When we think of a blockchain network, we usually think about decentralization on a global scale, transparency, security, and no need for intermediaries. There are different types of blockchains that can either offer more security, or just a little bit less. A permissioned blockchain is an example of a blockchain network variant that delivers an extra layer of control and privacy. How? We’ll also get to know other types of blockchains to understand.

Blockchain Basics

What are blockchain networks? Think of it like this, blockchain technology is like a record book, keeping information stored on different blocks. These blocks are linked together via unique codes called “hash”. The structure of blockchains make data tamper-resistant, secure, and transparent.

Unlike most traditional data systems that we’re used to, blockchains have a decentralized nature. This means that everyone on the chain verifies the information and not a central authority. What benefits can decentralization bring? For starters, it ensures transparency development, trust within the community, efficiency to the blockchain network, and more.

Types of Blockchains

As we mentioned, there are various types of blockchains in existence. Let’s take a closer look at each one, then make a comparison between them all.

Permissioned Blockchains

What are permissioned blockchain networks? A permissioned blockchain is a type of blockchain network that has a level of control over access and governance to the chain. Meaning, not everyone can access permissioned blockchains and access is only granted to a select group with access permissions.

Who would benefit from a permissioned blockchain? A permissioned network caters to industries and organizations that require more scalability, privacy and regulations. Permissioned blockchains still bring the same general benefits we see in permissionless blockchains, ones that do have public access, but they also tend to be faster, more private, and sometimes have cheaper transaction fees.

Pros

• Controlled access and governance for more privacy
• Improved confidentiality
• Faster transaction processing
• Regulatory compliance
• Reduced costs

Cons

• May have potential centralization
• Dependency on trusted governance

Permissionless Blockchains

Permissionless blockchains are the opposite of permissioned blockchains. They do not require as much verification and permission to participate, and are usually available to the public. A permissionless blockchain is usually used when there is less transparency and control needed.

You may see the terms “permissionless blockchains” and “public blockchains” used interchangeably, but there is a slight difference between the two.

Pros

• More accessibility to participants
• Fosters innovation
• Immutability
• Censorship resistance

Cons

• More difficult to scale
• Slower transaction speeds

Public Blockchains

We mentioned that the terms public blockchain network and permissionless blockchain are often used interchangeably, but there are differences. “Permissionless” specifically refers to the lack of authorization needed to participate, while “public” focuses on the openness and transparency to the general public.

Public blockchains are decentralized networks that allow anyone to join, validate transactions, and participate in the consensus protocol.

Public blockchains tend to be more decentralized and operate with transparency, enabling anyone to view and verify transactions recorded on the network. Public blockchains eliminate the need for intermediaries and enable direct peer-to-peer interactions.

Pros

• Transparency
• Heightened decentralization
• More accessibility
• Innovation

Cons

• Potential privacy and anonymity concerns
• Tougher governance

Private Blockchains

Private blockchains are similar to permissioned blockchains in the sense that they both offer more privacy and security. Permissioned blockchains allow controlled access and governance to a defined set of participants, which can be wider than a single organization, while private blockchains are restricted to a specific group of known participants.

Think of it like this:

A group of banks establishes a private blockchain to securely and efficiently process bank-to-bank transactions. The blockchain is restricted to the participating banks and allows them to streamline transactions, reduce costs and improve transparency within their closed network. Using a private blockchain, banks can securely collaborate and simplify the complex process of interbank transactions.

Pros

• Enhanced privacy and confidentiality
• Increased control and governance
• Higher transaction throughput
• More scalability
• Can be more cost-effective

Cons

• Only partially decentralized
• Reduced transparency

Types of Blockchains Compared

Difference between Permissioned and Permissionless Blockchains

Permissionless Blockchains: Open to anyone, allowing participation and access. Example: Bitcoin blockchain, where anyone can join, mine, and transact.

Permissioned Blockchains: Restricted access to a specific group, requiring permission or authorization to participate. Example: Hyperledger Fabric used by a group of banks for secure interbank transactions. The key difference is that permissioned blockchains control access to known entities, while permissionless blockchains are open to anyone.

Private vs. Public Blockchains

Private Blockchains: Restricted to a specific group of known participants, offering enhanced privacy and control. Example: A group of shipping companies using a private blockchain to streamline supply chain operations.

Public Blockchains: Open to the public, allowing anyone to participate and access the blockchain data. Example: Ethereum blockchain, enabling global developers to build decentralized applications (DApps) and execute smart contracts.

Permissioned vs. Private Blockchain

Key Difference: Permissioned blockchains control access and governance, while private blockchains prioritize privacy within a specific known group.

Permissionless vs. Public Blockchains

Key Difference: Permissionless blockchains emphasize open participation without requiring permission, while public blockchains are accessible to anyone, ensuring inclusivity and openness.

Conclusion

Permissioned blockchains provide controlled access and rules for a specific group of participants, ensuring better privacy, scalability, and conformity to regulations. Although this type of blockchain may not be as open as a public blockchain, a permissioned blockchain is well-suited for industries and scenarios that prioritize control, confidentiality, and collaboration among known entities.

Related Articles:

What Are Blockchains and the Tech Behind Them?
SecuX wallets now support MetaMask and Bitcoin!
The Ethereum Virtual Machine for Beginners

Sources:

https://www.investopedia.com/news/public-private-permissioned-blockchains-compared/
https://www.investopedia.com/terms/p/permissioned-blockchains.asp