Page 150 - ITU-T Focus Group Digital Financial Services – Technology, innovation and competition

ITU-T Focus Group Digital Financial Services
Technology, Innovation and Competition

1.3.3 Permissioned shared ledgers

There are two types of permissioned shared ledgers: private and public.

For permissioned private ledgers, only permissioned entities may read the contents of the ledger and write to
the ledger, for example R3’s Corda. The permissioned private ledgers may have one or many owners. When
26
a new record is added, the ledger’s integrity is checked by a limited consensus process. This is carried out
27
by trusted actors such as government departments or banks. This process makes data entry and verification
28
faster and more efficient when compared to the consensus process of permissionless ledgers. In addition, use
of digital signatures by nodes on the chain also creates highly-verifiable data sets. 29
In permissioned public ledgers, only permissioned entities may write the ledger, but anyone may view the
ledger’s contents, for example, Ripple. A permissioned ledger may have some ‘permissionless’ aspects in
30
circumstances where ‘non-permissioned’ entities may be given restricted access to view partial data sets. They
invariably will not, however, have any editing rights on that blockchain.
31
Permissioned (usually private) blockchains are often split into consortium blockchains, or fully private blockchains.
There are benefits and drawbacks to permissioned, permissionless, public, and private approaches, and
combinations thereof. While these issues are beyond the scope of this paper, with permissioned blockchains
32
there is an inherent trust as the users must be given consent by a governing body or entity to participate in
that blockchain. This ‘trust’ reduces the amount of computational power required for that blockchain, as well
as increases the speed of the blockchain.
33
The governing body can create its own data access rules to ensure that only participants that are party to a
transaction can see sensitive details. With permissionless blockchains, public keys used to assign access to
blockchains are never tied to a real-world identity (ID). There is no governing authority and hence trust is
measured across the nodes in the blockchain which are able to validate transactions.

This however, increases not just the computational power (and cost) required to ‘establish’ trust (for example,
a fee related to mining/buying a coin), but also increases the time (latency) for all the nodes on the blockchain
to agree to what should be committed to the ledger.

26 See Section 2.5 on R3’s Corda blockchain implementation.
27 UK Government Office for Science (2016) ibid.
28 Each transaction can also be validated by a ‘notary’ and a notary itself can be a ‘notary pool’ involving multiple nodes run by
several different organizations, in effect creating a decentralized check. See Swanson (2015) ibid.
29 However, note that the verification of the data on a blockchain is of its input, not the provenance or veracity of the data. The
latter issues are still being developed.
30 Ripple, while a type of DLT, does not use blockchain technology. See Section 2.3 on Ripple. Ethereum could be included here as
an example of permissioned blockchain, but it also has the characteristics of a permissionless blockchain since one can program
and participate in Ethereum blockchains without special permission.
31 Although there are permissionless aspects, a security key is required for access to the blockchain. The ‘owners(s)’ of the permis-
sioned blockchain will allocate access rights to the blockchain.
32 See further, Pilkington, M (2015) Blockchain Technology: Principles and Applications, available at https:// ssrn. com/ abstract=
2662660; Credit Suisse (2016). ibid; and Buterin, V (2015) On Public and Private Blockchains, available at https:// goo. gl/ l7ZoSk .
33 In practice, the reason for the more or less hash rate – the measure of computational power being used on a blockchain - comes
online (or goes offline) is that, for crypto currencies such as Bitcoin, it tracks the price of the cryptocurrency. Thereto, see Appen-
dix B in Swanson (2015) ibid.

130