Why do some cryptocurrency projects choose to use a permissioned blockchain instead of a permissionless one?

3 answers

• Dec 18, 2021 · 3 years ago
  One reason why some cryptocurrency projects choose to use a permissioned blockchain is the need for enhanced privacy and confidentiality. By having a permissioned blockchain, these projects can control who has access to the network and the data stored on it, ensuring that sensitive information is only shared with authorized participants. This can be particularly important for projects that deal with sensitive financial data or require strict compliance with regulations. Another reason is scalability. Permissioned blockchains can handle a higher number of transactions per second compared to permissionless blockchains. This makes them more suitable for projects that require fast and efficient transaction processing, such as high-frequency trading or payment systems. Additionally, permissioned blockchains often offer better governance and consensus mechanisms. With a permissioned blockchain, project developers can select the participants who validate transactions and make decisions, which can lead to faster consensus and more efficient decision-making processes. However, it's worth noting that permissioned blockchains may face criticism for being centralized and less transparent compared to permissionless blockchains. The decision to use a permissioned blockchain should be carefully considered based on the specific needs and goals of the project.
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• Dec 18, 2021 · 3 years ago
  Some cryptocurrency projects choose to use a permissioned blockchain because it allows them to have more control over the network. With a permissioned blockchain, project developers can set specific rules and permissions for participants, ensuring that only trusted entities can join the network and participate in the consensus process. This can help prevent malicious actors from disrupting the network and compromising its security. Another reason is the ability to comply with regulatory requirements. Permissioned blockchains can implement features that enable projects to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. By having a permissioned blockchain, projects can ensure that only verified participants can transact on the network, reducing the risk of illegal activities. Moreover, permissioned blockchains can provide better performance and scalability compared to permissionless blockchains. By having a predefined set of participants, permissioned blockchains can achieve faster transaction processing times and higher throughput, making them suitable for projects that require high-performance and high-volume transactions. However, it's important to consider the trade-offs of using a permissioned blockchain, such as reduced decentralization and potential reliance on a central authority.
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• Dec 18, 2021 · 3 years ago
  At BYDFi, we believe that the choice between a permissioned and permissionless blockchain depends on the specific requirements and goals of the cryptocurrency project. While permissioned blockchains offer benefits such as enhanced privacy, scalability, and governance, permissionless blockchains have their own advantages. Permissionless blockchains, like the one used by Bitcoin, provide a high level of decentralization and transparency. They allow anyone to participate in the network and validate transactions, making them more suitable for projects that prioritize openness and inclusivity. Ultimately, the decision to use a permissioned or permissionless blockchain should be based on factors such as the desired level of control, privacy, scalability, and regulatory compliance. It's important for cryptocurrency projects to carefully evaluate their needs and consider the trade-offs before making a decision.
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