Why Private Blockchains Might Not Be Ideal
April 29 2019 - 12:44PM
ADVFN Crypto NewsWire
Bitcoin Global News (BGN)
April 29, 2019 -- ADVFN Crypto NewsWire -- At face value,
having a private blockchain might seem like a more secure option,
especially for companies that want to have full control of the data
they are sharing and storing. The fact is, however, this is not
exactly the case. Private blockchains come with their own
vulnerabilities.
In an article today, CoinDesk
mentioned several key points that Moody’s, which is well-known
ratings agency, has discovered on the subject. First and foremost,
Moody’s is reportedly making the argument that the consensus
mechanisms of private blockchains are weaker or even non-existent.
While the first claim is fairly easy to get behind since typically,
less nodes are involved in a private blockchain, the second is
harder to puzzle out.
How could a blockchain function
without any method of consensus to coordinate its’ activities?
Judging by the article itself and the basic definitions of
permissioned and permissionless blockchains, this comes down to
decentralized versus centralized governance.
In most if not all private
blockchains that have already been created, a small group of
entities control everything about the network. On the other hand,
if we take Bitcoin and Ethereum as examples, thousands of users can
help to decide their futures.
Perhaps, if the report from Moody’s
is taken as fact, it could then be concluded that to make private
blockchains truly secure for institutional use, some hybrid form of
governance framework would have to be developed. Ideally, it would
both mirror those of crypto’s top players, while allowing for a few
nodes to maintain its’ security.
Whether or not this is possible
remains to be seen. In the end, at least, companies like IBM appear
to be working tirelessly on new solutions in this case. Perhaps
other projects like Facebook Coin will also bring key insights to
the table as to how other institutional players should contribute
to the evolution of private or permissioned solutions.
By: BGN Editorial Staff
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