Hybrid blockchain will change the Industry
Satoshi Nakamoto’s ideas didn’t only apply to public decentralized networks.
The Hybrid Approach
Both public and private DLTs then have important and very different use cases, but real world problems seldom lie at the extremes. We find the majority of systems we architect for our customers benefit from a combination of both public and private DLT with a hybrid blockchain solution. We use each for its respective strengths. And we prefer using DLT platforms that include a decentralized public network but also allow us to provision our own private networks using the same developer interface and methodology. This way, one piece of application code for the business is able to talk to both DLTs as appropriate and our customers get the enterprise-level security, auditability, and scale required to further their business
Blockchains and Centralized Systems
Centralized blockchains are hybrid concepts that blend a centralized governance structure with a decentralized network. Like decentralized blockchains, these systems distribute information over a shared P2P network with every node sharing and securing the ledger. They also require consensus rules to verify a single, indisputable version of blockchain.
Where centralized blockchains differ, however, is in the number of nodes in the network that can make changes to and enforce the consensus rules and software protocols. One of the largest decentralized public blockchains in the world, for example, is Bitcoin. Anyone can access its ledger and share computing power to execute its proof-of-work protocol POW or Proof of Stake POS
Private or centralized blockchains, by contrast, sharply restrict who can make changes to the ledger and the protocols. But that makes them ideal for private organizations like corporations. In this way, companies can take advantage of the many benefits of a decentralized database for storing and sharing internal records and enforcing contracts.
In its current form, the world of crypto is a hybrid world in the middle of some groundbreaking and disruptive transitions. Today, centralized and decentralized models co-exist, always seeking out new ways to link up with and interact with each other.
Satoshi Nakamoto’s ideas didn’t only apply to public decentralized networks. If you remove the public requirement of full decentralization, you still have a DLT trust engine that does a fantastic job of securely and reliably keeping track of transactions and other data on a private network of trusted nodes. The private network still enforces transactional rules that help a business ensure proper accounting and resistance to errors by individual users/systems.
For a business, this kind of private DLT might take the form of their own network of nodes (running, say, on a private cloud) behind a firewall that can address public DLT shortcomings:
- Privacy: Running private DLT nodes within a company firewall, private DLT networks naturally keep user and business transactions private, while still ensuring they are correct and can’t be tampered with.
- Speed: Because the business can trust its own nodes, it doesn’t need mining or other defensive features. Removing the defensive features of a public DLT allows the private DLT to run much faster — sometimes hundreds or thousands of times faster.
- Availability: A business can easily design a custom network of private nodes for low-latency availability, site redundancy, and for the level of DLT performance required.
