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Permissioned Versus Permissionless

In: The Economics of Blockchain Consensus

Author

Listed:
  • Joshua Gans

    (University of Toronto)

Abstract

This chapter examines the trade-offs between permissioned and permissionless blockchain networks. Permissionless networks, like Bitcoin, allow any node to join without prior authorisation but face greater security challenges. To maintain security and deter Sybil attacks, permissionless networks impose costs on nodes and offer rewards, such as block rewards and transaction fees. Comparing permissioned and permissionless systems resembles the trade-offs between monopoly and competition. Permissionless networks encourage diverse participation and potentially higher efficiency but may incur higher costs. The chapter highlights the importance of balancing security, participation, and efficiency in blockchain networks.

Suggested Citation

  • Joshua Gans, 2023. "Permissioned Versus Permissionless," Springer Books, in: The Economics of Blockchain Consensus, chapter 0, pages 51-67, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-33083-4_4
    DOI: 10.1007/978-3-031-33083-4_4
    as

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