When starting out with blockchain, many people focus on the differences between Private and Permissioned Blockchains. While there are some notable differences between these two types of blockchains, there are also many key similarities. The purpose of this post is to quickly break down what those are, so that you can get a clear sense of where both private and permissioned blockchains shine.
Uses Distributed Ledger Technology (DLT) for Record Keeping
A distributed ledger is the shared database in the blockchain network that stores the transactions, such as a shared ﬁle to which the network participants can contribute/write transactions. Distributed ledger technologies have strict rules about who can commit and contribute to the ledger. You can not delete entries once they have been recorded.
Uses Cryptography & Hash Functions
Data on the Blockchain is stored in blocks. A hash function’s
literal ‘function’ is to create an output of the data stored in a
block into a speciﬁc ‘hash’ or a long string of letters & numbers
that represent the data. Hashes of the data cannot be
reverse-engineered as it is incredibly complicated. Any attempt
to alter the underlying data will result in a different hash,
allowing anyone to verify instantly that the data has not been
tampered with. This way, the actual data in the block is
Uses Smart Contracts
Companies use smart contracts to self-manage business contracts without the need for an assisting third party. They are programs stored on the blockchain system that runs automatically when predetermined conditions are met. They run if-then checks so that transactions can be completed confidently. For example, an issue or advisor can have a smart contract that automatically rejects a request to buy alternatives from a customer who is not eligible.
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