Welcome to Hard Fork Basics, a collection of tips, tricks, guides, and advice to keep you up to date in the cryptocurrency and blockchain world.
With every week that passes there is a new use for blockchain that promises us a better and brighter future. Blockchain is now being used for more than just cryptocurrency, and every iteration is different to the last.
With the sheer diversity of envisioned use cases, two fundamentally different blockchain models have cropped up: permissioned and permissionless. In this edition of Hard Fork Basics, we’re going to define what these two terms mean.
A permissionless blockchain you say?
Many consider the the permissionless model to be closer to the original concept of blockchain, as outlined by Satoshi Nakamoto.
A permissionless blockchain is quite simple, as its name suggests, no permission is required to become part of this blockchain network and contribute to its upkeep. In theory, anyone and anything can become part of a permissionless blockchain. Permissionless is, in many ways, just a fancy way of saying “public.”
As anyone can join a permissionless blockchain, they tend to be far more decentralized than a permissioned system. One trade-off is that permissionless blockchains are often slower than permissioned alternatives.
Transaction information stored on permissionless blockchains is usually validated by the public. With no third-parties to regulate what goes on, the system relies on this to reach a public consensus on what transactions are considered true.
But what if you need more control and privacy?
Enter, permissioned blockchains
Permissioned blockchains flip the whole idea of a blockchain on its head. Blockchains were originally intended to be open, free, and public systems, but a permissioned blockchain is effectively the opposite. Permissioned blockchains can also be called private blockchains.
Again, in principle it’s quite simple; permissioned blockchains require permission to join. As a result, the owner of a permissioned blockchain has the ability to dictate who can and cannot become part of its network. This control also means the blockchain owner can: dictate the network’s structure, issue software updates, and generally control everything that takes place on their blockchain.
Information on permissioned blockchains is validated only by approved members of that blockchain. The owner can also control who sees that information. In some cases the public will be able to view certain information stored on a private, permissioned blockchain.
Take Walmart for example; the American supermarket is planning to track vegetables on the blockchain to try and reduce instances of E. Coli. The information is validated and approved by Walmart and its suppliers, but the public will be able to trace produce back to its origin.
Due to the restrictive and smaller nature of permissioned blockchains they tend to be more scalable, and operate faster. They are often more centralized than permissionless blockchains.
Indeed the permissioned model has become popular with: banks, supermarkets, shipping firms, and even telecommunication companies.
In a permissionless blockchain, the public validates transaction information. In permissioned systems, transaction information is validated by a select group approved by the blockchain’s owner.
Permissioned systems tend to be more scalable and faster, but are more centralized. Permissionless systems are open for all to join, and as a result, usually more decentralized, the trade off is speed and scalability.