What is exclusive blockchains?
Bitcoin-blockchain has proved itself as a decentralized electronic payment platform. It is therefore not surprising that the success of Bitcoin led to the attempts of various companies to adapt technology for corporate use. For example, the Estonian LHV Bank introduced the Cuber payment system based on colored coins, organized on top of Bitcoin blockchain.
However, corporate application developers quickly realized that Bitcoin blockchain could not fully satisfy their requirements, at least in the short term. This led to the emergence of exclusive blockchains, which we will discuss in today's material.
/ image by Adam Bailey CC
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One of the obstacles to the direct adaptation of the public blockchain, which is Bitcoin, was its openness. In such a network, any of its members is able to read data from the blockchain and write them, creating new blocks of transactions. In other words, publicly available blockchains are resistant to censorship. However, this feature ceases to be a virtue in the context of the internal work processes of a large company — in this case, access control comes to the fore.
Here, the companies came to the aid of the so-called exclusive blockchains. An exclusive blockchain is a blockchain in which transaction processing is performed by a specific list of subjects with identified personalities. Access to read data is also usually limited, although certain rights may extend beyond the circle of blockchain operators.
For example, in a financial blockchain supported by several banks, the data will be available to the regulator and law enforcement agencies; Also, their data can be viewed by customers of banks. In addition, developers of third-party financial applications based on the blockchain, who have limited access to a specific set of information, can be involved in this scheme.
And world organizations are already exploring the possibility of building their own exclusive blockchains. Three major Dutch banks, ABN Amro, ING and Rabobank are exploring the use of the blockchain for payment systems. And, for example, Citigroup has built three blockchains and a domestic currency based on them in order to minimize risks when interacting with other banks.
Exclusive blockchains provide greater control over the system by the company. The bottom line is that such networks allow, for example, to quickly update functionality. Therefore, their use is most justified in institutions that work with registries and accounting systems - exclusive blockchains form a more controlled environment, compared to publicly available blockchains.
Another feature of exclusive blockchains is a transparent management structure. They also offer greater flexibility and adaptability compared to an open blockchain infrastructure. This allows exclusive blockchains to find application in solving very specific business problems - property rights, journalism, the electoral system.
Many experts believe that they will solve many problems of financial organizations that are not able to solve, say, bitcoin. For example, compliance with the regulations of the Law on the Moveability and Accountability of Life Insurance (HIPAA) or anti-money laundering policies (AML).
Creating blocks in an exclusive blockchain does not require proof of work . Instead, for consensus in exclusive blockchains, well-studied consensus algorithms with authenticated participants can be used, for example, Practical Byzantine Fault Tolerance (PBFT). Another example is the block creation protocol used in BitShares. In such algorithms, each transaction processor has a pair of keys — private and public. The creators of the blocks are known and are determined by the digital signature of the block.
Exclusive access blockchains are less global compared to publicly available blockchains. When they are created, the developers do not aim to build a unified infrastructure for any industry as a whole. For this reason, the development of exclusive blockchains is based on frameworks, while publicly available blockchains are more like PaaS solutions . Roughly speaking, blockchain frameworks in their tasks resemble a DBMS (the same DBMS can be substituted into the back-end of many sites), and publicly available blockchains - web platforms like Twitter or Facebook (each platform is unique and has its own characteristics).
The active development of frameworks for exclusive blockchains started recently - just a few years ago. Most of them have open source code (or it is planned to open it in the future), so anyone can start developing for exclusive blockchains. Among the most popular frameworks can be identified:
In addition to these solutions, there are many other frameworks: Chain , Monax , Symbiont , Axoni, and so on. There are also a number of initiatives that bring the Bitcoin blockchain to the corporate environment, such as BloqEnterprise .
Although it is not necessary to use proof of work in exclusive blockchains, this protocol can still be connected. This approach simplifies auditing and further enhances the level of security and control over the system for end users. In fact, the proof of work translates confidence in the blockchain from the subjective, when trust in the system is equivalent to trust in its controlling organization, into objective - here the level of trust is built on the basis of mathematical laws and the high economic cost of attacks on the system.
Another way to “objectivize” exclusive blockchains is to use the link to publicly available blockchains. Blockchain anchoring is a technology whereby an exclusive blockchain operator periodically sends block hashs for inclusion in a supporting public blockchain in the form of transactional evidence.
The closest analogy for blockchain binding is the publication of block headers in a print publication (for example, in a newspaper). Such a scheme was proposed by cryptographers in the early 1990s, and was successfully used by some companies, such as Guardtime .
The idea is the same in both cases: the binding tool (a public blockchain or a print edition) cannot be retroactively replaced due to the large circulation and high economic cost of the attack. Thus, the data recorded in the exclusive blockchain becomes indisputable, that is, they cannot be changed, even if all the blockchain operators collude with each other. Binding does not disclose any information about the exclusive blockchain (due to the use of hash functions) and at the same time captures the current state of the blockchain entirely (all blocks are connected in one chain using the same hash functions).
However, publicly available blockchains have advantages over newspapers. They allow you to bind more often, flexibly adjust its format (for example, you can record certain individual transactions of an exclusive blockchain), as well as conduct automatic checks. The information included in the associated blockchain can be verified by users of the exclusive blockchain. This ensures that the transaction history in the system remains unchanged (in fact, external proof of work is used for this).
Linking an exclusive blockchain with a supporting publicly available blockchain (for example, Bitcoin)
To attack a chain protected by linking to an open blockchain, an attacker needs to overcome consensus mechanisms for both the exclusive blockchain and the supporting chain. The blockchain binding itself does not require a large amount of resources and does not create a critical dependence on the supporting blockchain - cooperation between the exclusive blockchain operators and the miners on the supporting blockchain is optional.
Linking to blockchains solves the problem of diversifying the security of distributed registries and can be used in blockchains that do not use internal proof of work. However, both approaches are not mutually exclusive and can be used simultaneously to increase the level of security.
PS Post topic: Another use of blockchains is smart contracts .
However, corporate application developers quickly realized that Bitcoin blockchain could not fully satisfy their requirements, at least in the short term. This led to the emergence of exclusive blockchains, which we will discuss in today's material.
/ image by Adam Bailey CC')
One of the obstacles to the direct adaptation of the public blockchain, which is Bitcoin, was its openness. In such a network, any of its members is able to read data from the blockchain and write them, creating new blocks of transactions. In other words, publicly available blockchains are resistant to censorship. However, this feature ceases to be a virtue in the context of the internal work processes of a large company — in this case, access control comes to the fore.
Here, the companies came to the aid of the so-called exclusive blockchains. An exclusive blockchain is a blockchain in which transaction processing is performed by a specific list of subjects with identified personalities. Access to read data is also usually limited, although certain rights may extend beyond the circle of blockchain operators.
For example, in a financial blockchain supported by several banks, the data will be available to the regulator and law enforcement agencies; Also, their data can be viewed by customers of banks. In addition, developers of third-party financial applications based on the blockchain, who have limited access to a specific set of information, can be involved in this scheme.
And world organizations are already exploring the possibility of building their own exclusive blockchains. Three major Dutch banks, ABN Amro, ING and Rabobank are exploring the use of the blockchain for payment systems. And, for example, Citigroup has built three blockchains and a domestic currency based on them in order to minimize risks when interacting with other banks.
Features exclusive blockchains
Exclusive blockchains provide greater control over the system by the company. The bottom line is that such networks allow, for example, to quickly update functionality. Therefore, their use is most justified in institutions that work with registries and accounting systems - exclusive blockchains form a more controlled environment, compared to publicly available blockchains.
Another feature of exclusive blockchains is a transparent management structure. They also offer greater flexibility and adaptability compared to an open blockchain infrastructure. This allows exclusive blockchains to find application in solving very specific business problems - property rights, journalism, the electoral system.
Many experts believe that they will solve many problems of financial organizations that are not able to solve, say, bitcoin. For example, compliance with the regulations of the Law on the Moveability and Accountability of Life Insurance (HIPAA) or anti-money laundering policies (AML).
“Closed blockchains provide an interesting opportunity for companies to use objectivity and transparency [of blockchains] in internal and inter-corporate scenarios,” said Dan Wasyluk, Syscoin team leader.
Creating blocks in an exclusive blockchain does not require proof of work . Instead, for consensus in exclusive blockchains, well-studied consensus algorithms with authenticated participants can be used, for example, Practical Byzantine Fault Tolerance (PBFT). Another example is the block creation protocol used in BitShares. In such algorithms, each transaction processor has a pair of keys — private and public. The creators of the blocks are known and are determined by the digital signature of the block.
Exclusive Blockchain Framework
Exclusive access blockchains are less global compared to publicly available blockchains. When they are created, the developers do not aim to build a unified infrastructure for any industry as a whole. For this reason, the development of exclusive blockchains is based on frameworks, while publicly available blockchains are more like PaaS solutions . Roughly speaking, blockchain frameworks in their tasks resemble a DBMS (the same DBMS can be substituted into the back-end of many sites), and publicly available blockchains - web platforms like Twitter or Facebook (each platform is unique and has its own characteristics).
The active development of frameworks for exclusive blockchains started recently - just a few years ago. Most of them have open source code (or it is planned to open it in the future), so anyone can start developing for exclusive blockchains. Among the most popular frameworks can be identified:
- IBM Fabric . IBM started developing its blockchain framework in 2015. In 2016, the IT giant was one of the founders of Hyperledger , a project under the wing of The Linux Foundation, aimed at developing enterprise standards for blockchains and distributed registries. The framework is written in Go and uses Docker containers to implement smart contracts.
- Intel Sawtooth Lake . Intel came to the blockchain in terms of the Internet of Things. From the features of Sawtooth Lake, you can select the consensus proof of elapsed time (PoET) algorithm, which uses the SGX trusted computing module built into the latest generation of Intel processors. Implemented in Python.
- R3 Corda . Corda is the result of the work of the R3 consortium uniting the largest banks in the world. Unlike other considered frameworks, Corda does not build blockchains, but distributed registries: Corda does not have the concept of blocks and large-scale replication of data as a whole. Corda is written in Kotlin and supports smart contracts in any JVM-compatible language.
- Enterprise Ethereum . Despite the fact that Ethereum is a public blockchain, its developers pay a lot of attention to using the product code to create exclusive blockchains. At the beginning of 2017, they announced the organization of the Enterprise Ethereum Alliance, the purpose of which is to develop business-oriented functions (for example, separating the consensus algorithm into a separate module).
In addition to these solutions, there are many other frameworks: Chain , Monax , Symbiont , Axoni, and so on. There are also a number of initiatives that bring the Bitcoin blockchain to the corporate environment, such as BloqEnterprise .
Binding to blockchains
Although it is not necessary to use proof of work in exclusive blockchains, this protocol can still be connected. This approach simplifies auditing and further enhances the level of security and control over the system for end users. In fact, the proof of work translates confidence in the blockchain from the subjective, when trust in the system is equivalent to trust in its controlling organization, into objective - here the level of trust is built on the basis of mathematical laws and the high economic cost of attacks on the system.
Another way to “objectivize” exclusive blockchains is to use the link to publicly available blockchains. Blockchain anchoring is a technology whereby an exclusive blockchain operator periodically sends block hashs for inclusion in a supporting public blockchain in the form of transactional evidence.
The closest analogy for blockchain binding is the publication of block headers in a print publication (for example, in a newspaper). Such a scheme was proposed by cryptographers in the early 1990s, and was successfully used by some companies, such as Guardtime .
The idea is the same in both cases: the binding tool (a public blockchain or a print edition) cannot be retroactively replaced due to the large circulation and high economic cost of the attack. Thus, the data recorded in the exclusive blockchain becomes indisputable, that is, they cannot be changed, even if all the blockchain operators collude with each other. Binding does not disclose any information about the exclusive blockchain (due to the use of hash functions) and at the same time captures the current state of the blockchain entirely (all blocks are connected in one chain using the same hash functions).
However, publicly available blockchains have advantages over newspapers. They allow you to bind more often, flexibly adjust its format (for example, you can record certain individual transactions of an exclusive blockchain), as well as conduct automatic checks. The information included in the associated blockchain can be verified by users of the exclusive blockchain. This ensures that the transaction history in the system remains unchanged (in fact, external proof of work is used for this).
Linking an exclusive blockchain with a supporting publicly available blockchain (for example, Bitcoin)
To attack a chain protected by linking to an open blockchain, an attacker needs to overcome consensus mechanisms for both the exclusive blockchain and the supporting chain. The blockchain binding itself does not require a large amount of resources and does not create a critical dependence on the supporting blockchain - cooperation between the exclusive blockchain operators and the miners on the supporting blockchain is optional.
Linking to blockchains solves the problem of diversifying the security of distributed registries and can be used in blockchains that do not use internal proof of work. However, both approaches are not mutually exclusive and can be used simultaneously to increase the level of security.
PS Post topic: Another use of blockchains is smart contracts .
Source: https://habr.com/ru/post/330370/
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