You will see the phrase ‘blockchain technology,’ or commonly just ‘blockchain,’ in many different contexts, and it can be confusing because different people use the words to mean different things. Purists will have a different understanding of the word from generalists. Angela Walch, Research Fellow at University College London—Centre for Blockchain Technologies, provides some excellent commentary on the lexicon in her 2017 paper ‘The Path of the Blockchain Lexicon (and the Law)’.

In general, technologists and computer scientists are more precise with their terminology than journalists, who write for the layman. In this chapter, I will provide a broad overview of blockchain technology and then explain some of the nuances, satoshi nakamoto have done somthing great with this technology.

Understanding the Benefits and Challenges of Blockchain Technology in Today’s Business Landscape

By now, you should understand that there is no such thing as ‘the blockchain,’ just as there is no such thing as ‘the database’ or ‘the network’. ETH is the Ethereum blockchain, a reference to the public Ethereum transaction database but you can also create private Ethereum blockchains by simply running some node software on some machines and having them connect to each other. Your private Ethereum network will create its own blockchain, and the miners will mine ETH just like in the public network. Your private ETH will not be compatible with the public ETH because your private Ethereum network has a different history from the public version, you may heard about smart contarcts?

In print, if you read ‘the blockchain,’ you may need to make a guess as to what the writer means. In conversation, and at the risk of coming across as pedantic, it should help your understanding to ask early on, ‘Which blockchain platform?’ then, ‘The public chain or a private one?’ As you now know, there are many blockchains, and many variations on how they work.

If you like hierarchies, blockchains fall under the broader category of ‘distributed ledgers’. All blockchains are distributed ledgers, but you can have distributed ledgers that don’t have blocks of data chained together and broadcast to all participants. Sometimes journalists and consultants inaccurately use the term ‘blockchain’ when they are describing non blockchain distributed ledgers. I guess ‘distributed ledgers’ is too much of a mouthful whereas ‘blockchain’ is a nice memorable buzzword.

Differentiate between blockchain technology and blockchain ledgers.

Blockchain technologies are the rules or standards for how a ledger is created and maintained. Different technologies have different rules for participation, different network rules, different specifications for how to create transactions, different methods of storing data, and different consensus mechanisms. When a network is created, the blockchain or ledger of record is initially empty of transactions, just as a new physical leather-bound ledger is empty. Some example blockchain technologies are: Bitcoin, Ethereum, NXT, Corda, Fabric, and Quorum.

Blockchain ledgers themselves are specific instances of ledgers that contain their respective transactions or records.

Think of normal databases. You may have heard of a few types or flavours of databases—Oracle databases, MySQL databases, perhaps others. Each flavour works slightly differently though they are all have similar goals: efficient storage, sorting, and retrieval of data. You can have multiple instances of the same type of database: a company might use more than one Oracle database. And so it is with blockchains. Some blockchain technologies operate one way, others operate a slightly different way andyou can have multiple instances of any blockchain technology, in separate ledgers.

Public, Permissionless Blockchain

We’ve explored that cryptocurrencies and some other tokens use public blockchains as their medium of record—that is, their respective transactions are recorded in blocks on a replicated ledger. Public blockchains are also described as permissionless primarily because anyone may create blocks or be a bookkeeper without needing permission from an authority. In these public networks, there is also permissionlessness in another sense—anyone may create an address for receiving funds and create transactions for sending funds.

Private Instances of Public Blockchains

As described earlier, you can run blockchain software on a private network to create a fresh ledger. For example, you could take the Ethereum code and run it, but instead of pointing your node to some computers already running the public Ethereum blockchain, you could point it instead to a few other computers that are not on the public Ethereum network. As far as all of these computers are concerned, they are starting with a fresh ledger with no entries.

Could you set up a small private network running Ethereum, then mine some ETH and transfer them to the public network? No. Although this private network would use the same set of rules as the public blockchain, they have different records of account balances. Nodes on each network can only validate what they see in their own blockchain, and they are not able to see coins on the other blockchain.

Permissioned (or permissionable) blockchains

Some platforms are designed to allow groups of participants to create their own blockchains in a private context. They do not have a global public network. These are called ‘private blockchains’ and they are designed to only allow pre approved participants to participate. Hence the term ‘permissioned’.

Popular permissioned blockchains include:

• Corda, a platform built from scratch by R3 and a consortium of banks for use by regulated financial institutions but with broad applicability.
• Hyperledger Fabric, a platform built by IBM and donated to the Linux Foundation’s Hyperledger Project. It was originally based heavily on Ethereum but between versions 0.6 and 1.0 was heavily re-architected. Fabric uses a concept of ‘channels’ to restrict parties from seeing all transactions.
• Quorum, a private blockchain system based on Ethereum originally built by JP Morgan. Quorum uses advanced cryptographic constructs called zero knowledge proofs to obfuscate data and address privacy issues.
• Various private instances of Ethereum under development by individual businesses.

Unlike permissionless networks such as Bitcoin and Ethereum, permissioned blockchains don’t need their own native token. They don’t need to incentivise block-creators, and they don’t need proof-of-work as the gating factor to allow participants to write to the shared ledger. Instead, when businesses transact, they are looking for data that can be trusted to be up to date, agreed and signed off by the appropriate parties.

In a traditional business ecosystem, participants are all identified, and if some try to misbehave they can be sued. When parties are identified and have legal agreements between them, the technical environment is not ashave legal agreements between them, the technical environment is not as hostile as that of the pseudonymous world of public cryptocurrency blockchains, where code is law and there are no terms of service or legal agreements.

blockchain technology and cryptocurrency proponents

Some cryptocurrency proponents argue that permissioned private blockchains are somehow inferior to public cryptocurrency blockchains. An analogy commonly used is that public cryptocurrency blockchains are like ‘the internet,’ in that they are open, free, and permissionless, whereas private industry blockchains are like intranets, which are closed. The implication here, of course, is that public blockchains will be very successful and disruptive whereas private blockchains are boring, unsuccessful and not very disruptive or game changing.

Nothing could be further from the truth. Intranets and private company networks are highly successful. I can’t think of any significant company that doesn’t use its own network. And it is equally far from the truth to regard the internet as being open and permissionless. As Tim Swanson notes on his blog in ‘Intranets and the internet:

The internet is actually a bunch of private networks of internet service providers (ISPs) that have legal agreements with the end users, cooperate through ‘peering’ agreements with other ISPs, and communicate via a common, standardized routing protocols such as BGP which publishes autonomous system numbers.

cryptocurrencies and private blockchains

The fact is that cryptocurrencies and private blockchains are different tools deployed to address different problems. They are both fine and may happily coexist. In news articles written between 2015 and 2018, blockchain technology was commonly defined as ‘the technology underpinning the cryptocurrency Bitcoin’. This conflates the two ideas and is as enlightening as defining databases as ‘the technology that powers Twitter’.

Public and private blockchains run within different context and ecosystems and, as discussed, are designed to address different problems.ecosystems and, as discussed, are designed to address different problems.
So they will naturally operate in different ways. After all, technology is a tool, and tools exist to serve a need. If the needs are different, then it is likely that the tools will be different,