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Copyright © Blockchain Council www.blockchain-council.org 1
Copyright © Blockchain Council www.blockchain-council.org
Advantages and disadvantages of permissionless
Blockchain
Blockchain Technology surfaced with the surge of cryptocurrency. Today you may find
every business, and all the big industries are talking about using Blockchain. They want to
make it a part of their mainstream business operations. On the surface, we know that
blockchain is a distributed ledger technology. It works on the principle of decentralisation
and peer-to-peer transactions. It means that Blockchain culminates the need of having
intermediaries. Thus it saves cost and time both. It is the prime reason that many of the
financial institutions and businesses are trying to use Blockchain for their benefit.
2
Copyright © Blockchain Council www.blockchain-council.org
The data exchange on blockchain works on the principle of cryptographic protocols. This
makes all the information and data in the ledger free from tampering, hacking and
alteration.
When we talk about business-to-business perspective then Blockchain enhances the trust
between the trading parties, it also gives them instant access to the authentic information.
All this is feasible because of the ability of blockchain to have the historical record of the
entries. But when we dig a bit deeper into the technical aspects of this technology, then the
things are different.
3
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The blockchain is of two different types: Permissionless which is also known as Public
Blockchain and Permissioned which is known as Private Blockchain. Both these types
have their own sets of benefits and loss.
Companies are trying to explore various ways of using both types of the platforms but for
that, it is important to take into consideration the pros and cons of each. In this blog, I will
be focussing on the advantages and disadvantages of permissionless Blockchain.
4
Copyright © Blockchain Council www.blockchain-council.org
Blockchain Types-
For those who have been researching or listening about Blockchain, they would know that
the diversification of blockchain types is based on the consensus methods which helps to
validate the transactions. Based on it, there are two types of Blockchain:
1. Permissionless
2. Permissioned
Permissionless Blockchain– This type of blockchain is public and is open to all. The
participant must have resources like computing power and software to validate
transactions.
5
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Bitcoin and Ethereum are examples of the same. In simple words, it means that anyone in
the network (nodes) can join the network and validate the blocks, anyone can read the
chain and add new blocks to it.
Permissioned Blockchain – This type of system is based on a consortium of trusted
validators. One needs the authorization to read the information in the chain which is not
the case with permissionless blockchain.
6
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One of the major drawbacks which hold most of the companies to make permissionless
blockchain a part of their enterprise solution is that it requires massive computing power to
achieve consensus. Each node in the network solves a complex mathematical problem with
the proof of work consensus mechanism to ensure transaction validity. The point of
concern is the transparency of the system. It is visible to everyone which makes the
permissionless blockchain a dicey affair for the companies.
7
Copyright © Blockchain Council www.blockchain-council.org
When it comes to the permissioned system, then it is highly scalable. The consensus
models can be built on the proof-of-stake protocol.
Although the participant access is the key differentiator between the permissioned and
permissionless system, both are equally efficient and share similar attributes. It also
contributes to the advantages of both these systems.
8
Copyright © Blockchain Council www.blockchain-council.org
Advantage of Permissioned System:
❏ It offers a decentralized platform which means that the information is not stored in a
central repository and anyone can access the information at any time and from
anywhere.
❏ It provides immutable signatures for all records. All the information exchange and
transactions are encrypted cryptographically thus, making the entire system safe and
data secure.
9
Copyright © Blockchain Council www.blockchain-council.org
❏ Anonymity- This is yet another popular feature of the blockchain. The miners and
participants in the network remain anonymous.
❏ Transparency is yet another feature of the permissionless blockchain. All the data
and information is visible to all. However, this advantage has backfired and people
are questioning the security of data in case of the permissionless blockchain.
❏ Quick and easy transactions- Since the permissionless blockchain culminates the need
of having a third party, thus there is quick and easy validation and transaction.
10
Copyright © Blockchain Council www.blockchain-council.org
Disadvantages -
Well, certain features of permissionless blockchain have backfired on it and it has turned
out to be the biggest question. Here are some of the disadvantages that permissionless
blockchain might need to look at, It will help in overcoming the bottlenecks and making
the system more reliable and suitable for enterprise solutions:
11
Copyright © Blockchain Council www.blockchain-council.org
❏ Anonymity- Although, it’s a good sign that the identity of the trading parties remains
anonymous this can again be problematic. In case there is a fraud or someone wants
to trace down the parties which are trading, in case of the permissionless blockchain,
it becomes difficult. It is because of this features that many people are using
blockchain for illicit activity
❏ Consensus mechanism- the permissionless blockchain like Bitcoin works on the
principle of Proof-of-Work where the participants have to solve the complex
mathematical puzzle. It requires the consumption of a lot of resources, thus, it’s a
costly affair.
12
Copyright © Blockchain Council www.blockchain-council.org
❏ Permissionless blockchain offer limited block size.
❏ In the case of the permissionless blockchain, one doesn’t need to prove his/her
identity. All you need to do is to commit your processing power to become a part of
the network. Any miner who is playing games by the rile and solves the puzzle can
become the part of the system.
13
Copyright © Blockchain Council www.blockchain-council.org
These drawbacks of the permissionless blockchain system make it a questionable affair for
many companies. They believe that it is not suitable for them to make permissionless
blockchain a platform for offering enterprise solutions. It is because of these disadvantages
that Ethereum which is a permissionless blockchain is shifting its consensus mechanism
from proof-of-work to proof-of-stake.
14
Copyright © Blockchain Council www.blockchain-council.org
Blockchain Council Certifications
You can check out our certifications, and kick start your career in the Blockchain
space today.
● Certified Blockchain Expert
● Certified Blockchain Expertv2
● Certified Blockchain Developer
● Certified Smart Contract Developer
● Certified Solidity Developer
● Certified Ethereum Developer
15
THANK YOU!
Any questions?
You can mail us at
hello@blockchain-council.org
Copyright © Blockchain Council www.blockchain-council.org 16

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Advantages and disadvantages of permissionless blockchain

  • 1. Copyright © Blockchain Council www.blockchain-council.org 1
  • 2. Copyright © Blockchain Council www.blockchain-council.org Advantages and disadvantages of permissionless Blockchain Blockchain Technology surfaced with the surge of cryptocurrency. Today you may find every business, and all the big industries are talking about using Blockchain. They want to make it a part of their mainstream business operations. On the surface, we know that blockchain is a distributed ledger technology. It works on the principle of decentralisation and peer-to-peer transactions. It means that Blockchain culminates the need of having intermediaries. Thus it saves cost and time both. It is the prime reason that many of the financial institutions and businesses are trying to use Blockchain for their benefit. 2
  • 3. Copyright © Blockchain Council www.blockchain-council.org The data exchange on blockchain works on the principle of cryptographic protocols. This makes all the information and data in the ledger free from tampering, hacking and alteration. When we talk about business-to-business perspective then Blockchain enhances the trust between the trading parties, it also gives them instant access to the authentic information. All this is feasible because of the ability of blockchain to have the historical record of the entries. But when we dig a bit deeper into the technical aspects of this technology, then the things are different. 3
  • 4. Copyright © Blockchain Council www.blockchain-council.org The blockchain is of two different types: Permissionless which is also known as Public Blockchain and Permissioned which is known as Private Blockchain. Both these types have their own sets of benefits and loss. Companies are trying to explore various ways of using both types of the platforms but for that, it is important to take into consideration the pros and cons of each. In this blog, I will be focussing on the advantages and disadvantages of permissionless Blockchain. 4
  • 5. Copyright © Blockchain Council www.blockchain-council.org Blockchain Types- For those who have been researching or listening about Blockchain, they would know that the diversification of blockchain types is based on the consensus methods which helps to validate the transactions. Based on it, there are two types of Blockchain: 1. Permissionless 2. Permissioned Permissionless Blockchain– This type of blockchain is public and is open to all. The participant must have resources like computing power and software to validate transactions. 5
  • 6. Copyright © Blockchain Council www.blockchain-council.org Bitcoin and Ethereum are examples of the same. In simple words, it means that anyone in the network (nodes) can join the network and validate the blocks, anyone can read the chain and add new blocks to it. Permissioned Blockchain – This type of system is based on a consortium of trusted validators. One needs the authorization to read the information in the chain which is not the case with permissionless blockchain. 6
  • 7. Copyright © Blockchain Council www.blockchain-council.org One of the major drawbacks which hold most of the companies to make permissionless blockchain a part of their enterprise solution is that it requires massive computing power to achieve consensus. Each node in the network solves a complex mathematical problem with the proof of work consensus mechanism to ensure transaction validity. The point of concern is the transparency of the system. It is visible to everyone which makes the permissionless blockchain a dicey affair for the companies. 7
  • 8. Copyright © Blockchain Council www.blockchain-council.org When it comes to the permissioned system, then it is highly scalable. The consensus models can be built on the proof-of-stake protocol. Although the participant access is the key differentiator between the permissioned and permissionless system, both are equally efficient and share similar attributes. It also contributes to the advantages of both these systems. 8
  • 9. Copyright © Blockchain Council www.blockchain-council.org Advantage of Permissioned System: ❏ It offers a decentralized platform which means that the information is not stored in a central repository and anyone can access the information at any time and from anywhere. ❏ It provides immutable signatures for all records. All the information exchange and transactions are encrypted cryptographically thus, making the entire system safe and data secure. 9
  • 10. Copyright © Blockchain Council www.blockchain-council.org ❏ Anonymity- This is yet another popular feature of the blockchain. The miners and participants in the network remain anonymous. ❏ Transparency is yet another feature of the permissionless blockchain. All the data and information is visible to all. However, this advantage has backfired and people are questioning the security of data in case of the permissionless blockchain. ❏ Quick and easy transactions- Since the permissionless blockchain culminates the need of having a third party, thus there is quick and easy validation and transaction. 10
  • 11. Copyright © Blockchain Council www.blockchain-council.org Disadvantages - Well, certain features of permissionless blockchain have backfired on it and it has turned out to be the biggest question. Here are some of the disadvantages that permissionless blockchain might need to look at, It will help in overcoming the bottlenecks and making the system more reliable and suitable for enterprise solutions: 11
  • 12. Copyright © Blockchain Council www.blockchain-council.org ❏ Anonymity- Although, it’s a good sign that the identity of the trading parties remains anonymous this can again be problematic. In case there is a fraud or someone wants to trace down the parties which are trading, in case of the permissionless blockchain, it becomes difficult. It is because of this features that many people are using blockchain for illicit activity ❏ Consensus mechanism- the permissionless blockchain like Bitcoin works on the principle of Proof-of-Work where the participants have to solve the complex mathematical puzzle. It requires the consumption of a lot of resources, thus, it’s a costly affair. 12
  • 13. Copyright © Blockchain Council www.blockchain-council.org ❏ Permissionless blockchain offer limited block size. ❏ In the case of the permissionless blockchain, one doesn’t need to prove his/her identity. All you need to do is to commit your processing power to become a part of the network. Any miner who is playing games by the rile and solves the puzzle can become the part of the system. 13
  • 14. Copyright © Blockchain Council www.blockchain-council.org These drawbacks of the permissionless blockchain system make it a questionable affair for many companies. They believe that it is not suitable for them to make permissionless blockchain a platform for offering enterprise solutions. It is because of these disadvantages that Ethereum which is a permissionless blockchain is shifting its consensus mechanism from proof-of-work to proof-of-stake. 14
  • 15. Copyright © Blockchain Council www.blockchain-council.org Blockchain Council Certifications You can check out our certifications, and kick start your career in the Blockchain space today. ● Certified Blockchain Expert ● Certified Blockchain Expertv2 ● Certified Blockchain Developer ● Certified Smart Contract Developer ● Certified Solidity Developer ● Certified Ethereum Developer 15
  • 16. THANK YOU! Any questions? You can mail us at hello@blockchain-council.org Copyright © Blockchain Council www.blockchain-council.org 16