Abstract

Permissionless blockchains can be used by anyone. If you meet specific requirements, you can even participate in their consensus mechanism. Bitcoin, Ethereum, and BNB Chain are all permissionless blockchains, and they are usually transparent and decentralized.

Permissioned blockchains must be invited to join. Permissioned blockchains are often used in private enterprises and are tailored for certain use cases. Power lies in the hands of a small number of validators who can make most of the network decisions. Transparency may suffer, but network update speeds and scalability tend to increase significantly.

Introduction

Have you ever thought about the blockchain you are using? Which type? In addition to Proof of Work (PoW) and Proof of Stake (PoS), how else can it be classified? In fact, blockchain can be divided into permissioned and permissionless. Understanding these two types will help you gain insight into the characteristics of blockchain and its high degree of liquidity.

What is permissioned blockchain and permissionless blockchain Blockchain?

There is more than one type of blockchain. One of the most effective ways to differentiate between blockchain types is to determine whether the chain is permissioned or permissionless. You may already be familiar with the category of permissionless blockchains, where anyone can participate in its use and operation, or directly use the network and participate in the verification process. Bitcoin, BNB Chain and Ethereum are all permissionless blockchains.

Users on the permissioned blockchain must be permitted to join. Permissioned blockchain is often used in private scenarios, such as within an organization or enterprise. For example, a company may use the Hyperledger Fabric blockchain framework to create a permissioned blockchain for its supply chain system. If you want to join this network, you will need special permission from the administrator.

History and background

Blockchain technology can be traced back to Satoshi Nakamoto Bitcoin White paper period. The blockchain technology introduced in this white paper is a non-permissioned blockchain, and users who are not united with each other generate consensus on the chain. As the Bitcoin model has influenced multiple generations of blockchains, the permissionless blockchain trend continues. The values and ethos conveyed by Bitcoin and subsequent cryptocurrencies fit perfectly with public, permissionless blockchains.

The characteristics of blockchain are also attractive for applications in private scenarios. The immutability, transparency (in some aspects), and security of blockchain make people want to create a network with higher access restrictions.

To realize this idea, blockchain developers have created permissioned blockchain frameworks, and some have also tailored them for third parties. Customized blockchain. The Hyperledger Fabric mentioned earlier is a permissioned blockchain framework. Quorum, MultiChain, and Ethereum Geth also provide permissioned blockchain frameworks for enterprises.

Main Features

The following features are not always applicable to all license types and permissionless blockchains. But in general, most blockchains meet these obvious characteristics.

Advantages and disadvantages

Advantages of permissionless blockchain

1. The potential for decentralization. Not all permissionless blockchains are decentralized, but they often have the potential to be highly decentralized. Users are free to join the consensus mechanism or use a permissionless blockchain network within their capabilities.

2. Collective consensus. Users can actively participate and change network settings. Validators and network users have a high degree of voting power, and disagreement over changes could result in a blockchain fork.

3. Easy to access. Permissionless blockchain networks are easy to access, have relatively low barriers to entry, and anyone can create a wallet to join.

Disadvantages of non-permissioned blockchain

1. Scalabilityis low. Permissionless blockchains need to face a huge user base and high traffic burden. Upgrading the network to improve scalability must be achieved effectively through collective consensus.

2. Malicious attacks. Anyone can join a permissionless blockchain, and such networks are always open to malicious attacks.

3. Excessive transparency. Much of the information on permissionless blockchains is publicly available, leading to potential privacy and security issues.

Advantages of permissioned blockchain

1. High scalability. Permissioned blockchains tend to be run by an entity that has some control over validators, making it easy to upgrade the network.

2. Customize as you like. Permissioned blockchains can be created specifically for a specific purpose to efficiently implement a specific function. If you need to change the settings, you can easily do so.

3. Restrained transparency. Permissioned blockchain operators can adjust appropriate network transparency based on usage scenarios.

4. Invited users only. You can precisely control who joins a permissioned blockchain.

Disadvantages of permissioned blockchain

1. Centralization. Power may only lie in the hands of a certain central entity or a small number of validators selected by the blockchain owner, which means that decisions in the network may not take all stakeholders into account.

2. Vulnerable. Permissioned blockchains tend to have fewer validators, making their consensus mechanisms more vulnerable to attacks.

3. Review risks. Permissioned blockchain operators incur censorship risks when they collude or update the network. If enough participants agree to this practice, the information on the blockchain may be changed.

Should I choose a permissioned blockchain or a permissionless blockchain?

The answer is simple. If you want to create a network that is open to everyone, then you need to choose a permissionless blockchain. However, creating a permissionless blockchain doesn’t mean you have to follow the standard’s principles and goals. In fact, you can create a blockchain that is both centralized and permissionless at the same time. If you wish, you can also increase the privacy of permissionless blockchains.

If you want to apply blockchain in private scenarios, such as within enterprises or governments, permissioned blockchains are often more suitable . Similarly, the permissioned blockchain you create can also be completely open and transparent without complying with the characteristics of traditional permissioned chains.

Conclusion

As a cryptocurrency investor or trader, you may You will only be exposed to permissionless blockchains, but it is beneficial to understand the difference between permissionless and permissioned blockchains. It is easy to have a single view of distributed ledger technology (DLT), thinking that it should be a transparent, open, and decentralized cryptocurrency model. But these elements can be changed—in fact, many private companies have adopted permissioned blockchains that don’t adhere to traditional norms.

Extended reading

• What is a block Chain technology? See the Ultimate Getting Started Guide

• Permissionless Blockchain

• How Blockchain Works