Permissioned Vs Permissionless Blockchain

I think for every beginner in blockchain space, it is very important to understand how to identify use cases which can be a candidate for blockchain solutioning. Not every problem statement will be answered by blockchain. There are several emerging technologies like RPA, AI/ML and others which can be more better suited.

Very important factor to be considered before deciding to go for blockchain is whether you need a database and that too across multiple parties who don’t trust each other. Also, are there any requirement for a central authority to control the operation. If your answer is yes, we can go ahead and decide if public blockchain will help your cause or a private one. This is the topic which I would like to discuss in this blog. I would like to explain differences between permissionless and Permissioned.

A permissionless blockchain like bitcoin blockchain, Ethereum etc are open blockchain, meaning, anyone can join the network by downloading a client and start representing a node. Yes, as simple as that. A permissionless blockchain hence called a public blockchain, because you don’t need any permission to join the network. A permissioned blockchain, meaning, you need prior permission to be part of the network. There is a gatekeeper or MSP (Member Service Provider) who on-boards an entity to represent a node in the network. Hence, this is permissioned. Hyperledger Fabric, sawtooth, Corda and Quorum are some examples of permissioned blockchains.

A permissioned blockchains are less decentralised and semi trusted architecture. Also, the block generation time is controlled. In case of Corda, it’s completely a different architecture where the ledger is shared only between the parties transacting with each other. The consensus mechanism is also different from public blockchain. Here, since only parties transacting need to verify the transaction and not the entire network, consensus works in different ways across various permissioned blockchains.

The use cases which have to deal with sensitive or regulated transactions, prefer to go with permissioned blockchains. They are more scalable since they operate in a different way to public blockchain and are having ore defined parties in the network which increases the scalability of the network.

It would be nice to see private blockchains working together with public blockchains by establishing interoperability to achieve much better result. There are use cases which qualify for this approach, like supply chain management where a consumer can track his goods when they are being handled by a distributer outsourced to 3PL while keeping overall scalability of the network at a prime condition by onboarding all actors into a permissioned blockchain.

Blockchain has completed its hype cycle and now already in early adoption. The expectation for a mass adoption is rising day by day and the technology itself is expanding exponentially making it the next big thing in the coming years.

Thanks for reading and please drop a comment if you have any queries and I’m more than happy to address them.

Good luck with blockchaining