Permissioned

Definition

Permissioned refers to a type of blockchain that restricts access to certain participants, meaning that only authorized entities can join the network and validate transactions. This model enhances privacy and control, making it suitable for organizations that require confidentiality and regulatory compliance. In permissioned blockchains, the governance is typically managed by a central authority or a consortium, ensuring that participants adhere to predefined rules and protocols.

5 Must Know Facts For Your Next Test

1. In a permissioned blockchain, only specific individuals or entities are granted permission to access the network, unlike public blockchains where anyone can participate.
2. Permissioned blockchains often use different consensus mechanisms compared to public ones, which can lead to faster transaction speeds and lower energy consumption.
3. These blockchains are particularly popular in industries such as finance, healthcare, and supply chain management due to their focus on security and compliance.
4. Governance in permissioned blockchains is usually more centralized, meaning decisions regarding network changes or participant permissions are made by a select group of stakeholders.
5. Examples of permissioned blockchain platforms include Hyperledger Fabric and R3 Corda, which are designed for enterprise use cases.

Review Questions

• How does a permissioned blockchain differ from a public blockchain in terms of accessibility and governance?
  • A permissioned blockchain differs from a public blockchain primarily in its accessibility; it restricts participation to authorized users only, while public blockchains allow anyone to join. This creates a controlled environment where governance is typically centralized among a select group of stakeholders who set rules and manage access. As a result, permissioned blockchains often prioritize security and compliance over openness, making them suitable for enterprise applications.
• Evaluate the advantages and disadvantages of using permissioned blockchains in enterprise settings.
  • Permissioned blockchains offer several advantages in enterprise settings, including enhanced security, improved transaction speeds, and better regulatory compliance due to controlled access. However, they also have disadvantages such as reduced decentralization and potential single points of failure since governance is often concentrated among a few participants. The trade-off between privacy and transparency needs careful consideration depending on the specific use case within an organization.
• Design a use case for a permissioned blockchain in an industry of your choice, detailing how it addresses specific challenges.
  • A use case for a permissioned blockchain could be in the healthcare industry for managing patient records. By using a permissioned blockchain, hospitals and healthcare providers can ensure that only authorized personnel have access to sensitive patient information. This addresses challenges like data privacy regulations (such as HIPAA in the U.S.) while allowing secure sharing of information among trusted parties. It also streamlines administrative processes by providing a single source of truth for patient data, thus reducing errors and improving overall patient care.

Related terms

Smart Contracts:

Self-executing contracts with the terms of the agreement directly written into code, enabling automated processes on the blockchain.

Consensus Mechanism:

The method by which participants in a blockchain network agree on the validity of transactions, which can vary between permissioned and permissionless networks.

Privacy Coins: Cryptocurrencies that enhance user privacy by obscuring transaction details, often compared to the transparency of public blockchains.