Blockchain Categorisation

A permissioned blockchain is similar to a corporate intranet that is controlled, while a permissionless blockchain is like the public internet.

Blockchains are generally categorised based on the permission model, which determines who can access them. If anyone can read and write to a blockchain, it is permissionless. If only particular users can read and write to it, it is permissioned. In simple terms, a permissioned blockchain is similar to a corporate intranet that is controlled, while a permissionless blockchain is like the public internet, where anyone can participate.

Permissioned blockchains defy the original conception of the Bitcoin blockchain where everyone can read and write to the blockchain, and the ledger is transparent/public. Organisations that wish to work together, but do not fully trust one another, can establish a permissioned blockchain and invite business partners to record their transactions on a shared distributed ledger. This permissioned blockchain can have the same traceability of assets as they pass through the blockchain, as well as the same distributed, resilient, and redundant data storage system as a permissionless blockchain. These organisations can determine the consensus mechanism to be used, based on how much they trust one another.

Permissioned blockchains can be set up so anyone can read them, but only selected members can record transactions on them. This type of blockchain would provide full insight into the internal interactions of the organisation by anyone who has an interest, but the public at large would not be able to interfere with the data. Permissioned blockchains can also be set up so anyone can record transactions on the blockchain, but only selected members can read the data.

Application Considerations for Permissioned Blockchains
While permissioned blockchains are often considered an improvement over current systems, certain design characteristics must be considered carefully to ensure security. For example, when using a database, it is possible to have detailed permission granularity, such as allowing certain users to perform specific queries or only allowing certain users to write to specific tables. Applications that use a blockchain may need to consider whether the permissions supported by the blockchain are granular enough to permit enough roles to be created within the system (permissions allow for more traditional roles, such as administrator, user, validator, auditor, etc.). This also applies to how permissions are administered. Once a user is given write access to the blockchain, is it possible to revoke that permission? Most blockchain implementations are irreversible, unchallengeable & absolute, which can make permissions more complicated.

Trust is another critical consideration when deciding to build an application on a blockchain. Within a permissioned blockchain system the method of consensus is generally less computationally intensive – therefore it could be possible for users to act maliciously. However, the trust does not need to extend to all users. It is possible for the maintainer of the blockchain to designate a limited set of mining nodes. If these are trustworthy, it is then unnecessary for the user population at large to be trustworthy as the miners will enforce the blockchain rules.

Another important consideration is having a tamper-evident design. If a malicious mining node tried to change a block, they might for example forge a transaction to give themselves money. Would this kind of change be detected? Are there systems in place to determine what happened?

Immutability is important and is one of the founding principles of the blockchain. In general, malicious transactions that enter the blockchain cannot be undone, even if they are identified. To do so requires rewriting published blocks which essentially forks the blockchain and requires the approval of the majority of mining nodes. In a permissioned system this can be easier since the mining nodes are generally a trusted set that have a special relationship. It is much more difficult, but technically possible, for a permissionless systems such as Bitcoin.

Source: National Institute of Standards and Technology, U.S. Department of Commerce (Jan 2018)

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