Getting permission for private blockchain

Jonas Lundqvist, CEO of Haidrun, puts the case for permissioned private blockchains.
Jonas Lundqvist, CEO of Haidrun, puts forward the case for permissioned private blockchains.

At its core, blockchain is a distributed, decentralised public ledger that records transactions to create a continuous list of records stored in the form of blocks, which cannot be corrupted, lost or changed. These blocks are connected to each other using cryptography to create a time-stamped series of immutable, tamper-proof records of data managed by a cluster of computers. Each piece of data shared on this network is visible to all participants and each one of them is accountable for their actions.

According to Deloitte’s latest annual survey*, 77% of executives agree they will lose their competitive advantage if they don’t adopt blockchain. The report suggests that businesses are no longer asking “Will it work for us?”, but instead they ask: “How will it work for us?”. And according to research firm Spendmenot, more than 50% of global organisations view blockchain as a strategic priority and global spending on blockchain solutions is expected to reach US$11.7bn in 2022. **

The best-known public blockchains are those associated with cryptocurrencies. Anyone can join the network and read, write, or participate within the blockchain. A public blockchain is decentralised and does not have a single entity that controls the network – it is permissionless. But there are lots of blockchain applications where this approach may not be appropriate – across financial services and insurance to telecoms, supply chain and healthcare.

Take, for example, a medical record system for patients and doctors. One of the biggest issues with healthcare is the fragmentation of data across different providers and clinics. With a blockchain-based system, a patient’s medical history, records, current providers and mostly everything else a medical doctor would need to know is constantly and securely updated and accessible. The blockchain platform provides a steady pipeline of medical data to quickly and safely diagnose and treat patients.

With this type of application dealing with sensitive information, the idea that anyone can be part of the blockchain underpinning it is counterintuitive.  That’s where private blockchains come in. Private blockchains move away from the cryptocurrency focus of public blockchain and are more aligned to delivering business-ready solutions for the enterprise. In a private blockchain, one or more entities control the network and restrict the people who can participate or have access to the entire contents of the database – it is in effect, permissioned.  Private blockchains are usually set up for reasons of privacy, accountability and cost and where the platforms empower and support the business rather than the individual users.

All blockchain technology delivers a distributed database that provides a single time-stamped version of the truth. So, private blockchains adhere to the original principles but some use cases can look more like centralised, controlled networks. The reality is that private blockchains offer all the distributed benefits, whilst retaining overall control to improve privacy and eliminate many of the illicit activities often associated with public blockchains and cryptocurrencies. For many enterprises, using private blockchains is the preferred option to safeguard a company’s sensitive information, while also providing full accountability, often via external audits, on the running and operation of their systems. Private blockchains can also provide a much higher degree of regulation, determined and set by the administrators in line with regulatory codes.

Importantly, private blockchains do not need to use cryptocurrencies or native tokens for the network and any association with cryptocurrencies, good or bad, is not part of the private solution. So, less energy, fewer resources and fewer participants are required to run the private blockchain, which equals less cost on a far more predictable scale.

A private blockchain with a centralised authority could be perceived as more prone to data breaches while operating at a smaller scale could make it easier for any bad actors to manipulate the network. However, identity management, firewalls and access control to the data and transactions enable private blockchain administrators to manage who sees what type of information and under what circumstances.

A permissioned future

Public platforms still drive most of the hype around blockchain, but private blockchains look set to become the main contributor to blockchain market growth. Private blockchains provide more opportunities to utilise the technology for B2B use cases and they deliver higher efficiency, privacy, reliability, and transparency. Security is enhanced through Public Key Infrastructure (PKI) encryption and Key Management solutions. Large enterprise blockchain solutions will be custom developed, while SMEs will take advantage of cost-effective pre-packaged solutions.

Enhanced blockchain solutions will also harness complementary technologies such as AI and IoT. By combining the power of AI with the robustness of blockchain, enterprises can build safer, smarter, more transparent, and more cost-efficient data storage and business automation systems.

Today AI is essentially a centralised process and by offering a distributed, decentralised and immutable ledger that can record all data and variables that go through a decision made by machine learning, blockchain can make AI more coherent and understandable. This makes it possible to trace and determine why decisions are made – in effect it makes AI explain itself and its actions.


Blockchain is rapidly moving mainstream across sectors from financial services, supply chain and telecoms to health and insurance. Gartner forecasts that the business value generated by blockchain will grow to $176bn by 2025 and $3.1 trillion by 2030 and the technology is evolving to be more regulated and permissioned to address exciting new market opportunities.

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Amber Donovan-Stevens

Amber is a Content Editor at Top Business Tech

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