A vision for public and private blockchains
Public blockchains have given humanity an entirely new way of transacting with each other: permissionlessly. You don’t need permission to create a new natively digital asset on a public blockchain, and you don’t need permission to transfer such assets to anybody else. Both of these innovations are entirely new.
This has unleashed multiple parallel revolutions: cryptocurrencies, decentralized finance, non-fungible tokens, and digital assets more generally.
These revolutions have been accelerated by combining the permissionless nature of early blockchains with the time-tested principles of standardization, programmability and composability, all of which was delivered first by public platforms such as Ethereum.
And, as with all revolutions, there is a mixture of good and bad, and we make no value judgment. On the ‘good’ side, the ability to create new assets without needing permission catalyzes innovation, and the ability to transfer assets without permission is an engine of freedom. But this also means bad actors have new ways to defraud the vulnerable, and it means criminals have new ways to evade government blocks on their transactions.
These downsides, along with the lack of privacy, strong identity, regulatory compliance or legal recourse has made it difficult for regulated businesses to engage wholeheartedly with this space. This is a tragedy because, away from the bleeding edge of this new world, regulated businesses have identified two huge opportunities that this new world presents to them and their clients.
First, firms around the world have realized that the solution to long-standing market-level inefficiencies in their industries may lie in the the architectural techniques first popularized by public blockchains. In particular, blockchains have shown us that building multi-party systems that remain in sync, facilitate inter-firm transactions, and do so in the face of faults and adversaries is now within our grasp, even if—ironically —the public blockchains themselves aren’t designed to solve these problems. But the inspiration they’ve given to those platforms that can is significant.
Secondly, the customers of regulated financial industries are asking why these firms can’t be the ones who make the ‘wild west’ of public blockchains safe for their customers. Why can’t the financial industry provide safekeeping, fair trading, and value-added services on top of those permissionless assets and systems that have reached a bar of respectability?
And this is where private blockchains enter the picture. First, private blockchains such as Corda are purpose-built to improve the existing interactions of firms in a market by reducing inefficiency, optimizing processes, eliminating duplication, and creating certainty. We take ideas from the public chains and apply them to the hardest problems faced by regular businesses. Secondly, private blockchains like Corda are being used by some of the largest financial institutions in the world to create regulated, trustworthy networks where customers can safely hold, trade and innovate with digital assets of any type, whether they be traditional, natively issued on Corda, or assets from public blockchains that have been immobilized and bridged into the regulated perimeter.
So it’s not a question of ‘public’ versus ‘private’ blockchains.
It’s a vision of ‘public and private’ blockchains.