Stretching well beyond the technology that Blockchain networks bring, choosing a governance model that is right for you and your organization is critical to business success. Many organizations spend the great bulk of their time fleshing out the correct governance models for their consortiums, ensuring that the correct parties have the access they both need and desire.
This article below provides a framework for how to consider your governance options for a permissioned Blockchain network.
What is a Permissioned Blockchain Network?
A permissioned blockchain network has an access control layer built into the blockchain nodes such that the participants of the network have the ability to restrict access regarding who can validate blocks on transactions.
In short, this means that with a permissioned blockchain, one has the mechanism to better control who joins a network and what powers they have.
Why would you want a Permissioned Blockchain?
Being able to restrict who has the authority to join a network or indeed change the ledger is critical for many different kinds of business operations. This kind of infrastructure ensures that information is traded only with those organizations that have been highly vetted by a chosen central authority.
Reader, Writer and Operator
On the low end of the permission spectrum is READER. A READER cannot write to a ledger, only Read. This kind of permission state might be useful for those that need to analyze data being added to a ledger without modifying it. An example might be a network member that needs to gather data on how the flow of information is changing over time. Another example of why this role might be useful is when you would like to demo your network to potential members without giving them the authority to modify data.
At mid-range is WRITER. A writer has the ability to both READ and WRITE to the ledger but does NOT have the ability to grant access to new members or change access controls to existing members. That ability is granted to OPERATORS alone.
An OPERATOR has the ability to add new members to the network and grant them access. This is the SUPER-USER for a consortium. There are some instances where each and every member in a network is an OPERATOR. This is the United Nations model where each member has equal voting rights, meaning if ALL operators do not agree with having a new member join, the new member cannot join.
There are some situations where this indeed may be necessary and other situations where it would be devastating to the productivity of a consortium. It is for this reason, that I present the proposed Etiquette framework below to think through what kind of membership you should grant to your members or what kind of membership you should be seeking from a potential consortium to join.
Proposed Framework for Consortiums to Consider
1. United Nations Model– All members are Operators and are valued equally. As you can see from the diagram, this is most effective when there is a small, stable network of members that each perceives as being equally powerful and valued. The CONS to this approach is that processes like new member admission might get stalled as one votes by committee.
Ways to avoid such stalling problems is to ensure that each member is carefully screened and chosen based on each’s ability to quickly and effectively communicate about network operations. Managing the size of the network so that it is more manageable helps with this. Always consider the Watchdog Model below as a key way to mitigate risk of transactions that violate regulations.
2. Benevolent Dictator Model– Only one or few Operators manage Access Control and all other members are Writers or Readers. Although the pros with this approach are that the network may make decisions more quickly, the CONS are that it must be very clear as to WHY the Operator or Operators were chosen to represent the whole. Do they communicate well how new members are identified and added to the consortium via their published governance? All members are required to review and either accept or decline governance models as they are published by operators. When a member decides that the model is not to their liking (they wish more power for example), they can create their own Blockchain network. This could be a way to manage risk. Always consider the Watchdog Model below as a key way to mitigate risk of transactions that violate regulations.
3. Centralized Database– You dont need to share information amongst partners?
Then it doesnt sound like what you need is a Blockchain. A Centralized Database would be faster but do beware of bottlenecks and corruption control.
Questions for Orgs considering Joining a Network
As an organization HUNTING for a consortium to join, you need to consider the following questions:
1) Who is the Operator for the consortium you are considering joining? How do they choose who joins? Did you read the published governance model? Do you need the ability to have a vote on who else joins your network? Will new member ever need to be limited in power?
2) Do you need WRITE access or Only Read?
3) If you join a United Nations model, who else is on the network and what are the plans to scale? Will the size be so untenable that no decisions will be able to be made?
Dive into a Blockchain consortium with your eyes wide open. Take the time to really think through the flow of power that maximizes your organization’s role. And as always, consider ways to mitigate your risk. These are the kinds of questions that can help you make the right choice on what kind of Blockchain network to build and join.