Open and Restricted: Understanding the Two Operating Models of Blockchain

Core Concept

Blockchain technology can be divided into two major camps based on participation rules. One is the completely open permissionless model, where anyone can join and use it; the other requires specific authorization to enter. Bitcoin, Ethereum, and BNB Chain represent the open route, while many enterprise-level applications adopt a restricted framework. Both models have their advantages and disadvantages, making them suitable for different scenarios.

A Historical Perspective on the Divergence of Blockchain

The concept of blockchain originates from Satoshi Nakamoto's Bitcoin white paper, which was initially designed to create a public consensus system that anyone could participate in. However, as applications expanded, people realized that many business scenarios do not require the characteristics of complete transparency and decentralization.

This drives developers to create new architectural directions. Tools such as Hyperledger Fabric, Quorum, and MultiChain have emerged, providing controllable and private blockchain solutions for enterprises and organizations. Two lines of development have gradually matured, catering to distinctly different market demands.

Core Differences Between the Two Major Models

Open blockchains sacrifice efficiency for democratization; while permissioned blockchains have advantages in usability and speed, the concentration of power brings risks.

The Real Face of Permissionless Blockchains

Why Choose Open?

First of all, open blockchains offer true decentralization potential. Anyone with the resources and willingness can run nodes, participate in consensus, and even start mining or staking. This architecture inherently resists single points of failure.

Secondly, the community-driven decision-making mechanism ensures the democracy of the network. When proposed updates are unpopular, node operators can refuse the upgrade, even leading to a chain fork—this is the true embodiment of decentralization.

Third, the entry barrier is extremely low. Anyone can participate simply by installing wallet software, without any approval process.

Concerns and Challenges

However, complete openness also brings troubles. Since anyone can participate, unscrupulous individuals and malicious actors can also enter the network. The risks of fraud, attacks, and misconduct continue to exist.

Scalability has become a challenge. Open networks must handle massive numbers of users and transaction traffic, and any upgrades must be validated through consensus across the entire network, which significantly delays the pace of improvement. The bottlenecks in throughput that Bitcoin and Ethereum have faced for years are a typical example of this problem.

Excessive transparency also poses risks. All transaction and address information can be viewed, creating privacy and security risks.

The Operating Logic of Permissioned Blockchains

Why do companies choose to be restricted?

Permissioned blockchains are operated by authorized entities, with clear control over the nodes. This makes upgrades, maintenance, and functionality adjustments simple and quick. Enterprises can deploy improvements without waiting for community voting.

Secondly, the level of customization is high. Organizations can tailor the blockchain according to their business needs, choosing which features to keep and which to remove. The implementation of specific purposes such as supply chain tracking and internal payment systems is more targeted.

Transparency can also be finely controlled. Operators decide what information to disclose and what to keep confidential, which is crucial for competition-sensitive businesses.

Finally, access control allows organizations to precisely manage participant identities and avoid unnecessary external interference.

Risks and Limitations

However, centralized convenience brings power risks. Decision-making power is in the hands of a few node operators, which goes against the original spirit of blockchain. The decisions of the entire network may not represent all stakeholders.

Restricted networks usually have fewer nodes, and the consensus mechanism is relatively weak against attacks. Once a node is compromised, the security of the entire system is threatened.

The risk of scrutiny is the most severe. Internet operators can arbitrarily modify records, block certain transactions, or rewrite history. This turns the blockchain's “immutability” into a joke.

How to Choose: A Practical Guide

Choose an Open (Permissionless) Scenario:

If your goal is to establish services that are open to everyone - such as a global payment system, decentralized financial applications, or community asset issuance - open models are the inevitable choice. Even if some open blockchains exhibit centralized tendencies in practice, the structural openness still retains the possibility of future democratization.

Permissioned Scenario:

Restricted types are suitable for private environments such as internal corporate processes, government systems, and supply chain tracking. When participants are clear and controllable, transactions require approval, and privacy is crucial, the convenience of restricted types far exceeds the inconveniences brought by open types.

It is worth noting that the two modes are not absolute. You can completely establish a blockchain that operates in an open but centralized manner, or build a system with limited transparency but decentralized decision-making. The technical architecture and operational philosophy are two independent dimensions.

Overall Cognition

Many crypto investors have only ever encountered open blockchains, so they easily perceive its characteristics as the “standard configuration” of blockchains. However, the reality is much more complex.

Enterprises and institutions are extensively adopting permissioned blockchains, and these applications do not conform to the definitional characteristics of traditional blockchains. At the same time, open blockchains are also evolving—some are developing towards higher transparency, while others are enhancing privacy protection.

Understanding the essential differences between the two models is crucial for accurately assessing the true applicable boundaries of blockchain technology. Whether permissionless or permissioned, each has its own value and limitations. The choice of which path to take depends on your specific needs.