While public blockchains such as Bitcoin or Ethereum were the first to emerge, private and consortium blockchains that restrict access to specific users witnessed an increasing speed of implementations by companies and institutions. These private networks offer the benefits of a decentralized peer-to-peer network but require the authentication of the users’ identity to allow access rights, and it can be restricted to specific transactions.
Every blockchain network has its own design rules that are purposefully specified and implemented into the protocol to achieve the objective of the network. A blockchain infrastructure can be private or public. Access to certain features of the platform can also be permissioned or permission less. And finally, some blockchains are designed with a native token; some are not.
When we address these rules, we are generally addressing the level of decentralization of a given blockchain, stating not only the rules to who may read certain data and who is allowed to create new data in the shared ledger but also who will operate the network and according to which consensus.
These choices have implications on the level of energy consumption, the level of security, the speed, and the trust level required to join the network.
It is worth noting that the decentralization aspect of a blockchain is a complex subject. While decentralization is one of the critical elements behind blockchain, a blockchain can also run in a central environment.
For specific business applications where a blockchain is operated by one company or one organization and where participants are known and trusted, centralization could be accepted.
However, it is imperative to assess the degree of centralization and most of all, distinguish between the levels at which it could be observed:
The design rules impact the level of decentralization, and in consequence, they also impact the speed, the security, and scalability of a given blockchain.
