Understanding Permissioned vs Permissionless Blockchains: Why it Matters for the EU's Crypto Policies

As an Ethereum expert, I can attest to the importance of understanding the difference between permissioned and permissionless blockchains. The European Union (EU) is currently grappling with this issue, and Polygon is urging them to recognize the significance of this differentiation. In particular, Polygon has highlighted Article 30, which they claim is in contrast to the EU's other crypto-related policies. In this article, I will explain the difference between permissioned and permissionless blockchains and why it matters in the context of the EU's crypto policies.

Permissioned vs. Permissionless Blockchains

At their core, permissioned and permissionless blockchains differ in their level of access control. Permissioned blockchains restrict access to a select group of participants, while permissionless blockchains are open to anyone. The key characteristics of each type are as follows:

Permissioned Blockchains

• Access is limited to a pre-approved list of participants
• Participants are known and identifiable
• Transactions are private and only visible to approved participants
• Typically used in corporate settings

Permissionless Blockchains

• Anyone can participate
• Participants are anonymous
• Transactions are public and visible to all participants
• Typically used in open networks like Ethereum

Why the Difference Matters

In the context of the EU's crypto policies, the difference between permissioned and permissionless blockchains is significant. Specifically, Polygon has argued that Article 30 of the Markets in Crypto-Assets (MiCA) regulation is in opposition to the EU's other crypto-related policies. Article 30 requires that all crypto assets be traceable to their originator, which is difficult to achieve on permissionless blockchains due to their open and anonymous nature.

Furthermore, permissionless blockchains are often seen as more decentralized and resistant to censorship compared to permissioned blockchains. This is because permissioned blockchains rely on a central authority to grant access and approve transactions, which can lead to a concentration of power. In contrast, permissionless blockchains like Ethereum are open and decentralized, meaning that no single entity can control the network.

Conclusion

In conclusion, the difference between permissioned and permissionless blockchains is critical to understanding the implications of the EU's crypto policies. As an Ethereum expert, I believe that permissionless blockchains like Ethereum are essential for building open and decentralized networks that are resistant to censorship and promote innovation. I urge the EU to recognize the significance of this differentiation and consider the impact of their policies on the development of these networks.