o Partially Decentralized- While permissioned blockchains are distributed across multiple
peers or nodes like other blockchains, the network participants are limited to approved
entities rather than anonymous nodes.
o Identity Verification- In permissioned blockchains, real-world identities can be associated
with user addresses and transactions through identity verification processes.
o Customized Permissions- Administrators in permissioned blockchains can define granular
access policies and permissions for different types of members and roles.
o Flexible Consensus Models- Permissioned blockchains can utilize faster and more
energy-efficient consensus models like PBFT and voting-based schemes rather than
resource-intensive proof-of-work.
Pros and Cons of Permissioned Blockchain
Pros
Increased Privacy and Security
Customizability
Efficiency Gains
Regulatory Compliance
Centralized Governance
Cons
Limited Transparency
Higher Corruption Risks
Censorship Potential
Centralization Risks
Permissionless blockchain- are public blockchain networks that impose no restrictions on
access or participation. Some of the salient features of a permissionless blockchain include:
o Fully Open Access- In contrast to permissioned blockchains, anyone globally can join,
submit transactions, and participate in consensus mechanisms like mining in
permissionless blockchains without needing approval.
o Full Transparency- All transactions are publicly visible to every node in a default
permissionless blockchain like Bitcoin
o Pseudo-Anonymity- Users interact through cryptographic key pairs rather than real-world
identities.
o Censorship Resistance- With no central authority and distributed consensus mechanisms
like proof-of-work, no single entity can tamper with transaction histories or censor activity
on a permissionless blockchain like Bitcoin.
o Incentivized Participation- Tokens are used to incentivize nodes to verify transactions
and secure the network through mining and staking.
Pros and Cons of Permissionless Blockchain
Pros
Censorship Resistance
Transparency
Security Resilience
Immutable Records
Accessibility
Cons
Performance Limitations
Energy Intensive
Minimal Privacy
Potential for Crime
I. CONSENSUS
All parties agree to network verifiable transactions.
Two Approaches of Consensus
o Centralized
o Decentralized
Consensus Mechanisms
o The process by which a group of peers – or nodes – on a network determine which
blockchain transactions are valid and which are not.
o Are used to verify transactions and maintain the security of the underlying blockchain.
Different types of Consensus Mechanisms
o Proof of Work (PoW)
- Miners essentially compete against one another to solve extremely complex
computational puzzles using high-powered computers.
o Proof of Stake (PoS)
