ADVANTAGES AND DISADVANTAGES OF PERMISSIONLESS BLOCKCHAIN

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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.

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• 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.

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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.

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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.

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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.

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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.

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• 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.

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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.
• .

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• 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.

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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

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• Anonymity- Although, its 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, its a costly affair.

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• Permissionless blockchain offer limited block
  size.
• In the case of the permissionless blockchain,
  one doesnt 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.

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• 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.

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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

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