Permissioned Blockchains Are Here to Stay and Why Ethereum Will Help It

By Syahrul Nizam, Chainstack Developer Advocate

A Permissioned Blockchain isn’t a blockchain!

  • Everyone on r/cryptocurrency

Or is it?

As a developer advocate over at Chainstack, I’ve worked closely with both developers who are creating on top of Ethereum (we don’t support Bitcoin currently) and support has been great. It help’s that Ethereum has a great developer community. In fact, it’s the most mature decentralized platform, with thousands of DApps being created regularly.

I also came from a background as a hobbyist solidity developer back in my college days. My role here at Chainstack also involves me regularly creating decentralized applications as demonstrators.

Blockchain is the future and many Enterprises are currently prototyping and experimenting with their own versions of DApps. Yet there are some limitations that are preventing even more Enterprises in trying out Blockchain. I list them down in the following parts.

Slow Transaction Times

One of the issues that constantly bugged me when interacting with my DApps was that DApps are inherently slow. Transactions have to be mined by miners, and even with the release of Ethereum 2.0, the responsibility of including transactions in the next block will be shifted to staking nodes. Despite, Ethereum’s significantly block times of approximately 15 seconds, this is still a considerable wait compared to centralized applications — where function calls are near-instant.

Yes, the wait involved for our transactions to be propagated and confirmed is not an issue for some DApps (compound.finance), but it significantly kills of many potential use cases for a decentralized system.

Ether as an incentive token

Let’s also touch base with the fact that Ether is needed to make transactions on the blockchain. Ether has value because to interact with function calls on the EVM, it is used as fuel to pay the miners. This is undoubtedly a fair system. However, many companies are unwilling to purchase Ether from the market and be at the mercy of massive price fluctuations.

Lack of privacy

Data is not encrypted by default on the blockchain. This means that anyone can read the data freely. Obviously, this isn’t something that an enterprise wants.

Quorum

Enter Quorum — a fork of the Ethereum Blockchain developed by JP Morgan. The fact the team over at JP Morgan has decided to fork Ethereum instead of developing a new permissioned blockchain from the ground up speaks volumes about the acknowledgment that JPM is giving to the Ethereum team.

Quorum is almost the same as Ethereum, except that:

  1. No more miners involved
  2. All transactions are free
  3. Private transactions are possible

Smart Contracts on quorum are also written in Solidity, and all Ethereum development tools that currently work on Ethereum works on Quorum. Frameworks such as truffle work beautifully on Quorum, and there’s even a dedicated part of truffle’s documentation for Quorum!

Even better — Metamask can connect to Quorum nodes as if they’re normal Ethereum nodes. The Web3 libraries also work just as how you would expect when interacting with the Ethereum Network.

It’s trivial for Ethereum developers to jump over to Quorum, their skillsets are still highly relevant. It can be seen why JPM decided to base Quorum of Ethereum, the Ethereum development scene is highly mature and the myriad of tools make it easy for Quorum to grow.

Ethereum and Quorum are two sides of the same coin. The growth of Quorum is highly dependent on how Ethereum changes. As the number of developers for Ethereum grows, the number of Quorum developers indirectly increases too.

Just use a database, bro

One of the many arguments against permissioned chains is that they’re inherently not decentralized, and thus using a normal database (which is much more efficient) would suffice.

There is some truth to this statement, yet trust isn’t a black and white issue with only two options. Trust between companies exists on a spectrum.

Let’s take a look at a fictional consortium of companies who all sell chicken. They’ve decided that every year, each chicken will sell for exactly for $2, and only 2000 chickens will be sold per year. How can Company A be sure that Company B is not selling chickens at a lower price and at the stipulated 2000 chickens per year?

That’s why contracts are needed. They punish companies who do not follow the agreed rules. Yet, companies can often obfuscate their sales by releasing chickens to the black market for example.

This is where a blockchain comes in. Company B can expose the prices of the chicken that is being sold as well as the quantity to other members in the consortium. Company A, C, D can all check on each other that they are indeed following the terms in their agreement as a consortium without needing an external auditor.

Quorum’s capability to make private transactions also mean that Companies can hide data that they want to share with certain companies but not others.

We can see the strength of a permissioned blockchain (or ledger) in the case of a consortium.

Continue working on Ethereum

It’s okay if you’re not working on Quorum now — just continue with your passion and build amazing DApps on Ethereum. Grow the Ethereum community. Build robust smart contracts that are safe and secure, while still being efficient.

When your company decides to get started on blockchain use cases, recommend them the Ethereum that you love. I’m confident that they will then move to Quorum since it offers the benefits of Ethereum without its flaws.

That’s why at Chainstack we have support for both Ethereum and Quorum (14-day trial) — they’re both essential to the decentralized space.

Trust Yourself – Final Part of the Trust Trilogy

In part 2 of the Trust Trilogy, I ended with the promise of larger ecosystems and markets made possible through a simple mind-shift, where collaboration is the norm and the blockchain is the default trusted execution environment.

Chainstack
Chainstack
Jul 9
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