How Security Differs By Blockchain Types

Blockchains come in a variety of different flavors, including public vs. private and permissionless vs. permissioned.  These choices not only affect the blockchain’s ability to meet business needs but also the security of the blockchain system.

The Types of Blockchains

Blockchain systems can be classified in a couple of different ways.  The original blockchains, like Bitcoin, were public, permissionless networks.  However over time, the concepts of private and permissioned blockchains have emerged as well.

Public vs. Private Blockchains

The choice between a public and a private blockchain impacts who has the ability to create an account on the blockchain network and use it.  Public blockchains, like BItcoin, allow anyone to use them, while other networks restrict access to particular users.

Structurally, public and private blockchains are largely the same. Often, a private blockchain is simply an instance of a public blockchain that is set up within a controlled environment. 

However, some blockchains are specifically designed to be deployed as private networks.

Permissioned vs. Permissionless Blockchains

Blockchains can also be classified as permissioned or permissionless.  A permissionless blockchain, like Bitcoin, allows anyone to perform any role within the blockchain network.  

Permissioned blockchains, on the other hand, restrict certain functionality to particular users.

Permissioning can be implemented within a blockchain in a few different ways.  In some cases, blockchains use a “pay to play” model to implement permissioning, where any user with a certain minimum amount of cryptocurrency is a masternode with special privileges.  Under this model, the assumption is that privileged nodes will not misbehave because of the potential risk of losing their investments.

Other permissioned blockchains have privileged nodes selected by the creators of the network.  While these parties may be “trusted”, this model increases the centralization of the network.

The Security Impacts of Different Blockchain Types

The various types of blockchains create very different security environments.  With the choices between public and private, permissioned and permissionless digital ledgers come a wide range of security considerations.  

Some of the major security pros and cons of different blockchain types include:

• Data Privacy: In a private blockchain environment, an organization controls access to the blockchain’s digital ledger and the data that it contains.  This makes it easier to protect sensitive data against unauthorized access and achieve compliance with applicable regulations.

• Increased Centralization: Private and permissioned blockchains place limitations on who can access the blockchain and their permissions on it.  While this can have its benefits, it also makes the blockchain network more centralized, which decreases its resiliency and makes it more vulnerable to certain attacks.

• Exploitability: A private or permissioned blockchain limits access to the blockchain in general or certain functionality within it.  By limiting access, a blockchain can make it more difficult for an attacker to access and exploit vulnerabilities within the blockchain software or smart contracts running on top of it.

These are only some of the implications of the various blockchain models for blockchain security.  The precise security impacts and tradeoffs depend on the details of the blockchain’s design.  For this reason, a third-party security audit – designed to identify design flaws or oversights – is a crucial component of the design process for a blockchain system. Identify the different security risks your blockchain company may be exposed to by contacting Halborn at halborn@protonmail.com.