Business Benefits of Permissioned Blockchains
It goes without question that blockchain technology has changed how we store, secure, and process data.
And even though decentralized ledgers have become popular, businesses are now leaning towards permissioned blockchains for their special advantages.
Today, we will delve into the basics of permissioned blockchains, their types, and the various benefits they bring to businesses.
What Are Permissioned Blockchains?
Permissioned blockchains, also called private blockchains, are distributed ledgers that limit access to specific individuals or entities.
In contrast to public blockchains, where anyone can join, permissioned blockchains need users to get permission before they can be part of the network.
The Difference Between Different Types of Blockchain
Blockchain technology, the foundation of decentralized systems, comes in different types customized for users’ specific needs. Now, let’s break down the differences between them.
Private Blockchains
In a private blockchain, only approved members, usually from different parts of a company or involved parties, are allowed to take part.
The main goal is to keep control, privacy, and a strong level of trust among these known participants.
The good thing about private blockchains is that they work efficiently because they don’t have to deal with the complicated agreement processes needed in decentralized networks.
However, the downside is that they are less decentralized, meaning that control is in the hands of the organization or group running the show.
Permissionless Blockchains (Public Blockchain)
Permissionless blockchains, like Bitcoin and Ethereum, are like open clubs – anyone can join with no restrictions.
They work in a decentralized way, where participants, often called nodes or miners, can jump in without needing permission.
These open blockchains are super secure and resistant to censorship because no one central authority is in charge. But, the downside is they’re not as quick or efficient because the agreement processes need a lot of computer power.
Permissioned Blockchains
Permissioned blockchains, also called consortium or federated blockchains, find a middle ground between super-exclusive private blockchains and totally open permissionless blockchains.
In a permissioned blockchain, not just anyone can join – you need approval.
Businesses like permissioned blockchains because they provide better privacy and security.
These types of blockchains work well in situations where trust is highly important among the participants, but they still want some level of decentralization.
Why Businesses Prefer Permissioned Blockchains
Businesses prefer permissioned blockchains for a few important reasons. One big factor is better privacy and confidentiality.
In industries where they need to keep sensitive info safe, permissioned blockchains create a secure space with limited access.
Also, permissioned blockchains handle big loads and process transactions faster. With a set group of participants, the way they agree on things can be more streamlined.
Challenges in Adopting Permissioned Blockchains
Although businesses find benefits in using permissioned blockchains, bringing them into an existing setup comes with its share of difficulties. Let’s look at some main challenges linked to adopting permissioned blockchains:
Building a Group
Making a permissioned blockchain involves getting a group of people together, called a consortium. Still, convincing the right people to join can be extremely tricky, especially in industries with lots of players or complicated rules.
Running Things and Making Decisions
Making decisions and managing how things work in permissioned blockchains require a strong governance system.
This includes handling updates, resolving disputes, and agreeing on how everyone will work together. Creating a good governance model is like walking a tightrope – it has to consider everyone’s interests while keeping things simple and transparent.
Making Blockchains Work Together
Making different blockchain systems work together, known as interoperability, is a big challenge. In many industries, different groups might be using various blockchain platforms.
Getting these different systems to talk to each other, share information, and do transactions is a problem that organizations need to solve to get the most out of permissioned blockchains.
Dealing with Lots of Users and Transactions
As more people and transactions join the network, it becomes tricky to find the right balance between managing a lot of activity, ensuring security, and avoiding one central authority controlling everything. This task involves constantly adjusting and coming up with new ideas.
Following the Rules
Even though permissioned blockchains have more control over who joins the network, they still need to follow the rules.
But meeting legal requirements, especially in highly regulated areas like finance and healthcare, means dealing with a lot of complicated laws and standards.
Examples of Permissioned Blockchain Platforms
As businesses see the benefits of permissioned blockchains, new platforms have emerged to give them tailored solutions. Here are some examples that have become popular in the business and tech world:
Hyperledger Fabric
Hyperledger Fabric is a type of blockchain made by the Linux Foundation’s Hyperledger project. The best thing about it is that it’s like building with blocks – organizations can customize it to fit their needs.
Hyperledger Fabric can handle smart contracts (or chaincode, as they call it) and uses a way of agreeing on things that makes transactions go really fast.
R3 Corda
R3 Corda is designed by a company called R3. Corda’s job is to make direct transactions between people or groups easy and private. It uses smart contracts to make sure transactions are safe and direct between peers.
Corda is great for industries where companies care about privacy and need to keep important information safe.
Quorum
Quorum is made by JPMorgan Chase for big businesses. Some people say it resembles Ethereum but tweaked for private groups. Quorum has a way of agreeing on things called QuorumChain, and it can keep transactions private using a special code called Constellation.
Permissioned Blockchain Use Cases across Industries
More and more industries are getting into permissioned blockchains because they want to handle data in a clear and safe way. Let’s check out some examples of how they’re being used in different areas:
Supply Chain Management
Permissioned blockchains are changing the way we handle supply chains, making them clearer and more efficient. In industries like food and pharmaceuticals, companies are using permissioned blockchains to track every part of a product’s journey.
This means keeping records of where materials come from, overseeing how products are made, and making sure the final product is genuine.
Healthcare
In healthcare, permissioned blockchains are like a secure and private vault for handling patient records. They make sure the data is trustworthy and help make medical information more accessible. Hospitals, clinics, and insurance companies can work together within this secure system to share patient data.
This makes it easier to diagnose patients quickly and accurately. Plus, it keeps everything in line with strict healthcare rules, making both patient care and regulatory compliance better.
Finance
Banks and financial companies are using special blockchains called permissioned blockchains for different tasks like international payments, trade finance, and handling securities.
These blockchains make financial transactions quicker and more transparent, all while following the rules set by regulators. This helps banks do things faster, spend less money on operations, and keep everything more secure.
Government
Governments are checking out permissioned blockchains to make public services work better and be more transparent.
Things like keeping track of land ownership, managing identities, and running voting systems are areas where these special blockchains can be super helpful.
Using blockchain tech helps governments stop fraud, make sure everything is done responsibly, and keeps a super secure record of all actions.
Manufacturing
In manufacturing, permissioned blockchains are used to make supply chains work better, keep track of where products come from, and make sure parts are real.
Manufacturers use these blockchains to create a clear and checkable record of every step in making something, from getting raw materials to putting everything together.
Conclusion
As companies look into using enterprise blockchain development services to improve their way of doing things, permissioned blockchains stand out as a smart choice.
These blockchains are good because they control who gets in, keep things private, and have rules that fit specific industries with special rules.
Even though there are challenges in starting to use them, the advantages for businesses make permissioned blockchains a valuable tool in the changing world of decentralized technologies.
If you’re looking to bring a top-notch blockchain solution to your business, reach out to SCAND. Our team of blockchain developers is experts at designing customized and effective solutions that can improve how your business operates.
