Permissioned vs. Permissionless Blockchain: How and Why There Is Only One Right Choice

Abstract

The blockchain structure can be utilized in an efficient way to verify and ensure the integrity of the data and prevent historical transactions from tampering, such that if one block is altered, then the rest of next blocks are no longer valid. However, it is possible to re-calculate all the next blocks in a closed and permissioned network, such that all altered blocks will become valid again. In other words, only chaining blocks to each other, based on the hash of the previous one, cannot ensure the integrity and the security of the data and protect transactions against tampering. In this paper, we motivate why permissionless blockchain in an open network should be considered as the only acceptable type of blockchain and show that permissioned blockchain and closed network makes chaining transactions (i.e. blockchain) as an unhelpful structure. Of course, this never means that we ignore the existing problems in permissionless blockchains (such as, scalability of the network and transaction throughput), but also, we argue that permissioned blockchain cannot be an acceptable solution for those problems, where chaining transactions will no longer be meaningful. In other words, in a closed network, we no longer need to chain transactions. Although, this is a central issue and has been addressed in recent years, we are trying to bring new elements and an enriched point of view.