Top Permissioned Blockchains for Enterprises
The scope of blockchain technology has evolved and made significant headway with time. The application of blockchain has progressed beyond cryptocurrencies to provide business solutions for enterprises. In particular, the “permissioned blockchain” has infiltrated industry-level enterprises such as IBM, JPMorgan, and GoldmanSachs. A permissioned blockchain introduces an access control layer, meaning that specific actions can only be performed by participants who are identifiable on the network. These blockchains require network members to have access privileges as information gets shared strictly on a “need-to-know” basis.
Therefore, in the case of a permissioned blockchain, the intrinsic configuration defines the role and contribution of every participant. Apart from the fundamental difference of controlled access, it differs from a public blockchain which is the foundation of the most popular cryptocurrency, Bitcoin with respect to scalability, privacy, and degree of centralisation.
Public vs Permissioned Blockchain
Blockchain networks are being leveraged worldwide to transform the way in which businesses operate. The fundamentals of immutability and distribution remain the same. However, the application varies based on certain dissimilarities. Below are some of the differences between a public and a permissioned blockchain.
One of the greatest limitations facing public blockchains is the lack of scalability. While Bitcoin can handle around seven transactions per second, Ethereum can manage around twenty. This is an unacceptably low throughput, which translates into a prominent deal breaker for businesses. The primary fundamental on which a blockchain operates is consensus, a state in which the majority of participants on the open network have to be in sync in order to validate a transaction. Although there are numerous nodes on a public blockchain, it has an inherent tendency to lack scalability.
On the other hand, permissioned blockchains have markedly fewer nodes on any network, making the process of consensus much faster, and, therefore, a scalable alternative for enterprises.
Public blockchains, like the one underlying Bitcoin, are celebrated for being completely transparent. Firstly, anyone can participate in a public blockchain’s network, and secondly, all of the information (other than that encrypted by a user’s private key) is accessible to all of the participants. While this is a disruptive innovation for several sectors, like those of food delivery and supply chain management, such universal access can be risky for an enterprise.
Enterprises usually hold incredibly sensitive data which obviates the need for a certain degree of privacy to be implemented. At the same time, these organisations are also actively seeking automation and confined transparent governance — and permissioned blockchain offers both of these features. It gives access to authorised participants only and introduces a layer of confidentiality by not sharing information with third parties. A permissioned blockchain network equips an enterprise to maintain transparency along certain channels without risking the misuse of sensitive information.
Degree of Centralisation
Public blockchain has emerged as a technology that is synonymous with decentralisation. It is defined as a ‘decentralised’ ledger, which means that no central authority has access to alter or manipulate the information stored in it. A public blockchain is driven by consensus mechanisms in which a majority of the network participants are needed to validate a transaction or data point. The seamless integration of decentralisation has proven to be revolutionary for several industries. However, it is impractical for enterprises to relinquish all control over their information and data.
Permissioned blockchains are centralised or partially decentralised ledgers that have carefully constructed consensus mechanisms. Often, individual participants have different access controls — based on their authority and role in the organisation. The overall power cannot be distributed equally among all participants in an enterprise setting. A permissioned blockchain enables a business to have centralised control, and at the same time, to practise immutability and automation.
Top Permissioned Blockchains
An organisation that is willing to implement permissioned blockchain can choose from a pool of popular frameworks based on their requirements. The top five permissioned blockchain networks that are being integrated widely are Hyperledger, Corda, Quorum, Ripple, and MultiChain. Below are the details of each of these projects.
Hyperledger is the banner name used by Linux Foundation for its various blockchain and DLT projects, the most popular of which is called Hyperledger Fabric. It is a permissioned network which works by authorising every user to register through the provision of identity access. Every user is assigned a transaction authority that defines the range within which he/she can work. In addition, it also specifies the range of projects in which the user would require permission from other users.
Hyperledger Fabric is one of the top choices for organisations because of its modular architecture; developers save time and effort by not having to build everything from scratch. Apart from optimising core enterprise processes, Hyperledger Fabric offers confidentiality to enterprises by encrypting transactions which can then be modified only by authorised users. This platform is being leveraged by a diverse set of industries spanning food, airlines, and data. Some of the enterprises working with Hyperledger Fabric include IBM, NIIT Technologies, and The American Association of Insurance Services.
Corda was launched in 2015 with a vision of building a global ecosystem in which thousands of developers design DLT applications called CorDapps — all based on an open source blockchain platform. It allows enterprises to transact directly to reduce the cost of transactions and record keeping. Furthermore, it also introduces privacy by leveraging smart contracts along with streamlining business operations.
It eliminates the need for various businesses on the Corda network to know about every transaction by revealing relevant information strictly to interested parties. At the time of launch, its focus was on financial organisations. However, it is now being deployed by other sectors including government, trade, supply chain management, and healthcare.
Quorum is an Ethereum-based open-source blockchain platform that combines the public community of Ethereum with features that brace enterprise needs. It was launched in 2016 with the introduction of Ethereum Enterprise Alliance (EEA) — and with the vision of making blockchain integration across organisations a seamless process. As compared to Ethereum, it offers a simpler consensus mechanism, therefore, enabling faster speed of processing transactions.
In order to make it viable for businesses, Quorum has features of strict privacy, robust permission mechanisms, and high performance. In addition, updates in Ethereum are easily integrated into the enterprise network as well. Quorum is backed by some incredibly strong partnerships, such as those with J.P. Morgan and Microsoft.
Ripple was founded in 2012 with the goal of offering a payment settlement platform to banks, exchanges, and digital asset enterprises worldwide. The transactions on the Ripple network are processed through its own digital currency, XRP. Designed for enterprise use, XRP is a fast, cost-efficient, and secure cryptocurrency used for cross-border payments. The market cap of XRP was USD 13,246,782,120 as of 29th July, 2019.
In an attempt to make it suitable for enterprises, Ripple leverages on an architecture that allows it to be scalable and interoperable with other networks. Ripple has over 200 industry users, including Standard Chartered, American Express, MUFG Bank, Itau, Instarem, and MoneyGram.
Launched by Coin Sciences, MultiChain is a software tool for digital assets and legal contracts. It offers an open platform to build a blockchain in two simple steps so that organisations are able to benefit from blockchain’s features, but with high speed. It offers enterprises to issue ‘millions of assets’ on blockchain on a secure and verified network. In addition, it allows for safe multi-party and multi-asset atomic exchange transactions.
Every blockchain that is created using MultiChain can be designed to be as open or as closed as an enterprise requires it to be. An organisation can control and direct the users who can connect, receive, and send transactions or create assets and blocks. Several enterprises which have integrated MultiChain in their own offerings include SAP, Accenture, Boston Consulting Group, Cognizant, HCL, PwC, and Wipro.
According to the Deloitte 2019 Global Blockchain Survey, over 80% of respondents mentioned that their organisation is planning to use blockchain for replacing record systems and mechanisms. Furthermore, 45% of the respondents said that their company is focusing its activities on permissioned blockchains. With the benefits that a permissioned blockchain offers an enterprise as opposed to a public blockchain, several projects may well be powered by it in the future.
The features of optimised power consumption, faster consensus mechanisms, enhanced privacy, and strict security variables represent the driving force behind the adoption of permissioned blockchains. In fact, ecosystem stakeholders have referred to it as ‘Blockchain 3.0’ because of its range of offerings.
* The information above does not constitute any form of financial or investment advice and should not be relied upon. Investing in Digital Assets carries risk. For more information please see our risk warning.