Much has been made of the distinctions between public “permissionless” blockchains versus private “permissioned” blockchains. Like the bipartisan nature of American politics, there are the Purists confronting the Heretics.
The Purists amass behind their constitution, written by the nebulous Satoshi, and proclaim their creed inviolate and unassailable. Any dissenting views are quickly denounced. Depending on the degree of offense the backlash ranges from stern admonishment to exile.
Heretics are possibly less grounded in the esoteric and more concerned with the practical realities of the universe. Having received their schooling in the Satoshi creed, they find that once they enter the world it is a somewhat different place to the Nirvana towards which Satoshi so fervently points. Now, braving the taunts and the occasional projectile hurled at them by the faithful, they dare to enter the home of the tax collector, break bread with sinners and consort with prostitutes.
Of course this is simply a tongue-in-cheek commentary of the robust debate being waged around the technical construct of permissioned blockchains. Perspective is important lest we ignore the actual science and facts in order to be RIGHT.
A recent article in Cointelegraph highlights yet another manipulation by large banks resulting in hefty fines (hefty to mortals, but no doubt a fraction of the proceeds of the manipulation). At the end of the article there is a distinct sound of a Purist stone striking Heretic flesh.
“Permissioned blockchains, as the name suggests, are centralized networks which can be controlled and regulated by network administrators. Thus, financial institutions and banks can easily cancel and modify transactions and other activities with the same method they used to carry out illicit derivative swapping.”
The R3CEV led consortium of banks, attempting to implement a blockchain-like system named Corda, is singled out by the article as “dangerous to customers using it to settle so-called ‘irrefutable activities and transactions.'”
Purists 1 – Heretics 0
However, does this stand up to scrutiny? The answer is that it is simply too early to tell. A complaint has been laid, the police are investigating to see if there are grounds, and if there are, a just process – led by regulators and a jury comprising customers n the market – will decide. Of course, freedom of speech virtually guarantees vociferous opinions from the peanut gallery will be heard everywhere.
Blockchain as a whole is nowhere near a commercially understood and mastered topic. Like all technologies and innovations it is going through growth and proliferation. The many seeds that sprout will be subject to natural selection, and a few will survive to join the other giants of the forest.
Kompany.com has announced it is forming a private blockchain “to store both original and authoritative business information.”
In defense of the permissioned blockchain in financial services specifically, one should remember that regulators also have a place at the table. An inter-bank blockchain must, as part of its DNA, permit near real-time oversight to the regulators. This is precisely what will, in the future, rapidly block any failures, be they by neglect or intent, by bad actors. This feature is not something that is the anointed right of a permissioned or a permissionless blockchain, but rather the result of insight and design.