As blockchain continues to evolve, so do your opportunities. This article is a roadmap to informed blockchain decisions and will help you navigate public, private, and hybrid options with precision.
A blockchain is a decentralised and distributed digital ledger that records transactions across multiple computers in a way that ensures security, transparency, and immutability. Understanding the distinctions among various blockchain platforms is crucial when embarking on a blockchain project. Before diving deep into the crux of selecting the blockchain platform for your project, let us recap some fundamentals of blockchain and its types.
Brief overview of how blockchain works
While venturing deeper into the blockchain landscape, it’s essential to understand how this technology’s inner workings shape the choices in the world of decentralisation. Here is a brief overview.
Blocks: Transactions are grouped together into blocks. Each block contains a list of transactions and a reference to the previous block, forming a chain of blocks.
Decentralisation: Instead of being stored on a single central server, the blockchain ledger is maintained by a network of computers (nodes) distributed around the world. This decentralised nature prevents a single point of failure and makes the system more resilient.
Consensus mechanisms: To validate and add new blocks to the chain, a consensus mechanism is used. The most well-known consensus mechanism is proof of work (PoW), which requires miners to solve complex mathematical puzzles to verify transactions. Other mechanisms like proof of stake (PoS) and delegated proof of stake (DPoS) exist as well.
Immutability: Once a block is added to the blockchain, it’s nearly impossible to alter the information within it. This immutability is achieved through cryptographic hashing and the decentralised nature of the network.
Transparency: The entire transaction history is publicly available on the blockchain, offering a high level of transparency.
Security: The decentralised and distributed nature of blockchain, along with cryptography, enhances security. Changing a single block would require altering subsequent blocks on every node, which is computationally infeasible.
Blockchain use cases
Blockchain technology has transcended its roots as the backbone of cryptocurrencies, and has evolved into a versatile tool with myriad applications. It now has applications beyond cryptocurrencies.
Supply chain management: Blockchain can provide transparency and traceability in supply chains, verifying the origin and movement of goods.
Smart contracts: These are self-executing contracts with the terms directly written into code. They automatically execute and enforce agreements when predefined conditions are met.
Identity verification: Blockchain can be used to securely manage digital identities and reduce the risk of identity theft.
Voting systems: Blockchain can enhance the security and transparency of voting systems, reducing the potential for fraud.
Healthcare: Patient records can be securely stored and shared among healthcare providers using blockchain, ensuring data accuracy and privacy.
Real estate: Blockchain can streamline property transactions, reducing paperwork and improving efficiency.
Financial services: Blockchain has the potential to revolutionise traditional financial systems by enabling faster, more secure, and cheaper cross-border transactions.
Whether you’re considering launching a decentralised application (DApp), managing digital assets, or exploring supply chain solutions, selecting the right blockchain platform is a pivotal decision.
Public blockchains and private blockchains
A fundamental distinction in the world of blockchain is the division between public blockchains and private blockchains.
The choice between public and private blockchains depends on the specific needs of your project or organisation. Public blockchains excel in scenarios where decentralisation, openness, and transparency are paramount, while private blockchains offer control and privacy. The emergence of hybrid blockchains provides even more flexibility.
We’ll delve into the nuances of these two blockchain variants and explore their use cases, benefits, and trade-offs.
Public blockchains: The power of permissionlessness
Permissionless public blockchains are perhaps the most iconic face of blockchain technology. They epitomise decentralisation and openness. Here’s what characterises them.
Accessibility for all
Permissionless public blockchains are open to anyone, anywhere. Participation requires no prior approval or vetting. This inclusive nature enables global participation, fostering a truly decentralised ecosystem.
Transparency and trustlessness
Transactions on permissionless public blockchains are transparent and immutable. They’re recorded on a public ledger that anyone can access and verify. Trust is established not through intermediaries but through cryptographic algorithms and consensus mechanisms.
Prime examples
Two of the most renowned examples of permissionless public blockchains are Bitcoin and Ethereum. Bitcoin introduced the world to the concept of a decentralised digital currency, and Ethereum pioneered smart contracts, enabling programmable, self-executing agreements.
Use cases
Permissionless public blockchains are ideal for applications where trust, censorship resistance, and decentralisation are paramount. They are often used for digital currencies, DApps (decentralised applications), and scenarios where transparency is critical, like voting systems and public records.
Private blockchains: Control and privacy
Permissioned private blockchains, on the other hand, introduce a layer of control and privacy into the blockchain landscape. Here’s what defines them.
Controlled access
Access to a permissioned private blockchain is restricted. Participants are known and typically vetted, ensuring a degree of trust among network members. These blockchains often cater to consortiums, businesses, or organisations.
Enhanced privacy
Privacy is a key feature of permissioned private blockchains. Unlike their public counterparts, transactions on these networks are not necessarily visible to all participants. They provide a level of confidentiality that can be crucial in enterprise settings.
Use cases
Permissioned private blockchains find applications in contexts where privacy, regulatory compliance, and control are vital. Industries like finance, healthcare, and supply chain management use them to streamline processes, secure data, and meet legal requirements.
Hybrid blockchains: The best of both worlds
In some cases, a middle ground is sought through hybrid blockchains. These blockchains combine features of both public and private blockchains. They offer selective transparency and access control, making them adaptable to various use cases. Hybrid blockchains are an excellent solution when there’s a need for shared data among multiple parties while maintaining a degree of confidentiality.
Blockchain platforms
Open source blockchain projects provide transparency, flexibility, and often have active developer communities. There are several available. Table 1 lists some notable open source blockchain platforms and projects.
These are just a few examples of open source blockchain projects, and there are many more in various stages of development. When choosing an open source blockchain platform, consider your project’s specific requirements, community support, and the platform’s suitability.
|
Ethereum (ETH) |
|
Hyperledger Fabric |
|
Hyperledger Sawtooth |
|
Corda (R3 Corda) |
|
Stellar (Stellar Development Foundation) |
|
NEO (NEO blockchain) |
|
Cardano (IOHK – Input Output Hong Kong) |
|
Tezos (Tezos Foundation) |
|
Avalanche (Avalanche Foundation) |
|
Bitcoin (Bitcoin Core) |
|
Polkadot (Web3 Foundation) |
|
Cosmos (Interchain Foundation) |
|
IOTA (IOTA Foundation) |
Factors to consider when choosing a blockchain platform
Selecting the right blockchain platform is a pivotal decision, whether you are considering launching a decentralised application (DApp), managing digital assets, or exploring supply chain solutions. The key factors to consider when choosing the blockchain platform are:
Define your use case
Begin by clearly defining the purpose of your blockchain project. What specific problem are you trying to solve, and what functionalities do you need from the blockchain? Different use cases may require vastly different platforms.
Consensus mechanism
Understand the consensus mechanism employed by the blockchain platform. Each mechanism, whether proof of work (PoW), proof of stake (PoS), or others, has its advantages and trade-offs. PoW, for instance, offers high security but consumes substantial energy.
Scalability
Assess the scalability of the blockchain platform. Will it handle the anticipated transaction volume? Consider aspects like block size, block time, and the network’s ability to accommodate growth.
Security
Evaluate the platform’s security features. Look for a blockchain with a strong track record and mechanisms to thwart attacks, such as 51% attacks. Security is paramount, especially for applications involving sensitive data.
Smart contract support
If your project involves smart contracts, ensure the platform supports them. Examine the available programming languages and tools for writing and deploying smart contracts.
Interoperability
Consider whether the platform facilitates interoperability with other blockchains or existing systems. Blockchain networks increasingly need to communicate with each other and integrate into the broader tech ecosystem.
Privacy features
If your project demands privacy, seek platforms with features like zero-knowledge proofs or confidential transactions. These can shield sensitive data while still benefiting from blockchain technology.
Regulatory compliance
Be aware of the regulatory landscape in your region. Choose a blockchain platform that aligns with relevant regulations. Some platforms incorporate compliance features.
Token and asset support
If tokenisation is part of your plan, verify that the platform supports it and whether it offers standardised token protocols like ERC-20 (for Ethereum). Asset management tools should also be considered.
Ecosystem and partnerships
Examine the blockchain’s ecosystem. Are there active projects, DApps, or industry partnerships that align with your goals? A robust ecosystem can foster growth and adoption.
Costs
Consider the costs associated with using the blockchain, including transaction fees and hosting expenses. Ensure it aligns with your budget.
Performance and throughput
Assess the blockchain’s performance, including transaction throughput and confirmation times. A platform must meet your project’s performance requirements.
User experience and documentation
Examine the user-friendliness of the platform and the availability of comprehensive documentation and developer resources. A well-documented platform can expedite development.
Long-term viability
Consider the blockchain’s long-term viability and roadmaps. Ensure it is actively maintained and has plans for future enhancements.
Testing and prototyping
Before fully committing, consider building a prototype or conducting tests to evaluate the platform’s suitability for your project.
Legal and compliance consultation
If your project involves legal and compliance complexities, consult legal experts well-versed in blockchain to ensure full compliance with applicable regulations.
Community and expert input
Leverage the insights of the blockchain community and experts. Forums, conferences, and online communities can provide valuable perspectives.
Choosing the right blockchain platform is a multifaceted task. It’s not a one-size-fits-all technology, but rather a versatile tool that can be tailored to meet your project’s unique requirements. It could involve disrupting industries with decentralised applications or securely managing sensitive enterprise data.
We should not forget that blockchain technology is continuously evolving. We need to stay informed about new developments, emerging platforms, and updates in the blockchain space. With careful consideration and due diligence, we can select a blockchain platform that aligns with our project’s objectives and sets the stage for success in the decentralised world.
Disclaimer: This article expresses the views of the author and not of the organisation he works in.
