Blockchain has been on people’s lips for some time now: and there’s not much wonder. Its capability to make things transparent, and secure and having a decentralized environment has impacted commerce and its verticals, which include finance, healthcare, and logistics amongst others. But while many are familiar with public blockchains like Bitcoin and Ethereum, fewer are aware of a different type of blockchain that could be just as impactful as blockchain permissioned.
What is Blockchain Permissioned?
Fundamentally, a blockchain permissioned functions in the same way as any blockchain but with one major twist: it is not accessible to everyone. A blockchain-permissioned network is an organized network that allows only specific individuals or organizations to access or be part of the ecosystem.
While there is no restriction on the node and data entry in public blockchains anyone would be allowed to participate and execute transaction validation as well as block creation. Permission blockchains are controlled and defined by select participants.
How Does Blockchain Permission Work?
Blockchain permission allows only those selected individuals who can validate the information. It is particularly helpful to organizations involved in handling confidential information and requires tighter permissions over persons who can update their files.
Every participant of the permissioned blockchain has a certain role-logger, validator, contributor, or viewer. These roles are predefined by some overseeing authority of the network to allow only interaction only approved entities in the data in question.
One of the distinctive attributes of such a blockchain is the consensus facility that enables the permitted stakeholders to validate transactions. This is in contrast to public blockchains where consensus involves anybody who wants to be involved and this can sometimes slow down the execution of transactions or in some cases compromise the security of the chain.
Supply Chain Management
Blockchain permissioned is one of the most used implementations of blockchain technology across numerous industries but more commonly in supply chains. This technology enables firms to identify and monitor products in the supply chain from manufacturers down to retailers with an assurance of trust as everything in the supply chain is validated.
This also makes it easier for the companies to see any problem that might be associated with the supply chain such as fake products or delays and rectify such as early as possible.
Similarly, permissioned blockchain networks allow companies to share information with partners, suppliers, manufacturers, or retailers, while keeping confidentiality over other business information.
Improved Efficiency: Faster Transactions and Scalable Solutions
Blockchain permissioned provides an excellent choice that has faster and more scalable levels compared to those of public blockchains. This efficiency makes permissioned blockchains very attractive to businesses and industries where speed and the volume of data are an important consideration.
In a public blockchain, everybody can be a node for validation, and in most cases, it causes significant latency in transaction processing. These networks employ consensus algorithms like Proof of Work (PoW) or Proof of Stake (PoS) where multiple players try to make a transaction approval.
Although this decentralization helps in giving transparency to the transactions, the time taken to complete a transaction increases and may greatly be affected by the number of users within the network.
On the other hand, blockchain permissioned networks restrict the number of nodes that can authenticate blocks of transactions. Since only a chosen number of legal actors is involved in it, the decision-making process, or in other words consensus is reached in a much shorter time. This makes the entire process faster – in terms of verifying the transaction and including them in the blockchain.
For instance, when members of the financial sector apply for blockchain permissioned for cross-border payments, transaction durations hugely reduce from days to even a few seconds or minutes.
Other blockchains to the public due to the consensus models that involve thousands if not millions of people. This however brings about decentralization of the new, but at the same time, it would slow down the actual running of the network with the increase in nodes.