Permissioned vs. Permissionless Distributed Ledgers

This is the 6th blog in?Distributed Ledger Technology & Blockchain?series. Here we are discussing different types of distributed ledgers. Earlier posts can be found here.

Distributed ledger systems are different from traditional ledgers as, the former is not based on a single copy of a ledger, whereas the later is one ledger maintained by a central party. Distributed ledgers can be permissioned, permissionless (also known as open) or hybrid.

Permissioned Distributed Ledgers

Permissioned Dl members are pre-selected by the administrator of the ledger. The administrator can be a single entity (government, private company) or a consortium. While this enables options like verification, regulation, licensing; it simultaneously takes-away ability to function without the need for administration.

Permissionless Distributed Ledgers

In permissionless DLs the participants can join or leave the network at will using only the relevant software, without the approval of any entity or administration. There is no central authority

Comparison between Permissioned & Permissionless Blockchains

• Administration: There is no central administrator in open blockchains. In permissioned blockchains there is always some administration required.
• Access: Anyone can join public blockchains; whereas in permissioned blockchains participants are selected by some administration
• Transparency: Public blockchains are open and more transparent as compared to permissioned blockchains.
• Ownership: There is no legal ownership of public blockchains; whereas permissioned blockchains are always owned or controlled by some authority.
• Security: Security in public blockchains is ensured via wide distribution of ledgers; whereas in permissioned blockchains it can be implemented via access control as well.
• Speed: Public blockchains are slower than permissioned blockchains. Therefore, the later offers more transaction volume.
• Identification: Users can stay anonymous in public blockchains; whereas certain level of identification and verification is required in permissioned blockchains.
• Consensus: Complicated consensus algorithms are required in public blockchains, whereas permissioned blockchains need less complicated and/or time consuming algorithms.
• Type: Public ledgers are typically usually used for cryptocurrencies; whereas permissioned ledgers can be used for any type of data/asset.

Distributed Ledger Examples

Bitcoin:

It is permissionless distributed ledger. It is the first and the largest open blockchain and is used to record transactions of cryptocurrency Bitcoin. Bitcoin transactions can be viewed live here.

Ethereum:

This is also a public distributed ledger. Ethereum is the most popular blockchain for small contrats. A smart contract is a self-executing contract. The agreement terms between buyer and seller are directly written in the code which controls the execution. All transactions are trackable and irreversible.

Ripple:

Ripple is permissioned blockchain. It is focussed on commercial cross-border and inter-bank payments. The purpose of XRP is to serve as an intermediate mechanism of exchange between two currencies or networks. Instead of using any blockchain mining, it uses a consensus mechanism via a group of bank-owned servers to confirm transactions. Ripple uses far less energy than bitcoin mining and also less time confirm and complete a transaction.

Hyperledger Project:

Hyperledger project also known as Fabric, is an open-source project started by Linum Foundation. It includes other global organizations such as IMB, JP Morgan, Accenture, CISCO etc.??

It's main purpose is to develop frameworks and tools for enterprise-level permissioned blockhain?

Corda

Corda is a permissioned, open-source enterprise-based blockchain focused on financial applications. It is designed to offer interoperability for communications and transactions between enterprises. It records, manages, synchronizes and time-stamps agreements and transfer of valuables.

blockchain #block #Permissioned #Permissionless #Bitcoin #Ethereum #Ripple #Hyperledger #Fabric #Corda #DistributedLedgerTechnology #DLT

This article is for Tech Simply Explained series initiated by IrvineTek. IrvineTek provides custom-built scalable, enterprise-grade systems that drive operational agility while opening new revenue streams. Contact us for more information: [email protected]