built for Bitcoin and was meant to be open and permissionless. Also, it was backed by the open source community.

Enterprises and banks wanted to join in. Unfortunately, they realized that the way a blockchain was structured; it wasn’t practical for them to use. Be that as it may, they made their own innovations of blockchain technology and that’s how permissioned and private blockchains came to life.

Public vs. Private Blockchain

Public or Permissionless Blockchains

Public blockchains make up majority of the cryptocurrencies like Bitcoin, Ethereum, and Stellar. They are permissionless in the sense that they are open to all. Anyone who wants to join the network can do so freely without censorship.

Permissionless blockchains are inherently decentralized; meaning no central authority is in charge. The power of consensus belongs to the people.

Average users can opt to run their own node in order to oversee the network themselves, or even take part in powering the network and supporting its security. With that in mind, any changes in the network can be achieved as long as more than 50 percent of the network users agree to it.

Evidently, public blockchains need to be transparent, as the users must be incentivized to trust the network. However, that doesn’t mean users won’t have privacy since a blockchain can be both private and transparent; showing only the transactions and public keys but hiding the identity of users.

Bitcoin remains the most robust blockchain in all its 10 years of existence.

Private or Permissioned Blockchains

Private blockchains are closed systems. Whoever wants to join the network needs to have an invitation and must be validated by the network starter or whoever is/are in charge. Most permissioned blockchains are relatively centralized, which isn’t surprising since it is made for centralized entities like banks or bank networks, company consortiums, enterprises, etc.

IBM is the biggest proponent for private blockchains. They like to advertise these types as decentralized, but the truth is decentralization is not fixed state but a spectrum; there are levels of decentralization. Admittedly, permissioned blockchains can be made somewhat decentralized. But if you compare them to public blockchains, they’re really not.

Permissioned blockchains are governed by the higher-ups although this power can also be given to other members of the community as well. And running nodes, validating transactions, or even seeing the data records is a privilege given only to trusted users. Therefore, transparency is not a requirement and neither is privacy.

Example

One of the most popular permissioned blockchain implementation is IBM’s Hyperledger Fabric, which was built in collaboration with the Linux Foundation.

This article originally appeared on BitPinas: Public Vs. Private Permissioned Blockchain Guide

Resources: Blockonomi, IBM

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