- Permissionless blockchains are easy to access.
- Permissionless blockchains, unlike permissioned blockchains, are not governed by any Network Administrator.
Permissionless blockchains or unpermissioned ledgers are blockchains with unrestricted access to everyone allowing them to take part in all transactions and contribute to the consensus mechanism of that blockchain. Permissionless blockchains maintain the user’s anonymity and incentivize the users with various digital assets. They follow a completely transparent transaction process as no central authority is present to watch over the operations.
Ethereum (ETH) and Bitcoin (BTC) are some examples of permissionless distributed ledgers. It is because they let everyone into the network and allow them to perform all sorts of functions such as operating a node, sending and receiving transactions, and mining tokens by being involved in the consensus mechanism. Bitcoin pioneered the system of permissionless payments after which many other blockchains followed it. This led to the rise of permissionless crypto payments.
How are Permissioned Blockchains Different from Permissionless Blockchains?
There is no absolute difference between permissioned blockchains and permissionless blockchains. Permissioned blockchains do not provide access to any individual without authentication in the form of certificates or digital IDs. Since a central authority governs these there is a limited set of functions that the users can perform as allowed by the network administrator.
Permissioned blockchains provide a higher degree of security because the actions can be monitored by the administrators. The Network Administrators only allow some especially identifiable persons to perform certain actions.
For example, a bank has its own blockchain network which is governed internally by its own officials. This network could be used to perform several operations, say, tracking transactions, now these transactions can only be accessed by the individuals who are allowed to view them, this network is termed a permissioned blockchain as not everyone has access to it. It is governed by an Administrator.
Pros of Permissionless Blockchain:
- Since it is a decentralized platform, it is not governed by any Network Administrator and the data can be easily accessed from everywhere and at all times.
- All the information on a permissionless blockchain remains safe and sound as it is encrypted cryptographically. Since it also maintains the anonymity of the users, it gives an added layer of protection.
- Permissionless networks tend to work at a higher speed as compared to permissioned networks because it eliminates the role of a third party, which results in faster processing and verification of the transactions.
Cons of Permissionless Blockchain:
- As described above, anonymity provides an extra layer of security but it can also be disadvantageous at times, if there happens to be a fraud then it will be troublesome to identify the fraudster or if any individual uses the network for foul activities.
- A permissionless blockchain network can be a costly affair for any miner as it is a public network and requires a consensus mechanism and mining new blocks consumes a lot of energy. Hence, it can be a little heavy on the pocket for some individuals.
