What kind of Blockchain does my organisation need?

Once you have confirmed that your organisation needs to incorporate blockchain technology into its operation, there is one more question you must ask – What kind of blockchain does my organisation need?
Your question can be answered by understanding what your specific requirement is with respect to characteristics that are associated with your need for blockchain technology incorporation. In addition to this, you can better understand some of the advantages and disadvantages of the different types of blockchains.

The characteristics that you need to look for in your blockchain are:

  • Authority, Control & Trust

  • Business Context

  • Access Rights

  • Accountability, Legal Standing

  • Deployment Style

  • Record Immutability

  • Consensus Mechanism

What kinds of blockchains exist?

Private Permissioned

Operated by one entity. These Blockchains value efficiency over anonymity, immutability and transparency. For example, Ripple.

Public Permissioned

Single Industry – Operated by known entities such as stakeholders of one industry. They value immutability and efficiency over anonymity and transparency.

Public Permissioned

Multi-Industry – Operated by known entities such as stakeholders across multiple industries. They value immutability and efficiency over anonymity and transparency.

Permissionless

Anyone can be a user or run a node. Generally speaking public Blockchains such as Bitcoin value anonymity, immutability, and transparency over efficiency. This means your identity can be safe as you purchase goods online

Characteristic Private Permissioned Public Permissioned : Single Industry Public Permissioned : Multi Industry Permissioniess
Authority, Control and Trust Ledger management facilitated by a single company for private use -- centralised trust Ledger management facilitated by an industry utility, open to limited public use -- semi-centralised trust Ledger management facilitated by an industry utility or open to public use -- semi-centralised trust Ledger management facilitated by the distributed network/participants -- distributed consensus/trust
Business Context Intra-Company Inter-Company or within an industry Inter-Company or across industries Inter-Entity (company and individual) across a network or ecosystem
Access Rights Single company purpose permissioning Single industry purpose permissioning Defined multi-industry/purpose permissioning Multi-Industry/Participant and Multi-Purpose permissioning
Membership Static Static Semistatic Fluid
Accountability, Legal Standing Legally accountable actors Legally accountable and potentially regulated actors Legally accountable and potentially regulated actors Limited/Zero legal accountability and unregulated actors
Deployment Style Private Private or Public Private or Public Public
Record Immutability Potentially Editable Potentially Semi-Editable Potentially Semi-Editable Predominantly Irrevocable
Consensus Mechanism Proof of Stake, Federated Byzantine Fault Tolerance Agreement Proof of Stake, Practical Byzantine Fault Tolerance, Deposit-Based, Federated Byzantine Agreement Proof of Stake, Practical Byzantine Fault Tolerance, Deposit-Based, Federated Byzantine Agreement Proof of Work
Advantages
  • Authenticated and secure by known user rights
  • Optimisation of protocols and the network for specific use cases
  • Shared network/management utility costs
  • Easier governance and policy enforcement
  • Open to regulatory oversight
  • Controlled standards development
  • Operationally faster
  • Underlying product/service/business model stability and protection
  • All data public/transparent
  • Ability to resist hacking
  • No centralised entity control
  • No separation of users from application developers
  • Ecosystem growth via network effect
  • Open source
  • "Unlimited" developer resources
  • "Unlimited" native asset creation and conveyance
  • Reduces participant fees
Disadvantages
  • Single point of failure
  • May not be fully open source
  • Reinforces existing supplier product fee structures
  • Supplier-centric as opposed to buyer- or customer -centric
  • Limited developer resources
  • Required corporate consensus
  • Product/application design separated from customers/users
  • Potentially limited asset creation and conveyance
  • Scalability issues create transaction latency
  • Complicated governance
  • Untrusted actor participation
  • Potential for mining concentration
  • Potential for illegality
  • Direct financial incentives required to maintain the network