Open Permissioned Blockchain, a Hybrid Blockchain Offers the Best of Public and Private Chains
#1 What is the Open Permissioned Blockchain?
Interest in blockchain and its potential to transform business practices has never been higher. However, many businesses still have questions about how blockchain can best be applied to their specific problems and the advantages and drawbacks of public versus permissioned blockchains. This article summarizes the two and outlines how the BSN's Open Permissioned Blockchain (OPB) can combine the best features of both.
What is the difference between a public chain and a permissioned chain?
A public blockchain is a fully decentralized system in which anyone can participate. This participation will take the form of connecting to the network and contributing the available computing power to maintaining the ledger's authenticity through solving the cryptographic problems that generate the blocks that add to the chain. Each node of the network simultaneously verifies each block. In this way, the network is decentralized and self-governing, in the sense that no central authority is required to police the network and maintain its integrity. Bitcoin was the first and remained the most famous such system.
A permissioned blockchain is a more flexible and customizable form of blockchain and therefore has become the system of choice for businesses and consortiums worldwide. In a permissioned network, the system administrator verifies every participant's identity before joining. Specific and personalized permissions can be designated to each participant, allowing them to perform only certain activities on the network. From a business's point of view, the key advantage of this approach is that flexibility is offered over which information is available to each entity on the network. For example, it might be helpful for a shipping company employed as an intermediary between a producer and a retailer to have access to data about the quantity and agreed delivery date of a deal but not to have access to the price agreed between the factory and the retailer.
In essence, on a public network, the transactions are all publicly viewable by anyone on the network, but the identity of the participants is hidden. On the contrary, on a permissioned network, the identity of all participants is known and verified, while the details of specific transactions are only viewable depending on your permissions.
What is the OPB, and how does it compare to public and permissioned chains?
The BSN OPB is an innovative new form of a blockchain network that combines public and permissioned systems features. The OPB adapts public chains to allow permissioned controls over node deployment while allowing payments to be made fiat rather than cryptocurrencies. The comparison table below outlines the key differences between the three types of networks.
How does the OPB allow access to the Chinese market?
Today, the Chinese market represents something of a paradox. China is simultaneously at the forefront of developing cutting-edge blockchain technology while also having some of the most aggressive anti-cryptocurrency regulations anywhere in the world. Thus, companies and individuals within China are cautious about working with public chain technologies, and foreign companies seeking to enter the Chinese market face a myriad of complex and restrict regulations.
One significant advantage of the OPB is that it allows the deployment of decentralized applications in a way that is compliant with Chinese regulation, which currently forbids the use of cryptocurrencies. Without the OPB, the Chinese market is effectively closed to public chains and applications that run on them.
Although the Chinese authorities have long been unsympathetic towards cryptocurrencies, in September 2021, they left no room for ambiguity by declaring all cryptocurrency transactions illegal and banning citizens from working for cryptocurrency firms. The decree makes China the most significant economy to join a growing list of countries where cryptocurrency is either restricted in some way or subject to an outright ban. Other important markets include India, Indonesia, Russia, and Vietnam.
How does OPB stay compliant with Chinese regulation?
Demand within the Chinese market for the benefits that blockchain applications can bring to numerous business processes remains as strong as before the decree. As such, the OPB has become a vital bridge between the Chinese market and foreign companies and represents a more general method by which the benefits of blockchain applications can be salvaged from regulatory frameworks unfavorable to cryptocurrencies.
The technical transformation which makes the permissionless chain compliant with Chinese regulation is that the 'gas fees' required to enter smart contracts on the Ethereum chain and payable in the cryptocurrency Ether, are replaced on the OPB by payment in fiat currencies. In this way, the application runs without any need for cryptocurrencies to process the payments, and therefore fully complies with the ban on all cryptocurrency activity. Not only is this regulatory compliance, but the use of fiat currencies also makes it significantly easier for clients to budget for the cost of the services they require by removing the extreme volatility that characterizes cryptocurrency exchange rates.
