Consortia are not only suitable for the development of the Blockchain, but they also serve as bridges.
Regulated industries such as banking, finance, mortgage, healthcare, pharmaceutical, insurance, and others may not be ready to embrace or completely immerse themselves into blockchain technology. With numerous government regulations and privacy concerns, their hesitancy and precaution are completely reasonable. And since we’re still in the early stages of DLT, consortium blockchain is timely and most suitable for these types of organizations where there is a need for both public and private platforms and oversight.
Consortium blockchains would help these organizations ease their way into this new technology that may be relatively foreign to traditional and heavily-regulated industries.
Since a consortium blockchain is set up for organizations that need the benefits and guardrails of both public and private blockchains, it will allow these industries to take advantage of the increased security that private blockchains offer while allowing accessibility of a public blockchain. Consortia (aka Federated blockchains) optimize and enhance operational and communicational flow between the members (nodes) and prove economical.
This collaborative approach nurtures cooperation and encourages resource sharing even among competitors. Members can better leverage data, remain competitive, and control the cost of information. It makes problem-solving easy and less time consuming, and helps organizations work together to find solutions that save time and development costs.
Some of the primary benefits include: scalability of transactions, fast delivery/ speed, security, and automation. Additionally, consortia offer the new kid on the block to join an established structure and share information rather than starting from scratch.
While consortium blockchains have many benefits, there are still some improvements and enhancements that will need to be developed. Below are some of the advantages and disadvantages:
Advantages:
Validation: The number of participants in the consortium blockchain is known and verified. Authentication conducted by them reduces the risk of data threats. The nodes violating the set protocols are immediately identified and suffer the consequences of violation. The other threats like SQL injection, DDoS, “man in the middle,” are insignificant in consortium blockchain.
Control: Instead of a sole entity, a particular group of authentic participants controls the blockchain. This control helps to set rules, amend balances, edit or cancel an incorrect transaction, and encourage full cooperation for companies with common goals upon confirmation from each participant.
Security: The information on the authentic blocks is not permissible for access to the public. But the consortium participants can access the information quickly, ensuring high-end security. It builds high levels of confidence and trust for the platform clients.
Economic: As compared to other blockchains, consortium blockchain charges no service or transaction fee in the consortium setting.
Agreement: According to the governance scheme, a contract is often made by a relatively fewer number of nodes. This type of consensus is easier to reach as it is less demanding. These aspects directly affect the transactional outputs leading to speedy operations and improved scalability.
Flexibility: The involvement of several validators in other blockchains leads to mutual consensus and synchronization issues. However, such issues are avoidable in consortium blockchain due to the limited number of participants.
Energy requirement: Nonessential data mining directs the exclusive use of energy for routine operations only. Also, the Proof-of-Vote type agreement doesn’t employ much energy.
Disadvantages:
Network structure: The centralized network structure makes consortium blockchain vulnerable to attacks. The limited number of participants leads to the assumption that one or more participants may be corrupt. The designing of a shared infrastructure guarantees more security than a single enterprise.
Effectiveness: The efficiency of consortium blockchain technology is yet to be proven.
Framework: Consortium blockchain lacks the feature of a unified framework. Solutions like R3’s Corda, Quorum of JP Morgan, Hyperledger provide the industry standards required by private blockchains.
Delicate launching process: Due to less flexibility, setting a standard network between several enterprises is sluggish. Since all the participants must acknowledge the protocols, introducing a new blockchain is not an easy process.
Lack of cooperation: Sometimes, the participants cannot cooperate and reach an agreement, which hampers the development speed.
Upgradation: In situations when there is an increasing number of participants than at the beginning, upgrading the protocols can be troublesome.
If proponents of blockchain technology seek to gain mainstream adoption, consortia are not only suitable for the correct development of the blockchain, but they serve as a crucial bridge for society to realize the advantages of blockchain sooner, continue to birth countless more advancements, and propel us to the next era of innovation.
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