Permissionless and Permissioned Blockchains – An Overview of Relevant Properties

The blockchain is by far an innovative technology which is just beginning to revolutionize the way we trade and interact with each other. This reputation is particularly attributable to the blockchain’s properties which enable trustless entities to engage in financial relationships without having to rely on any intermediaries or third parties. Moreover, blockchains provide means for integrated data storage that promote transparency and prevent manipulation of stored information.

In this article, we will discuss some of the common properties between permissionless blockchain, such as bitcoin, ethereum, monero, and permissioned blockchains, e.g. Hyperledger, Hyperledger Fabric, Corda.

Permissionless blockchains:

Bitcoin and ethereum are the most prominent examples of permissionless blockchains, which are public and decentralized. Participants can join and leave the blockchain’s network at any time. No central authority manages who is allowed to join the network, or bans illegitimate users from connecting to the network. Via means of cryptographic primitives, it is technically possible to formulate a permissionless blockchain that conceals private information (e.g. Zerocash).

Permissioned blockchains:

Permissioned blockchains have been proposed to authorize only a confined group of users to participate in the blockchain’s network. A central authority determines and gives the right to predefined peers to write; i.e. extend the blockchain, or read; monitor or audit transactions on the blockchain. On permissioned blockchains, such as Hyperledger, in order to prmote privacy and encapsulation, writers and readers could also run in interconnected separated parallel blockchains.

Common Properties Between Permissioned and Permissionless Blockchains:

Public verifiability:

This enables users to validate the correctness of the blockchain’s state. Along a permissionless blockchain, each state change is validated by verifiers, e.g. miners on bitcoin’s or ethereum’s  blockchains. Any observer, or reader, on the other hand, can verify that the blockchain’s state has changed as per the protocol and eventually, all readers will have the same version of the blockchain. In a permissioned blockchains, various readers can have entirely different views of the blockchain’s state. Accordingly, they might not be able to validate that all transitions of the blockchain’s state were executed in a correct manner. Alternatively, readers have to trust that the central authority will provide them with the correct version.

Transparency:

Transparency of the data stored and the update process of the blockchain’s state is a necessity for public verifiability. The magnitude of transparent information available to a given observer, however, can vary, and not every user has to have access to every available piece of information.

Privacy:

This is a pivotal property of any blockchain. Usually, there is a form of conflict between transparency and privacy. Privacy is somehow simpler to achieve in a permissioned blockchains due to the fact that transparency along with public verifiability are not needed for the functioning of the blockchain.

Integrity:

Information integrity guarantees that information will be immune against unauthorized modifications, i.e. that retreived info is correct. Information integrity is closely related to public verifiability. If a blockchain promotes public verifiability, any user can verify data integrity; integrity can only be otherwise guaranteed if the permissioned blockchain is not compromised.

Redundancy:

Redundancy of data is pivotal when many use cases are considered. In permissionless blockchain frameworks, redundancy of data is provided via a replication process among the writers, while across permissioned blockchains, data redundancy is achieved via replication on various physical servers and through backups.

Trust Anchor:

Trust anchor will define the representatives of high authority of a system that can grant and/or revoke rights to read and write to the blockchain’s ledger.

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