Open Matters: Why Permissionless Blockchains are Essential to the Future of the Internet

We demystify the actual technologies behind “blockchain technology” and explain these several technologies in a way that even non-technical readers will understand.

This report offers a non-technical but thorough explanation of “blockchain technology” with a focus on the key variables within consensus mechanism design that differentiate so-called permissioned or closed and permissionless or open blockchains. We describe decentralized computing generally and draw parallels between open blockchain networks, e.g. Bitcoin, Ethereum, and Zcash, and the early Internet. For certain use cases, we explain why open networks may be more worthy of user trust and more capable of ensuring user privacy and security. Our highlighted use cases are electronic cash, digital identity, and the Internet of Things. Electronic cash promises efficient microtransactions, and enhanced financial inclusion; robust digital identity may solve many of our online security woes and streamline commerce and interaction online; and blockchain-driven Internet of Things systems may spur greater security, competition, and an end to walled gardens of non-interoperability for connected devices. We argue that the full benefits of these potential use cases can only be realized by utilizing open blockchain networks.

A direct download of this report is available here.

Based in Washington, D.C., Coin Center is the leading non-profit research and advocacy center focused on the public policy issues facing cryptocurrency and decentralized computing technologies like Bitcoin and Ethereum. Our mission is to build a better understanding of these technologies and to promote a regulatory climate that preserves the freedom to innovate using permissionless blockchain technologies.