|
Rage Comment : Industry experts have different opinions on the use cases of blockchain. Some people think that private chains are generally used in private enterprises because they rely on third-party institutions (i.e. companies that manage blockchains), and are not very useful; while others think that private chains can solve problems that financial companies cannot solve with Bitcoin, such as compliance with rules and regulations. Compared with centralized databases, the biggest advantage of private chains is encrypted auditing and public identity information. No one can tamper with the data, and even if errors occur, the source of the errors can be traced. Compared with public chains, private chains are faster, cheaper, and respect the privacy of companies. In general, private chains can promote the realization of public chains. After all, public chains have a subversive effect on the current financial system.
Translation: Nicole Many people believe that private blockchains are generally used by private enterprises and are not very useful because they make users rely on third parties - companies that manage the blockchain. Many people believe that private blockchains are not blockchains at present, but already existing distributed ledger technologies. Others believe that private blockchains can provide solutions to many financial enterprise problems that Bitcoin cannot solve, such as complying with regulations: the Health Insurance Portability and Accountability Act (HIPAA), anti-money laundering (AML) and know-your-customer (KYC) regulations. The Linux Foundation, R3CEV’s Corda platform, and the Gem Health network’s Hyperledger project are just a few of the different private blockchain projects being developed. Bitcoin Magazine spoke to a number of prominent experts about their thoughts on the use cases for private blockchains.
Bloq co-founder Jeff Garzik said:
“Overall, Bloq believes it is important to build software on both public and private blockchains to bring together blockchain consumers with public blockchain innovation, developers, and new applications.”
Brian Hoffman, founder of OpenBazaar, said:
“Before I comment, I want to state the fact that OpenBazaar is a public blockchain and Bitcoin-only project, so I don’t have much experience with private blockchains. I personally don’t think private blockchains built on top of privileged databases provide much added value, and I don’t see a necessary use case for them.”
Dan Wasyluk, Syscoin team manager, said:
“Private blockchains offer some interesting opportunities for enterprises to develop inter-enterprise use cases with trusted, transparent features. With the advent of smart contracts, this technology will eventually replace all centralized enterprises.”
Max Kordek, CEO of Lisk, said:
"I haven't seen many use cases for private blockchains, but they do have a place. Traditional institutions can't suddenly switch to a completely public blockchain. Private blockchains are an important step toward the future of crypto. The biggest benefit of private blockchains over centralized databases is cryptographic auditing and public identity. No one can tamper with the data, and even if errors occur, the source of the error can be traced. Compared to public blockchains, private blockchains are faster and cheaper, while respecting the privacy of the company. The bottom line is that companies can rely on private blockchains, which is better than having no crypto at all. Private blockchains have their benefits, and they can also promote blockchain terminology into the corporate world, which is one step closer to the future of true public blockchains."
Omni board member Patrick Dugan:
“Private blockchains, or shared databases, can make back-office settlement processes more efficient for financial institutions. They should not be seen as controversial or enter into a rogue vs. cop debate. When the AML/KYC identity layer can be put into public blockchain metadata (perhaps in Omni layer transactions on the Bitcoin blockchain), there will be interoperability between the two sides of the track. Right now, most of the world’s liquidity is still in banks because countries only allow monopolies to issue letters of credit. However, we believe that in the long term, public blockchains, especially work-based ones, will become an important part of informal economic activity in ‘System D’ and the source of most global economic growth.”
Eugene Lopin, CEO of CHEX, said:
“Private blockchains are basically the same as traditional databases. They are glorified databases. But the benefit is that if you start adding public nodes to the mix, there are more nodes. An open blockchain is the best way to have a trusted ledger. The more decentralized it is, the better it is for adoption. Bitcoin delivers all of these benefits.
CHEX aims to add scalability to its options, and our plan is to evolve the secrets into a regular public blockchain with public cross-validation when demand grows. But if that is not the goal, you might as well use the technology that is already there.”
“We believe initiatives like R3 are counterproductive to maintaining centralized control. There are already reports and rumors that things are not going as planned. Bitcoin will become stronger with this competition.”
Ryan Charles, founder of Yours.Network, said:
“Private chains can effectively solve the efficiency, security and fraud problems of traditional financial institutions, but this change is cumulative. Private chains will not subvert the financial system. However, public chains have the potential to replace most of the functions of traditional financial institutions through software, fundamentally changing the way the financial system operates.”
Eric Larchevêque, CEO of Ledger, said:
“Ledger enables the security of blockchain applications through trusted hardware. Public, private or consortium chains cannot scale without secure key management, so we are developing solutions for all use cases. We believe that censorship-resistant public blockchains have the potential to disrupt society, while private blockchains are just a cost-efficiency tool in the back office of banks. Some believe the potential should be measured in trillions, others in billions. But since they are completely orthogonal and can exist simultaneously, it doesn’t have to be business as usual against them.”
Anthony Di Iorio, CEO of Decentral and Jaxx and co-founder of Ethereum and Chief Digital Officer of TMX Group (Toronto Stock Exchange Group) said:
“You build private blockchains because you want to control the participants in the blockchain. So we have banks and financial institutions, which have to abide by strict regulations. They can’t use public blockchains now because public blockchains are open and permissionless, and anyone can participate, which contradicts the regulations they have to abide by.”
“Private chains can leverage blockchain technology by creating small groups of participants who can validate transactions internally. This also puts you at risk for security breaches, just like in centralized systems. So, unlike public chains that are secured by mining hash power, you are taking on greater risk. Private chains have their uses. They can be faster, they can do more transactions without having to worry about scaling. Private chains have security advantages, but they also have security disadvantages.”
Andreas M. Antonopoulos, author of Mastering Bitcoin , said:
“The only reason banks are considering permissioned ledgers is because they are finally in the bargaining stage, which is the third of the five stages of industry decline because the traditional industry has begun to lose its advantage. At first they refused to use permissioned ledgers, thinking that such ledgers would not work and would disappear soon, but it turned out not to be the case. Then they said that this is unsourced money and it will not have any value until it is proven to be valuable; no one else will use this currency except them; real investors will not put money in this ledger except them; but in the end, it still exists. Our transition from denial to bargaining may involve anger, frustration, and eventually public acceptance, but it will take a long time.”
“Decentralization, open protocol, open source, collaborative development are the features of Bitcoin and the overall feature. If you take a permissioned ledger and say, all that’s great, we like the database part, can we not open up the decentralized peer-to-peer open source uncontrolled distributed part, well, then you’re throwing the baby out with the bathwater.”
Ethereum founder/co-founder Vitalik Buterin said:
“A consortium or company using a private blockchain can easily change the rules of the blockchain, revert transactions, modify balance information, and so on. In some cases, such as a national land title registry, this is a necessary function; no system would be allowed to exist where Dread Pirate Roberts had legal title to a piece of land, and similarly, attempts to create a land registry that was not controlled by the government would not be recognized by the government in real life…”
“Given all these issues, there is no doubt that private blockchains are a better option for institutions. However, even under the current system, public blockchains still have a lot of value. In fact, this value lies largely in the philosophical virtues that blockchain advocates have always advocated, among which the most advocated are autonomy, neutrality and openness.”
| 
