What is the Difference Between Public & Permissioned Blockchain?
In our previous guides, we have explained about the blockchain; it’s functioning and applications. While doing so, we have introduced an explanation of the three technologies that build the blockchain technology: authentication (cryptographic) keys, P2P (distributed) network, and protocol generation via blocks.
Bitcoin is the most aspiring kind of blockchain. Anyone is free to use bitcoin’s authentication keys; anyone can become a node and be a part of the network, and also anyone can be a miner to serve the network and earn a reward. Miners may leave or join a node, according to their suitability, and still, get a full record of all network activities since they left.
Fundamentally, anyone may read the blockchain, introduce legitimate alterations, and add a new block into the chain (following all the terms and conditions). Bitcoin is entirely decentralized and also named as a ‘censor-proof’ blockchain. That’s why it is known for its most comprehensive description, i.e., a public blockchain. But, this doesn’t prove that it’s the only way to create a blockchain.
Blockchains can be created that need permission to read the information on the blockchain, which restricts the parties who can transact through the blockchain and assigns to those who can serve the network by writing new blocks into the blockchain.
Let’s take an example of Ripple that runs on a ‘permissioned blockchain.’ The startup defines who may function as transaction validator on their network system, and it has also included Microsoft, CGI, and MIT as transaction validators, while also generating its own nodes in various locations throughout the world.
A developer of the blockchain may prefer to make the system of record open for everyone to read, but they may not intend to allow anyone to become a node, serving to the network’s safety, transaction authentication, or mining. It’s a mix-and-match scenario that’s reflected in the different ways entrepreneurs are analyzing the technology.
While discussing permissioned blockchains, they may or may not include ‘proof of work’ or another system requirement from the nodes. There is some sort of diplomacy around it, as there exist those people who consider private blockchains, which don’t use any proof of work not to become blockchains at all but remain just shared ledgers.