John Wolpert leads Web3Studio, a unit of ConsenSys. Before joining ConsenSys in 2017, he served as the global product executive for IBM Blockchain and co-founder of Hyperledger.
In 2015, the Ethereum public mainnet launched, followed by a raft of private blockchain offerings targeting the enterprise. This opened the floodgates on companies prioritizing collaboration, funding long-overdue digitization efforts, and extending business processes across corporate borders.
Today, a new epoch of system integration is underway. However, efforts to make blockchain technology enterprise-friendly split the community into two camps: public networks versus private networks. The dichotomy was wrong-headed from the start, making it easy to believe that public blockchain networks shouldn’t be used in confidential business operations and that private networks were safe and secure.
The first belief is wrong, and the second is dangerous.
It’s true that the consensus mechanism of a private blockchain can make it difficult to tamper with information, assuming that the companies maintaining the ledger don’t share a common motive to alter records. But such private blockchain networks are not particularly secure against data breaches, because they must protect many identical copies, each controlled by a different company. That’s a hacker’s dream. This can be managed, and the risk can be worth it, but to say that private blockchains are secure is specious.
Hacking notwithstanding, not everyone in a consortium should know about every transaction or agreement between others operating in that network, even among a tight group of permissioned partners. Private platforms like Hyperledger Fabric try to compartmentalize information inside a permissioned network, but it’s not what blockchain technology was designed to do.
Consequently, they add an immense amount of complexity, and complexity is the enemy of security. The good news is that...