How To Create a Permissioned Blockchain

Blockchain technology has gained widespread recognition as a revolutionary way to securely record and verify transactions without intermediaries. While public blockchains, such as Bitcoin and Ethereum, have gained popularity for their open and decentralized nature, permissioned blockchains offer a different approach that provides increased privacy and control for businesses and organizations.

A permissioned blockchain, also known as a private or consortium blockchain, restricts access to a select group of participants who have been granted permission to participate in the network. This type of blockchain is ideal for enterprises that require strict access controls and regulatory compliance, making it a suitable option for industries such as finance, supply chain management, healthcare, and government.

This article will provide a comprehensive guide on creating a permissioned blockchain, covering the essential steps, key considerations, and best practices.

Step 1: Define the Purpose and Scope of the Permitted Blockchain

Before diving into the technical aspects of creating a permissioned blockchain, it is crucial to define the purpose and scope of the network. Clearly understanding the goals and requirements of the blockchain will help shape its design and implementation.

First, identify the problem or use case that the permissioned blockchain aims to address. For example, a supply chain management system could require transparency, traceability, and accountability among participants. Or it could be a financial settlement platform that needs to streamline transactions and reduce costs. Next, defining the purpose of the blockchain will help determine the necessary features and functionalities.

Next, define the scope of the blockchain.

Step 2: Choose the Right Blockchain Platform

• The next step in creating a permissioned blockchain is choosing the right platform. Several options are available, each with features, capabilities, and trade-offs.
• Hyperledger Fabric: Developed by the Linux Foundation, Hyperledger Fabric is one of the most popular permissioned blockchain platforms. It provides a modular architecture that allows flexibility and customization, making it suitable for various use cases.
• Corda: Developed by R3 Corda is another popular permissioned blockchain platform focusing on privacy and security. It uses a unique consensus algorithm based on notaries and trusted parties that validate and agree on transactions.
• Quorum: Developed by JPMorgan Chase, Quorum is a permissioned blockchain platform based on Ethereum. It combines the benefits of Ethereum's smart contracts with the privacy and permissioning features needed for enterprise use cases.
• MultiChain: MultiChain is a permissioned blockchain platform focusing on simplicity and ease of use. It provides a simple yet powerful set of APIs and features that make it suitable for various business use cases.
• When choosing a blockchain platform, consider the features, scalability, performance, security, and community support. In addition, the platform should align with the purpose and scope of your permissioned blockchain and provide the necessary tools and capabilities to achieve your goals.

Step 3: Design the Permissioned Blockchain Architecture

Once you have selected a blockchain platform, the next step in creating a permissioned blockchain is to design the architecture of the network. This involves defining the various components and their interactions within the blockchain ecosystem.

Participant Nodes: Participant nodes are entities that are granted permission to participate in the blockchain network. These could be individuals, organisations, or entities with specific roles and responsibilities. Participant nodes can have different levels of access and permissions depending on their role within the network.

Consensus Mechanism: The consensus mechanism is the algorithm to validate and agree on transactions within the permissioned blockchain. Depending on the chosen blockchain platform, the consensus mechanism may vary. Choosing a consensus mechanism that aligns with the desired level of security, scalability, and performance for the permissioned blockchain is essential.

Smart contracts are self-executing contracts encoded on the blockchain that automatically enforce the terms and conditions of an agreement. They can be used to automate business processes, facilitate transactions, and define the rules of the permissioned blockchain. The design and implementation of smart contracts are crucial in ensuring the desired functionalities of the permissioned blockchain are achieved.

Permissioning Model: The permissioning model determines who has access to the blockchain network and what permissions they are granted. This includes defining the process of onboarding new participants, revoking access, and managing permissions. The permissioning model should align with the privacy and confidentiality requirements of the permissioned blockchain.

Step 4: Develop and Deploy the Permissioned Blockchain

• Once the architecture of the permissioned blockchain is designed, the next step is to develop and deploy the network. This involves writing and deploying smart contracts, setting up the participant nodes, and configuring the consensus mechanism.
• Smart Contract Development: Depending on the chosen blockchain platform, smart contracts can be written in various programming languages or using domain-specific languages. It is crucial to thoroughly test the smart contracts to ensure their functionality and security before deploying them on the permissioned blockchain.
• Node Configuration: Participant nodes must be configured according to their roles and permissions within the permissioned blockchain network. This includes configuring the consensus mechanism, setting up the communication protocols, and managing the permissions of each node.
• Deployment and Testing: Once the smart contracts and participant nodes are set up, the permissioned blockchain can be tested in a controlled environment. This includes running various scenarios and test cases to ensure the functionality, security, and performance of the permissioned blockchain.
• Production Deployment: The permissioned blockchain can be deployed in a production environment after thorough testing and validation. This includes setting up the necessary infrastructure, configuring the network topology, and onboarding the authorized participants.

Step 5: Maintain and Monitor the Permissioned Blockchain

• After the permissioned blockchain is deployed in a production environment, it is crucial to maintain and monitor the network to ensure its continued operation and security.
• Ongoing Maintenance: This includes regular updates and patches to fix vulnerabilities, upgrade smart contracts, and improve the performance of the permissioned blockchain. It is important to stay updated with the latest releases and security patches provided by the chosen blockchain platform or framework.
• Network Governance: Network governance involves managing the participants, permissions, and access controls of the permissioned blockchain. It includes onboarding new participants, revoking access for no longer authorised participants, and managing permissions based on changing requirements.
• Security Measures: Security is a top priority in maintaining a permissioned blockchain. This includes implementing robust authentication and authorization mechanisms, encrypting data, and implementing access controls to protect sensitive information.
• Monitoring and alerting: Continuous monitoring of the permissioned blockchain network is essential to detect and respond to anomalies or suspicious activities. This includes monitoring the performance, transaction volume, and network integrity.

Final Words

In conclusion, creating a permissioned blockchain requires careful planning, design, development, and deployment. It is a complex process that involves defining the purpose, participants, consensus mechanism, smart contracts, permissioning model, data privacy, and blockchain network topology. In addition, each step of the process requires thorough analysis, testing, and validation to ensure the functionality, security, and performance of the permissioned blockchain.

One of the key benefits of a permissioned blockchain is its ability to provide transparency, traceability, and accountability to the participants within the network. As a result, it can streamline business processes, reduce fraud, and increase participant trust. However, it is crucial to carefully manage permissions, access controls, and data privacy to ensure that sensitive information is protected and only accessible to authorized participants.

Another important consideration in creating a permissioned blockchain is the choice of the blockchain platform and consensus mechanism. Different platforms and consensus mechanisms have varying levels of security, scalability, and performance. Therefore, it is essential to choose the right platform and consensus mechanism that align with the specific requirements and goals of the permissioned blockchain.