Difference Between Permissioned And Permissionless Blockchain

Difference Between Permissioned And Permissionless Blockchain

Anyone who has been reading about the latest update of the distributed ledger technology would have often come across the work permissioned blockchain. There is another type known as permissionless blockchain and there is a lot of difference between the both.

In simple words, we can explain permissioned blockchain as a type of blockchain where participants are restricted as to what they can contribute to the network. There will be only a few users who will have the privilege to do validation of the transactions that happened on the block. There are chances of restricting the users who have created the smart contract from accessing the blockchain as well.

On the other hand, permissionless blockchain is nothing but here anyone is allowed to join within the network and have the permission to contribute in the verification process of blocks and create an agreed upon smart contracts. A great example of permissionless blockchain can be Bitcoin and Ethereum or any other type of cryptocurrency. There is more to know;  read more about Crypto Code. Here anyone can begin mining and participate in the network.

Advantages and disadvantages of the permissioned and permissionless blockchain

When you choose to participate in a permissionless network, one need not undergo the verification of their identity to access the ledger, provided you aim is to be committed to the process and want to extend the blockchain, you are allowed to join. The miners who participate in the game must play by rules and if they want to earn rewards from mining they must solve the hash puzzle and after solving, the transaction should be verified on the block. If the power of mining is high, the winning rewards through mining are also high

Whereas in a permissioned blockchain network there is a necessity of approval if the user wants to participate within the network. They need approval for both growing the blockchain as well as building a harmony. There are many groups of associations that make use of blockchain are making use of private blockchains for their financial institutions and other organizations.

Another crucial difference that these two types of blockchains have is that the hidden model for mining. The mining model used by permissionless blockchains is Proof of Work-PoW mining. Here the power of hash is given so that there is a trust built. The network consensus can be arrived at even if the 51% of nodes have players who are genuine.