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Are Bitcoin And Ethereum Permissionless Blockchains

Bitcoin and Ethereum are the two largest blockchains by market capitalization and are comprised of three main components: users, developers, and miners.

In this guide, we will consider how these respective parties get to join the networks. Do they require permission to participate or are the two networks permissionless?

What does it even mean to be a permissioned or permissionless blockchain? Read on to find out the answers to these questions and others.

Is Bitcoin A Permissionless Blockchain?

Bitcoin is a permissionless blockchain because it is open to the public and requires no authorization to join. Other properties of Bitcoin include:

  • Transparent – the Bitcoin blockchain can be accessed by anyone;
  • Decentralized – anyone can join Bitcoin as a user, miner, or developer. Since its launch, it has attracted a sizable number of participants in each category making it highly decentralized;
  • Immutable – transactions recorded to the Bitcoin blockchain cannot be changed and the older a transaction is, the less likely it is to successfully tamper with it;
  • Pseudonymity – with Bitcoin, participants are only identified by their wallet’s public addresses.

Is Ethereum A Permissioned Blockchain?

Ethereum is not a permissioned blockchain.

Just like Bitcoin, Ethereum has the properties of a public decentralized network, which include:

  • Openness – anyone is at liberty to join or exit the network;
  • Transparency – the blockchain is available to anyone who can download it, view the transactions, and participate in verifying new data to be recorded to the blockchain;
  • Pseudonymity – participants on the Ethereum network are only identified by the public addresses of their wallets but not by their personal information;
  • Shared governance – the Ethereum blockchain is governed by all of its participants, including the developers, miners, and users.

Learn more: Is Cardano More Decentralized Than Ethereum?

What Does Permissionless Blockchain Mean?

As the name suggests, a permissionless blockchain is open to the public, and no one needs permission to participate in its core functions. A permissionless or open blockchain network has the following key features:

It’s open – anyone can join, exit, and participate in core functions such as transaction verification and governance;

It’s transparent – the data managed within the network can be viewed and audited by anyone within the network, and governance is a shared responsibility of all participants;

Anonymity – this is not a core feature of an open network, but it is a common feature amongst public blockchains, including Bitcoin and Ethereum. Given that any individual or entity is at liberty to join the network, their identity is not requested and is unnecessary in using the blockchain;

Shared governance – open blockchains are operated by respective community members who are incentivized to participate in various roles, such as miners who verify transactions and developers who maintain the software.

What Is The Main Difference Between Permissioned And Permissionless Blockchain?

The two other terms used to describe permissioned and permissionless blockchains are private and public networks, respectively.

A private network is only available to a select group of individuals or institutions while a public blockchain is open to the general population.

Anyone able to join a public network can do so voluntarily and also exit the network at will. Their participation is guided by incentives baked into the parameters of the blockchain.

Other keys differences between permissioned and permissionless blockchains are:

  • Transparency – private networks are more exclusive with data being controlled by and shared with a select few as opposed to a public network whose data is available to anyone on the internet to access, view, audit, question, and interact with as needed;
  • Anonymity – permissioned blockchains lack anonymity since participation is limited to preselected groups of individuals or entities and their activities are monitored and tracked on the network. Public blockchains, on the other hand, are open to anyone and on networks such as Bitcoin and Ethereum, only public wallet addresses are needed to execute transactions;
  • Governance – with private blockchains, crucial decisions are made by a central authority who is in charge of operating and maintaining the network while on public networks, such decisions are made by the collective participation of all interested parties. In Bitcoin or Ethereum’s case, that could be the core developers or the miners/node validators.

Which Is Better?

Private blockchains can be used in instances where a closed network is ideal, say a consortium of companies or institutions that need to share data and communicate through a secure channel.

On the other hand, public blockchains are ideal for communicating with a wider audience. They’re more resistant to centralization and offer inclusivity to all participants.

The main drawback of using a public network is that it is prone to inefficiencies, high transaction costs, and slow processing speeds, and sometimes these networks are abandoned because of insufficient incentives.

Is Ripple A Permissioned Blockchain?

The Ripple blockchain, more accurately referred to as the XRP Ledger (XRPL), is a decentralized public network where anyone can join, use and participate in its governance. However, XPRL is not entirely permissionless.

XRPL uses a unique consensus mechanism called the XRP Consensus mechanism, in which approved and verified unique nodes can participate in verifying transactions.

Although some people accuse XRP of being vaporware, there are about 150 node validators, 35 of which are members of the Unique Node List. Ripple controls six of these nodes.

Is Solana Permissionless?

Yes, the Solana blockchain is among the list of permissionless blockchains as anyone can join and participate in core network activities such as transaction validation, governance, and maintenance.

Which Crypto Are Permissionless?

A majority of the current crop of blockchains is permissionless. These include:

  • Bitcoin;
  • Ethereum;
  • Litecoin;
  • Dogecoin;
  • Monero, etc.

Final Thoughts

Permissionless and permissioned blockchains are two distinct categories of decentralized networks. They each provide unique features and help solve specific challenges.

On the other hand, both present unique challenges and have some drawbacks. If you are considering which between the two to use, you will have to apply both to your problem and see which one works best.