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Blockchain has evolved more than just cryptocurrencies! Now they have started to assist enterprises in their operations. Businesses across several industries are constantly on the lookout to explore their ability to achieve transparency and avoid the need for intermediaries. But public blockchains like Bitcoin and Ethereum may not be suitable for businesses that require control and privacy. And that's where permissioned blockchains come into action.
In this blog, we will learn,
Let us begin!
As the name suggests, this is a type of blockchain in which only approved persons can join and validate transactions. Unlike public ones, where anyone can participate, this blockchain limits its access to only permissioned users. These are specifically designed for businesses that need both security as well as privacy.
Now let us view some of its features,
Let us learn the key difference between these three types of blockchains.
| Features | Permissioned | Permissionless | Private |
|---|---|---|---|
| Identity | Verified participants | Anonymous | Known and controlled within the ecosystem |
| Speed | High | Moderate to low at times | High |
| Transparency | Selective | Fully transparent | Only limited to the organization |
| Consensus | Efficient protocols like PBFT | Usually energy energy-consuming ones like PoW | Protocols like PBFT and PoA |
| Access | Restricted to only authorized persons | Open to anyone | Limited to the owner and other participants of a particular organization |
Permissioned blockchains offer a lot of benefits that make them attractive to both businesses as well as governing bodies.
All participants are verified in permissioned blockchains, which reduces the risks that arise from anonymous participants. Here, sensitive data can be shared with ease, and that too with specific individuals.
Certain sectors like banking and healthcare must meet strict policies and regulations. And permissioned blockchains are extremely helpful for them, as they allow compliance with standards like,
Public blockchains face the issue of tackling with high number of participants due to their open nature. But, in parallel, permissioned blockchains make use of consensus algorithms like PBFT to execute transactions quickly.
Since permissioned networks only allow authorized participants, the data is securely shared among them. Meanwhile, businesses have the freedom to control the amount of data shared with each participant.
The main benefits of using permissioned blockchain is it mainly reduce the overhead costs associated with administration, as they cut down intermediaries and automate processes with smart contracts. In certain sectors like supply chain, these blockchain eliminates verification steps and save both money as well as time!
Permissioned blockchains allow organizations to introduce governance frameworks that suit their structure. This includes rules for,
Most of the permissioned platforms support integration with APIs. They also support integration with APIs. And enable connectivity with other blockchains as well, which ensures a smooth flow!
Banks make use of permissioned blockchains for activities like,
And with networks like R3 Corda, financial institutions can easily settle transactions in no time and reduce fraud as well. Say, for example, banks like HSBC make use of Corda to streamline their financial activities, which effectively cuts down the processing time!
Medical data is too sensitive as data theft is so common in that domain, and there is also an increased number of cases of fraudulent behaviour in organ transplantation. To avoid such mishaps, permissioned blockchains allow patients, hospitals to access data selectively. For example, BurstIQ is a blockchain-based data management platform that helps in securely managing patient data while still adhering to compliance standards.
The supply chain sector usually consists of several stakeholders, like,
And permissioned blockchains enhance the traceability! One good example of this is Walmart’s partnership with IBM Food Trust, which makes use of blockchain to track food products effectively.
Governments require more secure and transparent systems for processes like
And permissioned blockchains offer the required transparency with privacy. For example, a country called Estonia has made use of a blockchain-based system to safeguard the data of both the government and citizens.
In the energy sector, utilities need more authentic and unaltered records. For instance, a permissioned blockchain named Energy Web Chain offers P2P energy trading and also tracks the amount of carbon credited.
Here is a list of permissioned blockchain spaces, each catering to the needs of different business requirements.
This blockchain is developed with the Linux Foundation, and it is highly customizable. And is widely used in industries like,
This blockchain is specially designed for financial services, and it enables direct and secure transactions between parties. It is widely adopted in banking and insurance sectors, and real-time examples include HSBC.
This blockchain is developed by J.P.Morgan, it offers features like transaction privacy and combines Ethereum’s flexibility. This makes it ideal for sectors like banking.
It is a cloud-based solution that offers a simple deployment process. And it supports the supply chain and ERP integration, making it attractive for organizations that already use Oracle systems!
It is a blockchain as a service platform that offers cloud deployment options. Kaleido makes it easy for businesses to build and deploy it without much technical expertise. This ultimately saves time and allows them to go live quickly.
Permissioned blockchains offer various benefits, but businesses often face a few difficulties during implementation. Let us see what it is!
Deploying a permissioned blockchain requires investment in software and training. And integrating with existing platforms can be quite complex and can add to the cost.
Most organizations run on complex IT systems. So, ensuring smooth communication with databases and APIs can be a great challenge.
Too much centralization reduces trust, and on the other hand, too much decentralization can complicate governance! Finding the right balance is what businesses need.
A well-defined governance is required to draft clear rules and dispute resolution. Without it, disputes will not be resolved properly, which can reduce trust among participants.
Permissioned blockchains offer businesses a way to get the maximum out of blockchain technology. Unlike public blockchain, which offers openness, permissioned networks offer a balance between trust and efficiency. For businesses looking to integrate permissioned blockchain into their system, and don't know where to start, then you need not worry. At Fourchain, a leading blockchain development company, we help businesses integrate blockchain seamlessly into their systems and help them take their enterprise to the next level! Take the first step by contacting our experts today!
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