Is Ethereum’s blockchain permissionless, or permissioned, or both?

Blockchain is a popular technology that promises decentralization of all aspects related to data. Ethereum, which has Ether (ETH) as its native cryptocurrency, is a large blockchain network with Solana and Cardano as its competitors. All of these networks allow developers to build new decentralized solutions, where record-keeping is spread widely among peers, meaning no single authority can make decisions.

But in the blockchain space, there is a debate about the extent of the distribution of power among peers. Should all members of the public be allowed to participate, or should access be restricted? This brings us to the concept of permissioned blockchain networks, where only invited participants are allowed to speak. Can Ethereum enable such a permissioned scheme? Let’s explore.

Is Ethereum permission or permission?

‘Mainnet’ is the term attributed to a fully functional blockchain. Bitcoin has its own mainnet, and so does Ethereum and many other blockchains. Ethereum’s mainnet is a public and permissionless network, meaning it does not exclude anyone from participating. A transaction can be recorded by any participant and there is no concept of permissions or privacy. The main cryptocurrency to pay the gas tax is the native ETH token, and it can be mined by those who participate in the Ethereum network’s record keeping. A majority of cryptocurrency networks are permissionless with distributed powers.

However, Ethereum also allows the use of the network to build new private blockchains. Inside a private version, limited access is available to only a few permitted participants. Ethereum’s enterprise solution provides an opportunity to build and deploy Layer 2 protocols, which can fit the specific blockchain-related needs of any enterprise. The blockchain says this can help increase operational efficiency while making the specific network inaccessible to third-party participants.

The rise of permissioned blockchain

Hyperledger, a project supported by the Linux Foundation and technology players such as IBM and Intel, focuses primarily on approved blockchain solutions. Hyperledger Fabric underpins IBM’s enterprise-class open and distributed platform and comes with “advanced privacy controls”. Here, smart contracts with self-executing terms can be deployed with limited participation, in contrast to a permissionless arrangement where unlimited anonymous participants can exercise control.

Cryptocurrencies, including Bitcoin and Ether, have shown ultra-volatility in their values, with doubts about how the so-called decentralized setup, powered by permissionless blockchains, will sustain in the long term. On the other hand, permissioned networks, which add limitations to the extent of distribution of control, are considered a better use of blockchain technology at the enterprise level, especially to reduce operating costs.

Bitcoin price

Stated data of CoinMarketCap.com

The bottom line

Ethereum’s mainnet is an open and permissionless network primarily focused on cryptocurrency records. Allowed solutions can be added to this core network as a layer 2 network. Separately, Hyperledger Fabric by IBM also offers approved blockchain solutions.

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