What is a Permissioned Ledger?
A permissioned ledger, also known as a private ledger, is a type of distributed ledger technology that restricts access to its network through a set of predefined permissions. Unlike a public ledger such as the Bitcoin blockchain, where anyone can participate in the network and validate transactions, access to a permissioned ledger is limited to a selected group of participants who have been granted permission to do so.
Permissioned ledgers are typically used in enterprise and financial settings where privacy, security, and regulatory compliance are major concerns. These ledgers allow organizations to keep their transactions and data confidential, while still leveraging the benefits of a decentralized network, such as immutability and transparency.
In a permissioned ledger, participants must first be vetted and approved by the network administrator before they can join the network. This ensures that only authorized participants can access the ledger, participate in consensus, and validate transactions. The network administrator can also assign different levels of permissions to participants, allowing them to perform specific tasks, such as adding or modifying records, or viewing confidential information.
One example of a permissioned ledger is the Hyperledger Fabric, which is an open-source project developed by the Linux Foundation. It provides a modular architecture for building private, permissioned blockchains and allows organizations to define their own network rules, consensus algorithms, and membership services.
Another example is the Corda platform, which was designed specifically for financial institutions and provides a secure, private ledger for interbank transactions and other financial applications. Corda uses a unique consensus mechanism called "validating notaries" to ensure that transactions are validated by trusted parties and to prevent double-spending.
Simplified Example
A permissioned ledger is like a secret club that only certain people are allowed to join. In this club, members can keep track of things, just like in a ledger. But, not everyone is allowed to join or see what's going on inside.
Only people who are given special permission, or "invitations," are allowed to be members of the club and see what's written in the ledger. This makes sure that the information in the ledger is kept private and only seen by people who are supposed to see it.
Just like how a club has rules about who can join and what members can do, a permissioned ledger has rules about who is allowed to participate and add information to the ledger. This helps keep the ledger organized and makes sure that the information in it is accurate.
It's like a secret diary that only a select group of people are allowed to write in, and it helps them keep track of important things.
History of the Term "Permissioned Ledger"
The concept of permissioned ledgers emerged in the early 2010s, coinciding with the development of blockchain technology. Academic papers and discussions within the blockchain community began referencing the term, often in contrast to "permissionless" blockchains exemplified by Bitcoin. Between 2015 and 2016, the term gained prominence with the ascendancy of enterprise-focused blockchain initiatives and consortia, which explored the applicability of permissioned ledgers for specific use cases. Likely contributors to the term's definition and dissemination include researchers, academics, enterprise blockchain consortiums like Hyperledger and R3 Corda, and technology vendors developing permissioned ledger solutions. Over time, the term has evolved, and various organizations and standards bodies, including the International Organization for Standardization (ISO), have contributed to efforts for clearer definitions and classifications of different ledger types and blockchain platforms. Alternative terms like "private blockchain" or "distributed ledger technology (DLT)" are also used, each carrying nuanced implications.
Examples
Hyperledger Fabric: Hyperledger Fabric is a permissioned ledger technology developed by the Linux Foundation. It is designed for use in enterprise environments, where privacy and security are a primary concern. In a Hyperledger Fabric network, each participant is given a unique identity and permissions to access certain parts of the ledger. This allows for greater control over the network, as only authorized participants are able to read, write, or validate transactions. Additionally, Hyperledger Fabric supports smart contracts, which can automate business processes and enforce the rules of the network.
Corda: Corda is a permissioned ledger technology that was specifically designed for the financial industry. It provides a secure platform for financial institutions to transact and share information with one another, while also maintaining privacy and confidentiality. Corda uses digital signatures and encryption to ensure the authenticity and confidentiality of transactions, and it allows transactions to be validated only by participants who have a legitimate interest in them. This ensures that sensitive financial information is only shared among relevant parties, while also improving the efficiency and speed of financial transactions.
Quorum: Quorum is a permissioned ledger technology based on the Ethereum blockchain. It is designed to provide high-speed and high-throughput transactions while also maintaining the privacy and security of its users. Quorum uses a consensus mechanism known as Istanbul BFT, which allows for faster and more efficient consensus than traditional blockchain technologies. Additionally, Quorum includes privacy features, such as private transactions and private smart contracts, which allow for secure and confidential sharing of information among authorized parties. This makes Quorum well-suited for use in industries such as finance, healthcare, and government, where privacy and security are critical concerns.