I often hear, wrongly, that the controversial Ripple (XRP) is a centralized crypto-currency because of its blockchain. We are far from the truth ! To fully understand the different existing Blockchain architectures (we will only talk about the main ones here), I invite you to read the following carefully.
Three main architectures can be noted
- Public or distributed blockchain: Like the Bitcoin blockchain, its blockchain is accessible and modifiable by everyone thanks to their public source code. Its execution is based on a token, in this case, the bitcoin, the digital asset that can be exchanged on the decentralized network.
- Authorized blockchain: Like the Ripple blockchain, its process works like a forum where the administrator decides on everyone’s roles. The process also includes the token, here XRP and its source code can be open source or not.
- Private or centralized blockchain: This last process works in the same way as an ordinary blockchain but in a private way. Often used by companies or groups of people who prefer not to keep their payment information within everyone’s reach. Its source code is not open and their structures are often much smaller than the previous ones.
We can, therefore, observe that one of the fundamental characteristics of the blockchain, decentralization, is at the heart of a debate among its users. Users in the same vein as Satoshi Nakamoto advocate a libertarian spirit and distributed architecture and militate against private blockchains and their lack of intrinsic transparency.
On the other hand, it is understandable that a company using the blockchain for its transactions does not want anyone to have access to its information, whatever it may be. For reasons of confidentiality, this information cannot be disclosed and many external actors, such as competitors or the media, could benefit from information from a public blockchain.
Private blockchains have another major flaw, it would only take one user to access the blockchain in question to change its code, which would be a disaster for companies using the blockchain in question.
Disintermediation (which involves decentralization) is also another disadvantage because it disappears in favor of an administrator, who would be placed above the others in a centralized hierarchy and therefore similar in every aspect to a “classic” company, which is precisely what we are trying to avoid by using open architectures, such as Bitcoin.
Representation of the different types of blockchain
On the example above, we can see the obvious difference between centralization (A), partial decentralization or consortium blockchain (B) and fully-open or distributed blockchain (C).
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Entrepreneur | ICO Advisor | Start-up Mentor & Representative at FasterCapital & Alchemyze Capital