How does permissioned blockchain work
Permissioned Blockchain vs. Public Blockchain: A Brief Overview
Public blockchains, such as Bitcoin and Ethereum, are open to anyone and allow anyone to participate in the network. They rely on a consensus mechanism, such as proof-of-work or proof-of-stake, to validate transactions and maintain the integrity of the network. In contrast, permissioned blockchains are designed for specific industries or organizations that require privacy and control over their data.
Permissioned Blockchain Architecture: A Step-by-Step Guide
A permissioned blockchain typically consists of three main components: nodes, consensus mechanisms, and smart contracts. Here’s a brief overview of each component and how they work together to form a functional blockchain network.
Nodes
Nodes are the devices that participate in the blockchain network. They can be run by individuals, organizations, or even third-party providers. Each node stores a copy of the blockchain and validates transactions using the consensus mechanism.
Nodes
also communicate with each other to share information and maintain the integrity of the network.
Consensus Mechanisms
Consensus mechanisms are the algorithms that nodes use to validate transactions and agree on the state of the blockchain. There are several types of consensus mechanisms, including proof-of-work, proof-of-stake, delegated proof-of-stake, and hybrid models. Each mechanism has its own strengths and weaknesses, and the choice of consensus mechanism depends on the specific requirements of the network.
Smart Contracts
Smart contracts are self-executing programs that run on the blockchain. They allow developers to define complex business logic and automate processes without intermediaries. Smart contracts can be used for a wide range of applications, such as supply chain management, voting systems, and identity verification.
How Permissioned Blockchains Differ from Public Blockchains: A Detailed Analysis
While both public and permissioned blockchains rely on a consensus mechanism to validate transactions and maintain the integrity of the network, there are several key differences between the two. Here are some of the most important differences:
Permissioned Blockchains Are Centralized
Permissioned blockchains are designed for specific industries or organizations that require privacy and control over their data. As a result, they are typically centralized, with a small group of nodes controlling the network. This centralization allows for faster transaction speeds and lower transaction fees, but it also introduces a single point of failure.
Public Blockchains Are Decentralized
In contrast, public blockchains are open to anyone and allow anyone to participate in the network. They rely on a distributed network of nodes, with no central authority controlling the network. This decentralization allows for greater transparency and security, but it also introduces slower transaction speeds and higher transaction fees.
Permissioned Blockchains Have Strict Access Controls
Permissioned blockchains have strict access controls, with only authorized users or organizations allowed to participate in the network. This ensures that sensitive data is kept private and secure. In contrast, public blockchains have a fixed governance model, which may not always be suitable for all use cases.
Permissioned Blockchains Have Customizable Governance Models
Permissioned blockchains have customizable governance models, allowing organizations to define the rules and regulations for their network. This allows for greater control over the network and ensures that it meets the specific requirements of the industry or organization.
Real-Life Examples of Permissioned Blockchain Implementations
IBM Food Trust
IBM Food Trust is a permissioned blockchain network that allows food companies to track the origin and movement of food products from farm to table. The network uses smart contracts to automate processes and ensure the integrity of the supply chain.
Maersk TradeLens
Maersk TradeLens is a permissioned blockchain network that allows shipping companies to manage their global supply chains more efficiently. The network uses smart contracts to automate processes such as customs clearance and invoicing, and allows for greater transparency and security in the shipping industry.
Deloitte’s MediLedger Project
Deloitte’s MediLedger Project is a permissioned blockchain network that allows pharmaceutical companies to track the distribution of drugs more efficiently. The network uses smart contracts to automate processes such as product tracking and serialization, and allows for greater transparency and security in the pharmaceutical industry.
Comparing Permissioned Blockchains with Other Distributed Ledger Technologies
Permissioned blockchains are not the only type of distributed ledger technology (DLT) available. There are several other types of DLTs, including:
Consensus-Based DLTs
Consent-based DLTs rely on a consensus mechanism to validate transactions and maintain the integrity of the network. Examples include permissioned blockchains, public blockchains, and hybrid models.
DAG-Based DLTs
Directed Acyclic Graph (DAG)-based DLTs use a graph structure to validate transactions and maintain the integrity of the network. They offer faster transaction speeds than blockchains but may not be as secure or transparent. Examples include Corda and Hashgraph.
DAG-Based Hybrid DLTs
DAG-based hybrid DLTs combine the benefits of both blockchains and DAG-based DLTs, allowing for greater scalability and faster transaction speeds. Examples include the Cosmos Network and Polkadot.
