2 Smart And Secret Types of Blockchain in [year]

Types of Blockchain in [year]: Blockchain technology is far from perfect and presents, as any disruptive technology, advantages, and disadvantages in its implementation. Let’s look at some of them.

Blockchains are typically managed by a peer-to-peer computer network for use as a public distributed ledger, where nodes collectively adhere to a consensus algorithm protocol to add and validate new transaction blocks. Although blockchain records are not unalterable, since blockchain forks are possible, blockchains may be considered secure by design and exemplify a distributed computing system with high Byzantine fault tolerance.

Blockchain in [year]

Blockchain technology is an advanced database mechanism that allows transparent information sharing within a business network. A blockchain database stores data in blocks that are linked together in a chain.

Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding).

Types of Blockchain in [year]: Permissionless and Permissioned

Permissioned Blockchain

Definition

A public blockchain is non-restrictive and permissionless, and anyone with internet access can sign on to a blockchain platform to become an authorized node. This user can access current and past records and conduct mining activities, the complex computations used to verify transactions, and add them to the ledger. No valid record or transaction can be changed on the network, and anyone can verify the transactions, find bugs or propose changes because the source code is usually open source.

Advantages

One of the advantages of public blockchains is that they are completely independent of organizations, so if the organization that started it ceases to exist the public blockchain will still be able to run, as long as there are computers still connected to it. “Some blockchains incentivize users to commit computer power to secure the network by providing a reward,” noted James Godefroy, a senior manager at Rouse, an intellectual property services provider.

Another advantage of public blockchains is the network’s transparency. As long as the users follow security protocols and methods fastidiously, public blockchains are mostly secure.

Disadvantages

The network can be slow, and companies can’t restrict access or use. If hackers gain 51% or more of the computing power of a public blockchain network, they can unilaterally alter it, Godefroy said.

Public blockchains also don’t scale well. The network slows down as more nodes join the network.

Features

• The first major feature of permissioned blockchain is that it provides more transparency based on the objectives of the organization. It is more clear as to who has made the changes, and who has been permitted to do so. Every action taken by the user is tracked and known.
• Permissioned Blockchain is of great advantage to private entities or companies as it has allowed them to handle data in a more secure way. It has complete control over who has the access to it and who has permission to make the changes.

• Lack of Anonymity is another feature that can prove a lot more useful for private entities. Since only a limited number of users are allowed to make the changes to the data, every change is tracked to the user. So the administrator is always aware of the changes and who actually made them.
• Permissioned Blockchain does lack central authority but it allows a private group to authorize decisions.

Pros and Cons

Although the Permissioned blockchain is very useful in adding an extra layer of protection and security due to which it is being adopted by a lot of private entities, there are still some cons as well. Let’s have a look at the pros and cons of a Permissioned blockchain.

Pros

Since it is a decentralized model, the companies can easily participate without having to deal with the risk of centralized models.

Privacy is the focal point of Permissioned Blockchain and strong privacy is what the users have to work with while accessing the transaction details.

It can be easily customized with various configurations and as per the needs. Users can have hybrid integrations or modular components.

Since the access is limited, few modes handle the transactions which increase the performance and scalability.

Cons

Since it has limited or few participants, it has more chances of collusion and corruption of data.

Getting a consensus in this model is not easy as rules of consensus can be changed by the operator at any time.

Since the participants are limited, there is less transparency to outside oversight.

Permissionless Blockchain

Definition

A permissionless blockchain is completely the opposite of a Permissioned blockchain. In the Permissionless model, which is also known as a public blockchain, there are no restrictions, and the participation is not controlled by an administrator. Anyone can participate in the consensus and validate the data.

Advantages

The controlling organization sets permission levels, security, authorizations, and accessibility. An organization setting up a private blockchain network can determine which nodes can view, add or change data. It can also prevent third parties from accessing certain information. Private blockchains can be very fast and can process transactions much more quickly than public blockchains.

Disadvantages

The disadvantages of private blockchains include the controversial claim that they aren’t true blockchains since the core philosophy of blockchain is decentralization. It’s also more difficult to fully achieve trust in the information since centralized nodes determine what is valid. Users can’t independently audit or confirm it, which can lead to less security. There is no anonymity on a private blockchain, either.

Features

• Since Permissionless blockchain does not have any kind of restrictions for the user to join through an open network, there is complete transparency of transactions to the users.
• The platform is a completely open-source development as the users can easily access it and make the necessary changes to it.
• The clause of anonymity did not exist in permissioned blockchain, but here it does. However, it does not mean that it provides complete anonymity, it does have some exceptions while making the changes.
• Permissionless blockchain lacks central authority since it is open to any user.
• It also offers heavy use of the tokens and digital assets as an incentive to participate. Therefore, it leads to more efficient and effective working.

Pros and Cons

Just like Permissioned Blockchain, Permissionless blockchain also comes with a lot of pros and cons which makes it a great platform, but not for private entities or companies looking for a more secure platform.

Pros

It has a broader decentralized platform which allows more participants through the network when compared to the permission blockchain.

It has a high level of transparency and also speeds up the reconciliation process.

Since it has a large number of participants, it is very resistant to censorship.

It is almost impossible to disrupt the repository as for that 51% of the network needs to be corrupt and corrupting a large amount of data is almost impossible.

Cons

Less privacy as compared to permissioned blockchain.

Low performance and scalability as more users lead to more pressure on the computing resources.

The model is not energy efficient as network-wide verification uses a lot of resources intensively.

Difference between Permissionless and Permissioned

We have already explained how Permissioned and Permissionless blockchain works and how it differs based on the applications it is used on. Based on their usage, there are four major differences between the two.

	Permissioned	Permissionless
Overview	Open Network allows anyone to interact with consensus validation and is fully decentralized.	Closed Network with limited Decentralization and designated parties for participation in Consensus Validation
Also Known As	Public, Trustless	Private, Permissioned Sandbox
Key Attributes	Full transparency, Development in Open Source, Mostly Anonymous, Privacy dependent on technological limitations, No Control Authority, Involves digital assets	Controlled Transparency, Development by Private entities, Not anonymous, Privacy based on governance decisions, No Single authority, May or May not involve digital assets.
Benefits	Brader decentralization, Highly transparent, Censorship resistant, Security resilience	Incremental Decentralization, Strong privacy, Customizable, Faster, and Scalable
Drawback	Less energy efficient, Slow and difficult to scale, Less user privacy	Limited decentralization, Override risk, Less transparent
Market Traction	P2P, B2C, Government to Citizens	B2B, B2C, Government to Organizations

Where can Permissioned and Permissionless blockchains be used in [year]?

Here are some of the factors that can help you decide whether to use permissioned or permissionless blockchain:

Scalability and Performance

It refers to the frequency of transactions and the interaction with them for validation, security, etc.

Power Usage

The more transactions will be, the more will be power consumption in processing them.

Roles

It refers to different kinds of user configurations needed for things like decision-making, setting permissions, allowing access, and more. 

Privacy

Based on the business parameters, it can be decided what kind of privacy is required or whether will it remain public.

Smart Contract

Smart contracts check for accountability and liability in case the system is compromised. 

Token

It is more relevant to the permissionless blockchain where companies can decide to give tokens or digital rewards to users.

Permissionless vs. Permissioned Blockchains

All types of blockchains can be characterized as permissionless, permissioned, or both. Permissionless blockchains allow any user to pseudo-anonymously join the blockchain network and do not restrict the rights of the nodes on the blockchain network.

Conversely, permissioned blockchains restrict access to the network to certain nodes and may also restrict the rights of those nodes on that network. The identities of the users of a permissioned blockchain are known to the other users of that permissioned blockchain.

Permissionless blockchains tend to be more secure than permissioned blockchains, because there are many nodes to validate transactions, and it would be difficult for bad actors to collude on the network. However, permissionless blockchains also tend to have long transaction processing times due to a large number of nodes and the large size of the transactions.

On the other hand, permissioned blockchains tend to be more efficient. Because access to the network is restricted, there are fewer nodes on the blockchain, resulting in less processing time per transaction.

Like so many things, pros come with cons, and the reduced processing time in permissioned blockchains is no exception: the centralization of permissioned blockchains to some central authority makes it a less secure system that is more prone to traditional hacking vulnerabilities. The fewer nodes there are on a blockchain, the easier it is for bad actors to collude, so private blockchain administrators must ensure nodes adding and verifying blocks are highly trusted.

Check Also: 10 Surprising Features Of Blockchain Wallet

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