By Steve Burnett
Blockchain technology is a technology that allows, among other things, the ability to keep permanent records of transactions or other data for an individual or an organization. While blockchains are generally known as decentralized and permissionless in the crypto industry, not all blockchains are permissionless.
In this guide, we discuss permissionless and permissioned blockchains, as well as highlight the differences between the two, so that you know what to expect from anyone you encounter or intend to use in the future.
Permissionless Blockchains
As the name implies, permissionless blockchains don’t need “permission” to use. Literally anyone can just log onto their computer and start using it, regardless of where they are as long as they can access the internet.
Permissionless blockchains are indeed decentralized and anyone can participate in the consensus process. For example, the Bitcoin network is maintained by nodes that are widely distributed around the world. The nodes participate in validating transactions that are added to the blockchain, making it a public blockchain.
This makes the network truly decentralized and difficult for any one to hijack because there’s no central control. Permissionlessness is the basic idea behind all public blockchains like cryptocurrency blockchains, although each project aligns with the principle to a different degree.
Permissionless blockchains are also referred to as trustless, censorship-resistant, or public blockchains, and have certain characteristics that separate them from permissioned blockchains.
First, they are open source. This means anyone can review the code used to build them and add their own ideas to it. This is why there is the Bitcoin Improvement Proposal and Ethereum Improvement Proposal. Developers can continue to propose ideas on how to make the blockchain better.
Permisssionless blockchains also enjoy full transparency since they are run by multiple entities known as nodes. Every node operator knows what is going on with the network at every time, so there’s nothing hidden about it, which reduces the chances of fraud.
Permissionless blockchians also confer anonymity on users. This is not to say that transactions are hidden because we just said it is transparent. Instead, the true identity of the user is kept hidden, even though all their activities are kept public.
Also as mentioned earlier, there’s no central authority, so there’s no central control. Instead, everybody is a participant in running the network
Permissionless blockchains are also incentivized. This means that node operators who participate in transaction validation and securing the network get rewarded for their roles.
What are Permissioned Blockachains?
Permissioned blockchains are also known as private blockchains. They are closed blockchains controlled by previously dedicated parties who do the validation. Unlike permissionless blockchains, these ones are only controlled by a small group of persons, and not everyone can see what goes on with the network.
Although permissioned blockchains also don’t have a central authority, only a few members decide what happens on the blockchain, and they can program it to function in a certain way. At the same time, no external person is allowed to review the codes and make improvements like the case of a permissionless blockchain.
The transparency of the network is controlled by the parties, depending on the goal of the consortium that formed the network. Also in stark contrast to permissionless blockchains, permissioned blockchains have zero anonymity. This means everyone using the blockchain is fully known, since there are no random users.
A major advantage of permissioned blockchains is that the decentralization can continue to increase as more organizations sign up to use the network. They can also be easily customized for specific use cases, making them adaptable.
Conclusion
Now you may be asking which of the two blockchains is better. Well, there’s no worse or better blockchain type, it depends on the goals of those who created it.
Permissionless blockchains are mainly for public cryptocurrencies like bitcoin, while permissioned blockchains are mainly for organizational use. If you’re thinking of building one, your goals will determine which one you go for.
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