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Permissioned Ledger

Permissioned Ledger Key Points

  • A permissioned ledger is a type of blockchain ledger in which only a limited number of entities have the authority to validate and record transactions.
  • It offers enhanced control, security, and privacy as compared to public or permissionless ledgers.
  • Permissioned blockchains are primarily used in business and enterprise settings where privacy and control over transactions are crucial.
  • The entities with the authority to validate and record transactions are often pre-selected by the network’s consensus mechanism.

Permissioned Ledger Definition

A permissioned ledger is a type of blockchain technology that limits the ability to execute certain actions such as writing data or validating transactions to a select group of participants. This select group is usually known in advance, and they have been granted the necessary permissions to perform these actions.

What is a Permissioned Ledger?

A permissioned ledger is a blockchain ledger that operates under a governance model where only specific, pre-determined entities have the right to contribute to the consensus of the system.
These entities, also known as validators or nodes, are chosen based on certain criteria set by the network.
This is in contrast to permissionless ledgers, where anyone can participate in the consensus process.

Who Uses a Permissioned Ledger?

Permissioned ledgers are commonly used by businesses and organizations that require a higher level of control and security over their transactions.
They are particularly popular in sectors like finance, healthcare, and supply chain, where privacy and security are paramount.
In these settings, only authorized parties, such as specific employees or departments, are given access to the ledger.

When is a Permissioned Ledger Used?

A permissioned ledger is used when there is a need for a controlled environment with high security and privacy.
It is often used when sensitive data needs to be stored and shared, or when transactions need to be validated and recorded by trusted entities.
It is also used when there is a need for speed and efficiency, as permissioned ledgers can process transactions faster than their permissionless counterparts.

Where is a Permissioned Ledger Used?

Permissioned ledgers are used in various sectors across the globe, including finance, healthcare, supply chain, and government.
They are implemented in settings where there is a need for a secure, controlled environment for recording and validating transactions.

Why Use a Permissioned Ledger?

The use of a permissioned ledger offers several advantages, including enhanced security and privacy, as well as improved efficiency.
By limiting the number of entities that can validate transactions, it reduces the risk of fraudulent activities.
It also provides a level of privacy as the identity of the participants can be known and controlled.
Moreover, with fewer participants involved in the consensus process, transactions can be processed faster, improving the efficiency of the system.

How Does a Permissioned Ledger Work?

In a permissioned ledger, a select group of entities are given the authority to validate and record transactions.
These entities are chosen based on certain criteria set by the network.
When a transaction is made, it is sent to these entities for validation.
Once a majority of these entities agree that the transaction is valid, it is added to the ledger.
This process is often governed by a consensus mechanism, such as Proof of Authority (PoA) or Practical Byzantine Fault Tolerance (PBFT).

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