Most blockchains are permissionless, like the Ethereum network and other EMV-compatible networks, which means anybody can access them, build on them, and participate in the network by running a node. These permissionless blockchains operate based on a transparent, public ledger that is shared amongst all network nodes. There is, however, another less-explored type of blockchain: a permissioned network. This article will explore what exactly a permissioned blockchain looks like, which industries and use cases they might work with, and how they can be integrated with Ankr App Chains. Let’s dive in!
First, a quick refresher on App Chains — which are dedicated sidechains for developers to customize their own blockchain protocol with plug and play tools to suit their particular needs. They’re essentially a blank canvas for developers to build their projects without constraints, and with full customizability, that are then anchored to some of the biggest blockchains in existence — like BNB Chain, Avalanche, or Polygon. But with all this flexibility, they can be tricky to build without a swath of Web3 development experience. That’s where Ankr’s App Chain service comes in to help users who need assistance. This service handles the most challenging parts of building, launching, and scaling dApps on App Chains.
And while developers and commercial users can greatly benefit from running their projects on App Chains with Ankr, we believe there’s also a market fit for enterprise-level users like banks, private companies, and even governments and CBDCs.
But before we dive too deep into permissioned App Chain integrations, let’s first cover a few basics about what permissioned blockchains are, how they work, and who might want to use them.
Permissioned blockchains are blockchain networks that make use of an access control layer. That means there’s a central authority in charge of regulating who can access and use the blockchain. In this type of system, users will need special access keys to perform certain actions on the network like view data, interact with data, or verify transactions.
Permissioned blockchains — also known as private blockchains — are like blockchain networks minus the decentralization. Admittedly, that might sound a little weird. Who would want to use something like that? Turns out there are more than a few industries looking to use private blockchains — and they’re some of the largest industries in the world.
The main entities that might be interested in permissioned or private blockchains are enterprises. They might want the usability benefits of blockchain technology, but need to keep certain data private for regulatory purposes, or to not share confidential business information with competitors.
Banks are one major potential user for private blockchain networks. Blockchain technology makes it possible to make transactions quickly and seamlessly across borders, which banks can benefit greatly from. That said, it’s usually not common in traditional banking to display account balances in a public database or shared ledger. In blockchain, however, a simple block explorer can tell you any wallet address’ balance.
Many banks — like City, HSBC, and JPMorgan — have already started researching and implementing various degrees of blockchain technology integrations. JPMorgan, for example, created the Interbank Information Network (IIN) in 2018 that’s designed to facilitate the easy, global transfer of data between banks with advanced data access control. In other words, it’s a tool for banks to share certain information with one another, while keeping other information private. It’s an initiative to minimize friction and let participating banks transfer relevant information instantaneously in order to achieve faster payment completion — and already, more than 300 banks have signaled their intent to join this network.
Central Banks & CBDCs
Central bank digital currencies (CBDCs) represent a digital form of a country’s official currency that’s issued by its central bank. Unlike traditional cryptocurrencies like bitcoin (BTC) or ether (ETH), the monetary supply policy of a CBDC is regulated by a central authority: the central bank. This makes CBDCs quite different from the digital assets that exist on public, transparent blockchain networks like Bitcoin and Ethereum. That said, many central banks have expressed interest in building out CBDCs using blockchain technology — private, permissioned blockchain technology of course.
As supply chains begin to explore the promise of blockchain technology, the need for permissioned blockchain architecture becomes clear. In order to keep supply chain data accurate from end to end, and to limit its access to only trusted parties, permissioned blockchains are a potential solution that’s becoming popular in this industry.
Private blockchains can also help the insurance industry transition to Web3 and make use of blockchain technology by facilitating privacy for sensitive evidence-based data and enabling better permissioned data sharing through a complex network of connections. Insurance enterprises stand to benefit greatly from blockchain technology integration that enables automatic claim payouts, fraud reduction, and the ability to greatly reduce overhead costs by reducing the amount of intermediary parties needed to process claims.
Much like the insurance industry, the healthcare industry deals with highly sensitive data that is regulated and protected under the strongest legal frameworks. As such, medical data access management is of extreme importance. That said, it’s also highly critical that medical data is able to be safely, securely, and quickly transferred between different healthcare organizations like hospitals, offices, and medical professionals — that may be located in entirely different parts of the world. The data transfer needs of the healthcare industry at large represent the type of immense throughput that require robust enterprise-grade infrastructure solutions.
These are just a sample of the many industries that blockchain technology can improve by increasing automation, reducing latency and friction between organizations, and cutting overhead costs — all while preserving secure data access management through permissioned blockchain infrastructure. Through permissioned blockchains, enterprises can achieve the same security, immutability, and transferability that comes with a public distributed ledger, while also retaining extra measures to control access to sensitive data.
Given the enormous size of the industries that are interested in and exploring permissioned blockchain technology, it would be an incredible boon to the Web3 ecosystem as a whole to help onboard these enterprise users. There will always be a need for private data (like medical data, insurance claims, bank statements, supply chain records, and more), so we believe we should help to integrate those needs within the larger Web3 framework of blockchain technology. Just because there is a massive need for decentralized blockchain networks, doesn’t mean there isn’t also an equal need for private networks in niche industries as well.
We believe that banks, government entities, and privacy-centric industries won’t disappear. In fact, there will likely always be a need for privacy-centric data sharing capabilities in industries like insurance, health care, supply chain, and more. But we do believe that these entities will inevitably move into Web3. So rather than resist their participation, we should make it easier for them to join, and provide them with the tools they need to improve their operations and become more efficient.
Ankr believes that once these industries transition into Web3, these are the types of networks they’ll most likely pursue. Moreover, these industries represent long-established traditional enterprises whose entire tech stacks exist in Web2 — meaning they likely won’t have much Web3 knowledge or expertise. These industries also, by nature of their size, have incredible amounts of data and transaction processing. These aspects combined make them the perfect candidates for permissioned blockchain infrastructure integrated with Ankr App Chains.
App Chains present themselves as a unique and strategic solution for enterprise users for a few key reasons. Namely, App Chains offer:
- Enormous, enterprise-grade throughput
- High customizability to satisfy the intricate needs of these industries
The only challenge for these traditional enterprises looking to join Web3 is the lack of technical expertise and Web3 knowledge, which is where Ankr’s App Chains service shines. Ankr can greatly reduce the technical barrier to building a dedicated App Chain with our service that handles everything from start to finish for users.
Typically creating a blockchain — sidechain, mainchain, or otherwise — entails bootstrapping all the infrastructure for validator nodes, RPC nodes, block explorers, testnets, faucets, staking mechanisms, and more. But with Ankr’s new App Chains, any Web3 developer can create a new App Chain easily, complete with all of the above infrastructure needs taken care of.
Learn more about Ankr App Chains
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