The popular myth is that the term “Permissioned Blockchain” otherwise called Private Blockchain goes against the foundational principles behind the creation of blockchain technology. Replete pieces of literature exist to buttress these claims some of which we shall look into. However, it is imperative we go back to the basics and really understand what blockchain is, the dichotomous divides between public and private blockchains, what enterprises look out for when considering adopting blockchain technology to increase business outputs whether the product or service-oriented.
What is a Blockchain?
Blockchain technology was first outlined in 1991 by Stuart Haber and W. Scott Stornetta, two researchers who wanted to implement a system where document timestamps could not be tampered with. But it wasn’t until almost two decades later, with the launch of Bitcoin in January 2009, that blockchain had its first real-world application.
According to Don & Alex Tapscott, authors of Blockchain Revolution (2016), the blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value. The Merriam-Webster dictionary defines the blockchain as a digital database containing information (such as records of financial transactions) that can be simultaneously used and shared within a large decentralized, publicly accessible network.
According to the definitions above, it can be inferred that for anything to qualify to be called a blockchain, it must possess digital ledger used for recording transactions, must be shared across a given network and the records in the ledger must be somewhat impossible to alter, the immutable nature of the blockchain.
Contrary to most public opinions, the blockchain does not apply to financial transactions alone even though this was the original use for which it was created. Its application has been seen to be rather pervasive just like Don & Alex Tapscott puts it, “… not just financial transactions but virtually everything of value”
Public and Private Blockchain
The main subject of our discourse bothers on the arguments surrounding the Public-Private Blockchain debate. As has been seen to be the popular opinion that the blockchain should only be applied to activities and transactions that should be full-fledged public in nature, hence flawing the very existence or set up of private or permissioned blockchains, there are others who hold the view that the public blockchain is not entirely suited for enterprises hence advocate a private or permissioned blockchain sometimes regarded as Enterprise Blockchain. There are still some others who think both the public and private blockchain are not mutually exclusive to each other, can exist not just side by side but can be interdependent impacting several industries that have found solid use cases for the blockchain technology resulting in an even richer global blockchain ecosystem.
Ethereum and Bitcoin Network are the most popular and largest of public blockchains there are tens of thousands of nodes (a computer connected to the network) scattered across the network all saddled with the responsibility of validating transactions through the consensus rule. The basic characteristics of this type of blockchain are that this type of blockchain is completely open and anyone can join and participate in the network, it can also receive and send transactions from anybody in the world, and is easily audited by anyone who is in the system. It is worth to note that each node has as much transmission and power as any other, making public blockchains not only decentralized but fully distributed, as well.
In order for a transaction to be considered valid, it must be authorized by each of its constituent nodes through the consensus process. Once this authorization takes place, the record is added to the chain. Public blockchains typically have incentives to encourage people to join the network as well as to authenticate transactions.
Unlike public blockchains, private blockchains have only a few actors that qualify to be called the “trusted participants”. The overall control of the network is in the hands of the owners. Moreover, the rules of a private blockchain can be changed according to different levels of permissions, exposure, a number of members, authorization as not anyone can read/write or audit the blockchain anytime unless one has the permission to do so.
Private blockchains can run independently or can be integrated with other blockchains too. These are usually used by enterprises and organizations. Therefore, the level of trust required amongst the participants is higher in private blockchains
While Private Blockchain requires the use of “Trusted Participants” to validate transactions, it should not be confused with the type of Delegated Proof of Stake (dPOS) where few “Trusted Participants” called “Block Producers” in EOS are. EOS is a Public Blockchain.
Permissioned Private Blockchains: A Necessity for Most Enterprises
As Lucas Kolisko puts it, most enterprise users of blockchain request for these array of functions to be finely met by whichever blockchains they seek to adopt:
Confidentiality: This clearly addresses the privacy concerns of enterprises when adopting blockchain technology for their everyday use. Confidentiality is the measure of ensuring that only entities participating in a particular transaction will have knowledge and access to it. Whether we focus our lens on a limited access within parties in the same enterprise bringing about controlled use and possibly limiting any damage that can result in unfettered access, or a broader consortium arrangement where potential competitors are participating it is essential to enable blockchain channels between peers that are not visible to all members of a consortium. It is not just about data confidentiality that can be potentially hidden using cryptography or more advanced zero-knowledge proof schemes. Just insight into a number of transactions between peers in the consortium could bring a competitive advantage, and this might not be desired.
Throughput: Throughput is the measure of the number of transactions processed by a period of time. In the parlance of the blockchain, it is the average number of transactions appended to blockchain (within blocks) per second. As has been seen where most public blockchains were the object of ridicule especially when compared to VISA’s transaction rate, most enterprise has always sought for enterprise-grade network of blockchain infrastructure that can rival VISA’s while also giving them some of the juicy benefits of blockchain networks. This is where private blockchains seems to be braving the odds.
Finality: Every second counts for business owners especially when transacting with its customers and other third parties. Finally measures how long one has to wait to be given a reasonable guarantee the transaction written in blockchain is irreversible (will not be orphaned). For most businesses, the latency between when transactions are initiated and when they get immutably registered on the ledger matters a great deal. This explains why public blockchains like the Bitcoin and Ethereum network lost out of fashion for most businesses.
Most of the private blockchains, therefore, go for voting based consensus algorithms. The block is finalized when the majority of nodes vote for it. It brings virtually immediate finality in exchange for lower scalability as consensus requires more messages to be exchanged. This typically is not such a big issue for private blockchains because the number of participants in orders of magnitude is lower and they are deployed in WANs with low latencies and guaranteed throughput compared to the general internet environment.
Akachain: The Permissioned Enterprise Blockchain for Your Business
Akachain, an end to end, permission, multi-chain network based on the HyperLedger Fabric having both a main chain and subordinate private chains which are linked together by the Privacy Preserved Bridge Protocol which stores private data cryptographically to ensure transparency and security with a focus on empowering business innovations and creating a fair and objective network environment. Akachain creates the enabling environment for enterprise adoption of the blockchain to allow businesses to increase efficiency, reduce cost, enhance data security, maximize revenue, gain an advantageous competitive edge over the competition. These it has done by eliminating the hindrances behind mass adoption.